By Julie Tomascik
Editor

The rapid expansion of data centers across Texas is drawing increased attention from lawmakers and Texans as questions grow about the impact on rural communities and state resources.

In a letter to Lt. Gov. Dan Patrick and Speaker of the Texas House Dustin Burrows, Texas Farm Bureau (TFB) outlined concerns and urged a balanced approach that protects landowners, agriculture and the state’s economy.

The Lone Star State has become a national hub for data centers. More than 300 facilities are operating in Texas, with 100 additional projects planned or under development and at least 142 more currently under construction.

That growth has been fueled in part by state incentives, including a sales tax exemption that, according to reports, exceeds $1 billion annually. Proponents argue the incentives attract investment and innovation, but questions remain about sustained impacts and the return for taxpayers and local communities.

“Texas Farm Bureau recognizes and supports responsible economic development that strengthens the state’s economy, creates jobs and enhances Texas’ reputation as a national leader in innovation and technology,” TFB President Russell Boening wrote.

But the unprecedented pace and scale of recent data center proposals, many of which are sited in rural areas and on agricultural lands, raises questions about their broader effects.

TFB noted lawmakers should evaluate the full impact of data center development on Texas’ rural areas. The facilities’ water and energy demands could add pressure to already strained resources.

“Of particular concern to Texas farmers and ranchers are the demands data centers place

on critical natural resources, especially water and electricity, in rural regions already

facing groundwater depletion, limited surface water supplies and recurring drought,” Boening wrote. “Large data centers may require significant and continuous water use for cooling, potentially competing with agricultural production, municipal needs, and long-term aquifer sustainability. Their high electricity demand can strain local transmission infrastructure, affect grid reliability during peak agricultural and residential use and increase power costs over time.”

Data centers are outlined in the interim charges for both the Texas House and Texas Senate, but TFB also asked the legislative leaders to engage relevant state agencies to study the impacts.

“Greater transparency and data-driven analysis are needed so landowners and local officials can make informed decisions about water sourcing, power interconnection, tax impacts and emergency management,” Boening said.

The issue is already reflected in TFB policy. Delegates adopted policy at the 2025 TFB Annual Meeting supporting appropriate oversight of where and how these facilities are built and operated.

“Texas Farm Bureau believes that sound policy begins with sound data,” Boening wrote. “Proactive analysis will help ensure that data center development proceeds in a manner that protects Texas’ agricultural heritage, conserves vital natural resources and supports the long-term vitality of rural communities—while still welcoming responsible investment and innovation.”

Data centers house the physical infrastructure and servers that power digital services like cloud storage, artificial intelligence and the internet. Their rapid growth in Texas and across the nation reflects increasing demand for those technologies.

Read the full letter here.