Texas is shifting from courting data centers toward regulating them.
Gov. Greg Abbott has proposed new rules for data centers as concerns about their energy and water consumption and their impact on utility prices spur complaints in communities across the US.
“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,” Abbott, a Republican, wrote in a letter to state regulators on Wednesday.
Abbott said he would work with the state legislature to pass a number of measures, including requiring data centers to pay for their own electric infrastructure, requiring new data centers to use water-efficient technology, and repealing sales tax exemptions for data centers.
The letter also directs state regulators to start working to ensure data centers pay for their own electric infrastructure, ensure data center interconnections result in lower residential electricity bills, and use their power to protect Texas residents.
The proposed regulations are notable in a pro-business state that hosts data centers owned by Big Tech companies from Tesla to Meta to Amazon. Texas has the second-most data centers of any state, behind only Virginia.
BYOE — Bring Your Own Electricity
Backlash to data center development has grown across the US, with protests in local communities and proposed statewide bans in at least 12 states.
Gabriel Collins, an energy and environmental regulatory affairs fellow at Rice University’s Baker Institute, said the proposed regulations in Texas are unlike efforts to pause data center development in other states.
Williams said the message he thinks Abbott is trying to send is “Texas is open for business, but be ready to bring your own electricity and be prepared to invest in local water systems.”
“They want to make sure that the companies with the big balance sheets bear the significant share of whatever the impacts may be,” he said.
Collins also said the issue of addressing data centers is largely bipartisan, a relative rarity in Texas, which could partly explain why Abbott is signaling state lawmakers to focus on it, adding there’s a pretty good shot they can get “reasonable guardrails” passed.
Texas approved a statewide sales tax break for data centers back in 2013. The Texas Tribune reported that the state gives data centers over $1 billion in tax breaks every year.
In November, Abbott called Texas “the epicenter of AI development” during a joint announcement with Google of a $40 billion investment in the state, which included new data centers.
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