Sitting beside Google CEO Sundar Pichai last November, Gov. Greg Abbott declared Texas the "epicenter of AI development" while announcing three massive data center projects in the state.
The announcement was unsurprising at the time. Abbott has passed legislation to ensure Texas is open for business — especially for tech companies — for over a decade.
Now people are looking back on the announcement differently. That's because in June, Abbott did a complete 180, declaring that he's now, "pushing back against these AI data centers that are trying to build in our neighborhoods," at a campaign stop in Bullard, Texas.
Abbott's sharp policy change has felt like whiplash to residents across the Austin area who have been calling for stricter data center regulations. Opposition to data center development has grown since 2023, when Central Texas began seeing a massive surge in projects, fueled in part by a growing demand to support AI.
With the state's stance on data center development uncertain, Democrats and Republicans alike have turned to city halls and county courts to urge local officials to stop data center projects because of the amount of water, power and space they require.
But Texas politics are wonky, and pleading with local officials has presented its own hurdles.
Lawsuits in every level of government
In July, a group of Taylor residents in eastern Williamson County tried to get their city council to temporarily ban data centers. They were unsuccessful.
The effort was led by a local advocacy organization called the Halt Taylor Data Center Coalition. The organization collected over 1,400 signatures to force the council to either approve a ban — or put it on the ballot and let voters decide.
The ban would have paused all the city's current data center projects — and any additional data centers — until more rigorous zoning regulations could be created.
The Taylor City Council was set to consider the ban at its July 9 meeting. Minutes after the meeting began, city staff posted a statement online saying council members would not be taking any action.
Mayor Pro Tem Kelly Cmerek said approving the ban could open the city up to a lawsuit from the state.
"State law does not allow a city to enact or change its zoning by popular vote. This is a determination about the legal process made available to the city," Cmerek said. "It's not a judgment about a policy issue — about the concerns you guys have voiced."
A week after the meeting, the city found itself in legal trouble, but not with the state.
Members from the coalition filed a legal motion with the state's Third Court of Appeals, claiming that Taylor and its City Council violated the Texas Open Meetings Act and the city charter by not taking action on the proposed data center ban.
They argued the court should require the council to put the ban on the ballot, but no action has been taken. Since the July meeting, the City Council has approved at least one other data center project.
Other localities in the Austin area have succeeded in passing citywide bans. In June, in a 4-3 vote, the San Marcos City Council changed its zoning regulations to make data centers ineligible for development within city limits.
Council Member Amanda Rodriguez was the first on the council to call for a ban.
" I think there are some fights worth setting the precedent and trying," Rodriguez said.
But some officials in the city are braced for a lawsuit. That's something county officials are worried about as well.
In February, a line of residents poured out of the Hays County commissioners courtroom to support a countywide data center moratorium. But some speakers seemed to understand that passing it could open up the county to a lawsuit.
"We have to come together as a community to fight," Abigail Lindsey said. "We can do something, we just need our elected leaders to start thinking outside the box."
Some of the commissioners supported limiting data center growth but thought the moratorium was just going to set them up for trouble with the state.
"I will tell you that if we pass this as written, we're gonna get sued, and we're gonna lose," Hays County Commissioner Walt Smith said.
The county's lawyers agreed.
"I think we would be exposing ourselves to significant legal liability," Chase Young, assistant criminal district attorney for the county said. "I think that if we closed at 3:00, we'd be sued by 4:00."
Local authorities lack the force to enact bans
Hays County is vulnerable to a lawsuit in part because of House Bill 2127 — also dubbed the "Death Star" bill. The 2023 bill limits the authority of cities and counties to pass ordinances that conflict with state law.
For example, it prevents counties from enacting countywide bans on fracking or cities from requiring businesses to offer sick leave. The idea behind the bill was to make it easier for businesses to operate in Texas without worrying about local laws that might change city-to-city.
Rodriguez, the San Marcos City Council member, said the threat of the bill alone was "enough to stoke such significant fear in municipalities to not even try to dare to go against anything that the state is doing."
Because of state laws like HB 2127, counties and cities have limited authority to mitigate development and building in their areas.
This is something Hill County found out the hard way.
In May, the county passed a moratorium on data centers. It was promptly sued to the tune of $100 million. Soon after a local data center developer filed a lawsuit, Hill County rescinded its moratorium.
Without local authority, organizers and local officials alike are looking to the state for guidance on how to manage data center development.
KUT News called several state lawmakers for comment on how data center development could be regulated in the future. They all declined to comment.
Jim Henson, executive director of the Texas Politics Project, said it's unsurprising lawmakers aren't taking a stance on the issue.
"They don't have the answers yet," he said. "I think that most of the lawmakers that are in this policy space are looking to the governor to lead the way and probably don't want to get involved."
Critics say state directives are 'nothing more than a suggestion'
Five months before what is projected to be a tight election against Democrat Gina Hinojosa, Abbott issued a directive to regulate data centers.
In June, he required data centers to "operate in ways that reduce costs for residential electricity customers, do not drain water needed for our communities, and take into consideration the needs of our neighborhoods."
This came after the state's grid operator, the Electric Reliability Council of Texas, announced it had received requests for nearly 500 gigawatts of power, most of which came from data centers. The state is also struggling to know the full extent of data center water usage.
Abbott announced another directive earlier this month, requiring the Public Utility Commission and ERCOT to audit the development plans of proposed data centers in the state.
Under his second directive, data center operators need to report what tax deals they have made, details about their power plans and anticipated water use, and how they plan to "reduce impacts" to neighboring communities.
The state's grid operator told the PUC last week that the audit will involve 250 to 300 projects and likely take "several months" to complete. Abbott said no data center projects will be allowed to connect to the state's grid until the audit is done.
Abbott claims his directives are already working, with at least 43 major tech companies having already agreed to comply with his new rules — and at least one that stopped construction and abandoned its plans entirely.
"The Governor established clear guidelines: Data centers must invest their own money, provide their own power, reuse their own water, ensure that the power grid is gaining power— not losing power because of their operations — and must not disturb neighborhoods," Abbott's press secretary Andrew Mahaleris said.
But activists and state leaders say Abbott's requirements are all hat and no cattle.
Texas Agriculture Commissioner Sid Miller has emerged as an unlikely critic of data center development in the state. Miller, also a Republican, said Abbott's directives are "nothing more than a suggestion" because they don't have legal consequences baked in.
For Abbott's directives to have weight, Miller said they need to be packaged in a law, executive order or statute. Miller said until then, complying with the new rules comes down to good-faith promises.
Opponents of data centers in the state have called on the governor for months to schedule a special session to regulate data centers — something Miller said Abbott could do "today."
"[Legislators] could come in tomorrow if it's the only thing on the call," Miller said. "They could be done within a week or less, and give it immediate effect."
Abbott has received millions in campaign donations from tech CEOs who plan to build data centers in the state, including $500,000 from Elon Musk. His primary election campaign was fueled by $1.6 million in donations from tech executives, according to an analysis from E&E News.
"I think he still wants them here," Miller said. "I think he's doing this just to try to get back up in the polls and get ahead, make it appear that he's anti-data center. He's not. If he was, he would call the moratorium. If he was, he'd call a special session. If he was, he'd return the campaign donations. He's done none of those three."
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