Greg Abbott spent a decade recruiting data centers to Texas with tax breaks. Now he wants to ban them from rural neighborhoods outright, a reversal that has split his own party down county lines, according to CBS News Texas's coverage of the fight. "Rural Texas is dying," Railroad Commissioner Wayne Christian said, defending the buildout as economic rescue for counties losing population. State Rep. Shelley Luther represents the Sherman area taking the brunt of new construction. She calls the buildout "a huge eyesore" on land her family moved to for what she calls "complete liberty." Both are Republicans. Both are talking about the same dirt.
Nearly half of Texas's planned data centers are slated for unincorporated rural counties, up from 12 percent today, and University of Texas polling puts rural opposition to local construction at 62 percent. Unincorporated means no zoning board, no permit hearing, no mechanism for a county to require anything about how a facility cools itself. An operator can drop a hyperscale campus on ag land and default to the cheapest option on the shelf: open-loop evaporative towers pulling from the same aquifer that irrigates the neighboring cotton field. Industry benchmarks put that draw at roughly 6.75 million gallons per megawatt per year, which works out to about 1.8 million gallons a day for a single 100-megawatt site. Luther calls this a property-rights fight. It doubles as a cooling-architecture decision made with zero local review. North Carolina reached for the blunter tool already, moving to ban evaporative cooling at hyperscale sites outright rather than leave the choice to a permitting process that, in rural Texas, does not exist.
Abbott is pulling a second lever alongside the rural ban. He has been just as specific about what every other data center in the state has to do to operate here. "Any AI data center even thinking about coming here, they got 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," he said. Paired with his push for mandatory water-efficient technology and public reporting of electricity and water use, that sentence reads as a mandate against open-loop cooling towers in favor of closed-loop and dry-cooling designs that do not draw down a shared water table. The reporting piece puts Texas in the same lane as Dick Durbin's federal push for water and energy disclosure, built on the same premise: nobody outside the industry currently knows how much water a given cooling loop actually pulls.
The mechanics already in motion move faster than the politics. Abbott has directed the Public Utility Commission and ERCOT to deliver a joint memorandum on data center cost allocation by July 17, and ordered the PUC to act on residential transmission costs by July 31. The rural prohibition itself is not law and will not be for a while. The Legislature does not reconvene until January 2027, and Agriculture Commissioner Sid Miller is already pushing Abbott to call a special session sooner. Cold plates, CDUs, and switchgear order 12 to 18 months out, which means nobody procuring cooling equipment for a Texas rural site today can wait on a statute that does not exist yet: every project breaking ground this year answers to the rules already on the books, rules that predate anything Abbott has promised to write.
Texas taxpayers have covered nearly $2.8 billion in sales tax breaks for data centers since 2014, with $3.2 billion more forecast over the next two years. That subsidy bought a lot of cooling towers nobody priced for their water draw until the counties they sit in noticed. Compare that to California, where Gavin Newsom bet on light-touch rules and vetoed mandatory water disclosure, the reverse bet from the one Abbott is now making. Proximity to a substation used to close land deals in Texas. Proving, on paper, that a cooling loop never touches the county's water table is what closes them now.