Abbott flip flops a little on data centers

Someone’s feeling heat.

Gov. Greg Abbott on Tuesday released sweeping regulatory recommendations on data centers for the Legislature to pass in the 2027 session, as Texas grapples with an explosion of artificial intelligence-driven development and soaring power demands.

In a letter to state regulators, Abbott outlined a series of proposals designed to ensure data centers shoulder the costs of their growth rather than Texas ratepayers.

Among his legislative priorities:

• requiring new facilities to add power generation to the state’s power grid
• requiring data centers pay for their own grid interconnection and infrastructure costs
• mandating the use of “closed-loop” water systems, which draw a large amount of water at the start but reuse it over some period of years
• require annual reporting by all data centers on electricity and water use
• establishing best-practice standards to address community concerns like noise
• repealing data center sales tax exemptions and “other outdated or unnecessary incentives for data centers”

The Texas Tribune reported earlier this year that the state is poised to lose $3.2 billion in sales tax revenue over the next two years because of a sales tax exemption.

“The rapid scale of data center development requires oversight to ensure everyday Texans are not burdened with the costs of infrastructure driven by data center expansion, and to ensure that as data centers interconnect to the Electric Reliability Council of Texas (ERCOT) grid, residential electric bills are not negatively affected,” Abbott wrote in the letter first obtained by the Texas Bullpen.

It’s a striking call for industry regulation by the Republican governor in a state that has long prided itself on being a favorable environment for business. In recent months, Abbott has toed the line of championing the industry, declaring Texas the “epicenter” of AI development, and issuing statements about how his office was sensitive to the concerns about strain on resources and quality of life.

The Data Center Coalition welcomed the governor’s proposals saying the industry already follows many of the recommended practices and is committed to working with agencies to support “responsible infrastructure growth.”

[…]

Notably absent from Abbott’s priorities was any proposal to expand local control over data center development. That omission comes as counties across Texas argue they lack the authority to regulate projects increasingly locating in rural, unincorporated areas where zoning restrictions do not exist. Some state officials have expressed interest in expanding counties’ regulatory authority over data centers.

Last week, the Tribune reported that in rural Hood County, eight projects have been proposed over 10 months and local officials had no authority to reject them. Efforts by lawmakers to slow development have been met with threats from state Sen. Paul Bettencourt, R-Houston, and from lawsuits from data center developers.

Yeah, the tax break situation is an obvious place to draw a line. I wonder how those tax breaks came to be in the first place? (Insert obligatory we’re all trying to find the guy who did this reference.) Abbott clearly thought he needed to Do Something, given the disproportionate impact of these things on Republican counties and the corresponding rebellion from the affected voters. In true form, he did the least he could do, and he refused to give the counties the one thing they really wanted, to have some control over what’s happening to them. I mean, Daddy knows best and all that. We’ll see if they buy it.

I’ve been rounding up a number of stories relating to data center madness and was prepping them for a post, but I thought this deserved to be its own thing. I’ll follow up with the compilation post tomorrow or Saturday. The Chron has more on Abbott’s flip flop.

Related Posts:

• More weasel words on data centers from Abbott
• A data center roundup
• The data center tango