Governor Greg Abbott has directed the Texas Water Development Board to impose penalties on data centers that do not comply with state water laws. This directive, issued recently, marks a continued shift in the state's approach to data center operations.
This is at least the third such directive from Governor Abbott in recent months, following previous actions including a temporary halt on new data center connections to the state's power grid. That halt, announced on August 3, was set to remain in effect until state regulators complete an audit and companies wishing to build in Texas comply with new standards. Two weeks later, on August 18, Abbott stated that approximately 20 companies had agreed to comply with these new requirements. Earlier, in June, the Governor also indicated a desire to repeal "unnecessary" incentives, including sales tax exemptions, in a letter to the public utilities commission.
These recent actions contrast sharply with the Governor’s previous stance. Last November, alongside Google leaders and state officials, Governor Abbott praised the state's growth, declaring Texas "the epicenter of A-I development, where companies can pair innovation with expanding energy."
However, public frustration regarding data centers began to emerge in the months following that statement. Residents like Matagorda County resident Donna Howard expressed concerns, stating that data centers belong "not small rural communities." Manvel Mayor Dan Davis also voiced strong opposition, stating, "I've taken an approach within my position as Mayor: no to data centers." As communities rallied against the facilities, the Governor began to roll back his previous support.
Less than a month ago, Governor Abbott outlined four key standards that he stated are now being universally applied by all data centers in Texas. First, data centers must clearly identify their water usage demands and ensure they are "not taking water from communities that need it." Second, they must not draw power from the Texas power grid that is needed by others. Third, these facilities are expected to lower the cost of electricity for consumers. Finally, they need to ensure they are not disturbing neighborhoods or rural communities where they are located.
Governor Abbott clarified that he believes the state did not move too fast in attracting data centers, but rather the facilities themselves developed too quickly and without sufficient local engagement. He stated that these centers "pop up in places that nobody ever heard of before until they started the construction." He attributed the backlash to a lack of collaboration with state and local governments, suggesting the companies "dug their own grave for the problem that's been caused for them."
Despite the Governor's directives, calls from the public for a special legislative session to enact actual regulation on data centers have not yet been met. Governor Abbott's office has not provided a response to inquiries regarding his latest directive and the change in his position on data centers.
