Texas Governor Greg Abbott has proposed sweeping regulatory recommendations on data centers for the Legislature to pass in the 2027 session. The proposals aim to ensure data centers shoulder the costs of their growth rather than Texas ratepayers.

Proposed Regulations

Among the proposed regulations are requirements for new facilities to add power generation to the state’s power grid, pay for their own grid interconnection and infrastructure costs, and use “closed-loop” water systems. Data centers would also be required to report their electricity and water use annually.

Abbott’s proposals also include repealing data center sales tax exemptions and “other outdated or unnecessary incentives for data centers.”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 due to a sales tax exemption.

Industry Response

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

However, some community groups have organized against proposed data center developments over concerns about water use, noise, land impacts, and strain on local infrastructure. A March Quinnipiac poll found that 65% of Americans oppose the building of an AI data center in their community.

Original reporting: Texas Tribune (HLL/CB) — read the source article.