A proposed data center in Henderson County, East Texas, has been withdrawn following months of community opposition and increased pressure from state leaders regarding its environmental impact.
Diode Ventures, based in Kansas, announced it will not proceed with its planned data center near Cedar Creek Reservoir, citing Gov. Greg Abbott’s new development standards for rural Texas data centers. After evaluating the project and consulting with residents and officials, the company determined the site was unsuitable for development.
The proposed facility faced widespread criticism for its potential impact on local water resources. Reports indicated the project would take about 12 years to complete and could consume up to 5 million gallons of water per day from Cedar Creek Reservoir by its fifth year.
The location also raised concerns among residents, as the proposed site was within a residential subdivision surrounded by hundreds of homes. This prompted questions about noise, infrastructure demands, environmental impacts, and long-term effects on the community.
Water usage was a primary concern. Cedar Creek Reservoir is a key water source for North Texas, including Fort Worth. With below-average rainfall and declining lake levels, residents feared the data center’s demand would further strain the resource.
Local officials welcomed the withdrawal. Henderson County Commissioner Wendy Spivey called it a significant victory for the community but warned the issue remains unresolved. She noted that property owners may pursue future developments, and another data center proposal could arise without stronger local regulations.
The canceled project is now part of a broader statewide debate on the rapid expansion of data centers in Texas. As demand for artificial intelligence, cloud computing, and digital infrastructure grows, companies are increasingly targeting rural Texas for its available land, water access, and limited local regulations.
In response to these concerns, Gov. Greg Abbott recently called for stricter oversight of future data center developments. While supporting continued business investment, Abbott emphasized that companies must prioritize local communities, protect natural resources, and avoid unnecessary pressure on the state’s water supply and electric grid.
Among the recommendations expected to be considered are requiring data centers to fund their own electrical infrastructure, adopting closed-loop water systems to reduce water consumption, and eliminating certain tax incentives for qualifying projects. Company leaders stated that future projects will only move forward if they align with available infrastructure, community priorities, and long-term sustainability goals.
The withdrawal is also a major victory for Save Cedar Creek Lake, a volunteer coalition formed to oppose the project. The group collected thousands of petition signatures for stronger data center regulations and planned to continue advocating for legislative reforms to protect Texas communities and water resources.
Despite the cancellation, local officials believe broader challenges remain. Many Texas counties have limited authority to regulate data centers due to a lack of zoning laws or land-use controls. Henderson County and others are urging state lawmakers to grant local governments greater oversight to better evaluate projects that could significantly affect their communities.
The cancellation underscores the growing scrutiny of large technology infrastructure projects in Texas as policymakers work to balance economic growth, environmental sustainability, reliable utilities, and local residents’ interests.
Source: Texas Tribune
Author: Jess Huff
Original Link: https://www.texastribune.org/2026/07/23/east-texas-data-center-withdrawn/