President Donald Trump has declared that artificial intelligence data centers should pay for their own water and electricity instead of passing those costs to local residents and taxpayers. This shift in policy thinking marks a dramatic reversal from just months ago, when Texas and other states were competing aggressively to attract these massive facilities with minimal conditions attached.

In a Truth Social post on Wednesday, Trump called data centers "big, strong, bold and Money Machines" for the communities where they are built, but insisted they must cover their own utility bills. His comments were primarily aimed at New York Governor Kathy Hochul's one-year moratorium on new data centers using 50 megawatts or more of electricity. Trump warned that projects, jobs, and tax revenue would simply relocate to more welcoming states, including Texas, Alabama, Florida, and Arizona.

This isn't Trump's first time making this argument. During his State of the Union address in February, he proposed that major technology companies should build their own power plants alongside their data centers, framing the idea as a "ratepayer protection pledge" to keep enormous power demands from showing up on household utility bills.

What Changed in Texas's Approach to Data Centers?

Just months ago, the conversation in Texas centered almost entirely on attracting data centers. Local officials spoke of billion-dollar investments and sudden boosts to the tax base. But that tone has shifted dramatically. The question is no longer whether Texas wants AI data centers; it's what companies should have to bring with them if they want to build here.

Governor Greg Abbott, who once promoted Texas as the nation's "epicenter" of artificial intelligence, directed state regulators in June to ensure data centers fully fund the electrical infrastructure needed to serve them. His directive to the Public Utility Commission of Texas and the Electric Reliability Council of Texas also required data centers to report their electricity and water use, disclose resource sources, use water-efficient cooling systems, and add to the state's generating capacity rather than simply increasing demand on the grid.

"Data centers must 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," Abbott said.

Governor Greg Abbott, State of Texas

This represents a stark contrast from the economic development pitch Texans were hearing even a few months earlier. The shift has hit especially close to home in Angelina County, where two major data center projects are now under discussion or construction.

How Are Local Communities Pushing Back?

Residents in Angelina County packed county commissioners' chambers in June to raise concerns about electricity demands and water consumption. In response, the Angelina County Commissioners Court unanimously approved a resolution asking state lawmakers to give counties limited authority over large data centers and battery energy storage facilities.

The request doesn't seek full zoning power that the county has historically lacked. Instead, commissioners asked for authority to:

• Setbacks and Mitigation: Establish setbacks from residential areas and require noise and light mitigation practices to protect nearby communities
• Environmental Review: Mandate water-impact studies and environmental safety plans before construction begins
• Public Process: Require public hearings and impose screening and design standards for transparency

Angelina County Judge Keith Wright has repeatedly noted that the county currently has almost no ability to impose these conditions unless a developer voluntarily enters into a road-use agreement or requests a tax abatement. "If we don't have any type of other regulations that the state allows us, then we have zero authority and zero impact on what they do," Wright said.

Two specific projects illustrate the challenge. Amp Z is pursuing a "gigawatt-scale" data center campus at the former Southland Paper Mill property along Highway 103 east of Lufkin, with plans for more than 2.1 gigawatts of capacity through a combination of utility service and on-site generation. Across the county, Hyper Data Grid is pursuing a separate project that has prompted county officials to begin discussing a potential road-use agreement.

What Role Could Nuclear Power Play?

Texas Agriculture Commissioner Sid Miller sounded a similar warning during a February visit to Lufkin, saying counties had been left without guardrails to manage the rapid spread of data centers. "There's no guidelines, there's no rules, there's no oversight, there's no guardrails whatsoever," Miller said. "So it's just whatever they want".

However, Miller was not calling for Texas to turn its back on AI. Instead, he argued that the United States is in an "AI data war" with China and needs these facilities to remain competitive. His argument was that the country should be smarter about where they are built and what resources they consume. Miller pointed to Trump's State of the Union remarks and suggested that future facilities could eventually rely on small modular nuclear reactors or other on-site generation, allowing them to produce their own electricity and potentially send excess power back to the grid.

"We're not against data centers. We're in an AI data war with the Chinese, and we want to win that war," Miller stated.

Sid Miller, Texas Agriculture Commissioner

The shift from welcoming data centers unconditionally to demanding they fund their own infrastructure reflects a broader recognition that AI's power demands are reshaping the energy landscape. What started as a local debate in East Texas has now reached the White House, with policymakers across the political spectrum agreeing on one principle: the companies building these facilities should bear the costs, not the communities hosting them.