HENDERSON COUNTY, Texas (KTRK) — A controversial data center project in East Texas is no longer moving forward after the company said it wouldn\u2019t be able to comply with Gov. Greg Abbott\u2019s development standards.<\/p>\n
RELATED: Polling shows Texans opposition towards data centers, as politicians reverse course<\/a><\/p>\n Kansas-based Diode Ventures<\/a>\u00a0had proposed building a data center in Henderson County near Cedar Creek Reservoir, a historic waterway in a community heavily involved in water conservation.\u00a0The Fort Worth Star Telegram reported\u00a0<\/a>the site was expected to take 12 years to build out and consume 5 million gallons of lake water per day by its fifth year.<\/p>\n The project\u2019s location was concerning because it would have sat right in the middle of a developed subdivision with hundreds of homes around it,\u00a0Henderson County Commissioner Wendy Spivey\u00a0<\/a>told The Texas Tribune. Residents were concerned that it would draw water from Cedar Creek Lake, which\u00a0supplies water to the Fort Worth area<\/a>. With little to no rainfall in the region this year, lake levels have been low for residents. They worried what years like this would look like with increased water withdrawals.<\/p>\n \u201cThis was a big, big step in a positive direction for Diode to back out,\u201d Spivey said.<\/p>\n However, she does not believe this is the end of the fight. The landowners of the proposed site are still looking for ways to sell or use the land, and just because Diode backed out doesn\u2019t mean another data center may not come in, Spivey said.<\/p>\n Data center proposals have cropped up in droves across the state, especially in the rural communities of East Texas that are water-rich and have little to no regulation. In recent weeks, Gov. Greg Abbott said he wanted lawmakers\u00a0to outright ban project developments<\/a>\u00a0in rural areas like those in East Texas and require data centers to be \u201cresponsible stewards\u201d of the natural resources.<\/p>\n SEE ALSO: State leaders look to enact more regulation when it comes to data centers in Texas<\/a><\/p>\n \u201cData centers that want to do business in Texas must meet a clear standard. This project did not,\u201d Abbott wrote in a statement released Thursday. \u201cTexas requires companies to put communities first, protect our natural resources and power grid, and respect the quality of life of our residents. Diode did the right thing by withdrawing their project. If other data center developments refuse to meet these standards, I expect them to do the same.\u201d<\/p>\n Abbott\u2019s tougher stance on data center developments and how they affect rural areas is what drove Diode Ventures co-presidents Rachel Attebery and Josh Johnson to cancel the project.<\/p>\n \u201cAfter completing our initial evaluation and consulting with the community, as well as state and local officials, we have determined not to advance the site beyond preliminary planning and have concluded our work on the site,\u201d Diode Ventures told the Texas Tribune in a written statement. \u201cDiode remains committed to responsible development, ensuring careful assessment of each site and moving forward with only those that align with infrastructure availability, community priorities and long-term project viability.\u201d<\/p>\n Cedar Creek, where the data center was to be built, and nearby watersheds have been the focus of several conservation efforts, including a\u00a0federal lawsuit,<\/a>\u00a0in Henderson County.<\/p>\n Save Cedar Creek Lake<\/a>, a volunteer-run coalition formed in early 2026 to push back against the proposed data center. Thousands of community members signed a petition demanding the project be canceled and asking lawmakers to establish strong requirements for data centers. The coalition announced it was going to take that fight to Austin during a July 27 committee meeting.<\/p>\n The company\u2019s retraction came days later.<\/p>\n All across the state, data centers have faced more scrutiny by policymakers. Abbott, who has long championed business development,\u00a0released sweeping regulatory recommendations<\/a>\u00a0on data centers for the Legislature to pass in the 2027 session. Among them are requiring data centers to pay for their own grid interconnection and infrastructure costs, requiring closed-loop water systems, and banning federal sales tax exemptions for data center proposals.<\/p>\n Henderson County, like many others across Texas, signed a resolution asking Texas lawmakers to grant them authority to regulate these centers. Counties don\u2019t currently have the power to demand any accountability or ensure their communities are protected. Spivey wants to see that change, she said.<\/p>\n \u201cThere\u2019s not much the county can do,\u201d Spivey said. \u201cWe don\u2019t have zoning rules and regulations.\u201d<\/p>\n