Graham Council Urged to Wait On Legislature for Data Center Rules

GRAHAM — Several citizens urged the Graham City Council on July 10 to postpone negotiations over tax abatements for the proposed Project Saltworks data center campus, arguing that local officials should wait until the Texas Legislature adopts new regulations governing the rapidly expanding industry.

The public turnout and emotional testimony are part of the ongoing debate over the approximately 900-acre development proposed by Headwaters Development and Stream Data Centers in southern Young County. The anti-data center residents repeatedly asked council members to slow the process and allow state lawmakers to establish new safeguards before any local incentive agreements are approved.

The speakers acknowledged that neither the Graham City Council nor the Young County Commissioners Court has the legal authority to prohibit the data center from locating in Young County. Instead, they focused their comments on urging local officials not to grant tax abatements or enter into development agreements until after the 2027 legislative session.

Several residents said delaying negotiations would strengthen the city’s bargaining position and allow lawmakers to establish statewide standards governing electricity costs, water use, environmental protections and neighborhood impacts.

“There are no emergencies when negotiating with data centers,” Lori Kramer told the council.

She said the developers’ desire to meet ERCOT’s interconnection deadlines should not force local governments into making decisions before the state completes its work.

“We are here to humbly ask that you do not enter into any agreements and do not negotiate with Headwaters and Stream Data,” she said. “Their desire to meet this deadline does not necessitate an emergency on your part.”

She noted that Gov. Greg Abbott has already announced that data center regulation will be a priority during the next legislative session and argued that if Young County truly is one of the best locations for such a project, developers will still be interested after new laws are adopted.

On June 10, Gov. Greg Abbott directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas to immediately begin protecting residential customers from the costs associated with rapidly expanding data centers.

In a letter to PUC Chairman Thomas Gleeson and ERCOT Chief Executive Officer Pablo Vegas, Gov. Abbott ordered regulators to require data centers to pay for the electrical infrastructure necessary to serve their facilities so those costs are not shifted onto homeowners and small businesses.

He also directed both agencies to recommend additional protections by July 17 and ordered the PUC to begin reducing residential transmission costs by July 31.

Gov. Abbott pledged to work with the Legislature next session to require future data centers to use water-efficient cooling systems, report annual electricity and water consumption, eliminate outdated tax incentives, and adopt setbacks, noise reduction measures and other practices designed to lessen impacts on neighboring landowners.

The governor’s directive follows similar concerns raised nationally. In March, the White House announced a federal initiative aimed at keeping electricity affordable while accommodating the explosive growth of artificial intelligence and data center infrastructure, reflecting bipartisan concern over rising energy demand.

Several speakers described fears that the project would permanently alter the rural character of southern Young County.

Judy Brown questioned why negotiations appeared to be moving so quickly when state lawmakers are preparing new regulations.

“Texas legislation is about to change to add safeguards for our rural communities,” she said. “Could this be the rush?”

Ms. Brown urged council members to think about neighboring landowners who could face years of heavy construction traffic, dust, noise and sediment runoff into nearby waterways.

Other speakers questioned how the project first came to Graham, who ultimately would approve any agreements, and whether council members had personally visited communities where large data centers already operate.

Not everyone opposed moving forward.

Former Graham school board member and hospital board member Terry Bishop urged council members to consider the financial needs of the city.

Mr. Bishop said Graham faces growing costs for replacing aging water lines, maintaining streets, improving parks, supporting public safety and expanding healthcare services.

“If we don’t expand the tax base, then who’s going to pay for it?” he asked.

Mr. Bishop acknowledged that construction would be disruptive but encouraged the council to negotiate the strongest possible agreement rather than reject the opportunity outright.

“It’s never as bad as they say it will be, and it’s never as good as they say it will be,” he said. “But if we don’t do anything, what is that going to get us?”

Andy Jones, speaking on behalf of Headwaters Development, disputed suggestions that the project is being rushed.

He said the company has spent approximately two years studying the project and evaluating its impacts on both the city and the county.

“It’s not been a rush,” Mr. Jones said. “It’s been two years to do our due diligence to make sure of how it’s going to impact the City of Graham and how it’s going to impact the county.”

Mr. Jones acknowledged that any development creates challenges but said Headwaters has built its reputation on attempting to be a responsible community partner.