LUFKIN, Texas (KTRE) – Texas Agriculture Commissioner Sid Miller wants to steer data centers away from the state’s most productive farmland, and he’s offering tax incentives to make it happen.
Miller announced proposed federal legislation Wednesday in Lufkin, backed by Congressman Pete Sessions, that would create so-called “Agriculture Freedom Zones.”
The zones would use incentives, including deferred capital gains taxes and accelerated depreciation, to encourage data center developers to build on marginal, less-productive land instead of fertile agricultural ground.
“This will encourage people to build not on our most fertile land, but on our marginal land, our least productive land,” Miller said. “And if they’ll do that, we can give them incentives like deferred capital gains tax.”
Miller says Texas has somewhere between 400 and 500 data centers, and the number is growing fast.
He outlined three major concerns driving the proposal:
Farmland loss: Data centers, like solar farms and crypto mines, are increasingly built on fertile agricultural land. “Once it’s covered in concrete, we don’t ever get that back,” Miller said.
Energy demand: Miller warned data centers could consume up to 71% of the state’s electricity within a few years, straining the grid and driving up consumer rates.
Water use: Large-scale data centers require significant water for cooling systems.
Miller said Texas counties currently have no ordinance-making authority to regulate where data centers are built, leaving no local guardrails on development.
The legislation is modeled after the federal Opportunity Zones program and would need to pass both chambers of Congress before being signed into law.
Miller acknowledged the process will take longer than his initial estimate of three to four months, given it must clear the House, Senate, and earn a presidential signature.
He described the bill as bipartisan and said it would go through the Ways and Means Committee due to its tax components.
Miller said the proposal does not address data centers already built in Texas, only future development.
He added that timberland, particularly relevant in East Texas, would likely qualify as protected agricultural land under the zones.
On water usage, Miller said he believes technology and free-market solutions, including Small Modular Reactors (SMRs), will address cooling demands without legislation.
Congressman Sessions was not present at the announcement. His office said he was in Washington, D.C., casting votes.
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