Texas Governor Greg Abbott Vows Ban on Rural AI Data Centers, Sparking Local Clash

Texas Gov. Greg Abbott on Tuesday endorsed banning new artificial intelligence data centers in rural areas, signaling a sharp shift from his previous regulatory approach to outright blocking such facilities.

Speaking at a campaign stop in Bullard, about 110 miles southeast of Dallas, the Republican governor tied the issue to a broader property tax initiative and vowed to push lawmakers to end the industry’s state sales tax exemption.

“We must prohibit them from building AI data centers in rural Texas neighborhoods,” Abbott told the crowd at Milano’s Pizza, framing the fight as one over “East Texas values.”

He stated that any developer considering the state would need to “bring their own money, bring their own power, reuse their own water” and warned that the current sales tax break for the industry should be revoked.

The remarks extend beyond a June 10 directive Abbott sent to the Public Utility Commission of Texas and the Electric Reliability Council of Texas, which set a July 17 response deadline and required large-load customers to fund infrastructure, adopt closed-loop cooling systems, and submit annual water and power usage reports.

An Abbott campaign spokesperson confirmed that the Bullard comments align with that letter.

Pressure has been building within his own party. State Rep. Helen Kerwin, a Republican who represents Somervell County, wrote to Abbott in March urging an “immediate pause” on rural data center development to establish sound policies from the outset.

She praised Tuesday’s announcement on social media, thanking Abbott for “listening to the voices of Rural Texas.”

The local authority battle is already underway. Hill County briefly considered a moratorium before backing off after facing a $100 million lawsuit from a data center developer. Meanwhile, San Marcos—situated between San Antonio and Austin—recently became the first city in Texas to outright ban data centers, prompting Republican state Sen. Paul Bettencourt to prepare a legal challenge.

The question now is whether the Legislature will empower counties with stronger tools to block development or maintain the state’s pro-industry stance.

By Jim Thomas