Gov. Greg Abbott is calling for new AI data centers to be blocked from development in rural neighborhoods across Texas amid growing backlash over their effects on residential communities and water supplies.
During a property tax event in Bullard, a rural community located south of Tyler, Abbott said he would push back against AI data centers seeking to build in neighborhoods, adding that companies should pay their own way. He also said he wants to eliminate the tax breaks companies receive for locating in Texas.
“I’ve made it clear already: Any AI data center thinking about coming here, they have to bring their own money, bring their own power, use their own water, and do it in a way that reduces the cost of electricity for residents across our state,” Abbott said. “We must prohibit them from building AI data centers in rural Texas neighborhoods, and we must eliminate the tax break they are getting.”
Abbott’s remarks contrast sharply with a November 2025 press release in which he praised AI data centers and called Texas the “epicenter of AI development.”
“This is a Texas-sized investment in the future of our great state,” Abbott said at the time. “Texas is the epicenter of AI development, where companies can pair innovation with expanding energy.”
“We must ensure that America remains at the forefront of the AI revolution, and Texas is the place where that can happen,” he added.
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Since then, Abbott has shifted his position. In June, the governor sent a letter to Thomas Gleeson, chairman of the Public Utility Commission of Texas, and Pablo Vegas, president and chief executive officer of the Electric Reliability Council of Texas, instructing them to “guarantee any data center development does not come at the cost of Texans and our local communities.”
Abbott’s letter directed the utility commission to ensure that the data centers’ interconnections reduce residential electricity costs, require developers to pay for all electric infrastructure without passing costs on to residential ratepayers, and have both the Public Utility Commission of Texas and the Electric Reliability Council of Texas review their existing authorities to identify additional actions that could protect Texas residents, their property, and resources.
Abbott’s latest comments go a step further, calling for AI data centers to be prohibited from being built in rural neighborhoods.
The proposal comes as many rural residents have raised concerns about the facilities’ noise, electricity demand, water consumption, and the limited number of permanent jobs created by the centers.
Last month, San Marcos became the first Texas city to ban data centers in a 4-3 city council vote. Residents argued the facilities would strain the Edwards Aquifer and increase electricity demand around the clock.
Communities across North Texas have also voiced opposition to proposed data centers. Residents from Fort Worth to Henderson County have raised concerns about agricultural impacts, local water supplies, noise, and pollution.
Carson Clayton, the campaign director for an energy-education initiative at the Texas Public Policy Foundation, said the opposition from rural communities is not surprising.
“Rural Texas has had to deal with wind and solar being built out in their area, battery storage being built out in their area. Many of them are dealing with these high-voltage transmission lines being built out, and now they have data centers,” Clayton told the Daily Signal. “This isn’t out of nowhere; this is, for many people, the last straw.”
Clayton said the data centers can provide temporary construction jobs, permanent employment opportunities, and additional property tax revenue. However, he said the biggest complain he hears is the lack of communication from developers, particularly regarding construction noise.
“A lot of this could be headed off if the data center companies were just a little bit more transparent, a little bit more forthcoming with their plans in that community prior to building out the actual facility,” Clayton said.
Another major concern is water consumption.
Existing data centers in Texas consume an estimated 25 billion gallons of water annually, which equals out to roughly 4% of the state’s total water use.
“There’s not a lot of transparency as to how much water they’re actually using, and water issues are ultra-local,” Clayton said. “I think they need to be transparent up front with what sort of cooling technology they’re using and how much water that’s actually going to require.”
Clayton says that he anticipates Texas lawmakers to address the issue during the 90th Legislative Session as they consider what technologies and standards should apply to future data center development.
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