Texas Attorney General Ken Paxton has unveiled a four-point plan to address the burgeoning data center industry in the state, a move that comes amidst a heated contest for the Senate seat against Democratic nominee James Talarico. The plan aims to establish guardrails for the expansion of data centers, which have become a political focal point due to rising concerns over power and water consumption.
Paxton's plan includes federal and state-level actions. At the federal level, he proposes authoring two bills to prevent Chinese technology from powering U.S. data centers and to create criminal liabilities for companies whose data centers host AI platforms that endanger children. He also intends to co-sponsor the DATA Act, which would allow data centers to generate their own independent power sources away from existing grids.
At the state level, Paxton's plan seeks to repeal sales tax exemptions for data centers, a policy he previously supported in 2013 as a state senator. This exemption, which required significant initial investment and employment, is credited with fueling the current boom in data center development. Paxton's proposal also aligns with recent directives from Texas Governor Greg Abbott, who has initiated measures to scrutinize new data center projects. Abbott's directive requires disclosure of power and water usage, financial incentives, community impact plans, and ownership details, and has reportedly halted approximately 1,800 data center projects.
Talarico has also made data centers a central issue in his campaign, criticizing Paxton for accepting campaign donations from data center companies. Talarico's proposed policies include repealing state tax exemptions for data centers, requiring them to cover all grid connection costs, mandating closed-loop water recycling systems, and granting local governments the authority to veto project developments.
Both candidates have faced scrutiny regarding their ties to data center-affiliated funding. Talarico's political operation has received substantial funding from LinkedIn co-founder Reid Hoffman, a proponent of data centers and their role in the AI race against China. Paxton has stated his plan prioritizes Texans and safeguards communities, while Talarico's campaign has accused Paxton of being influenced by corporate interests.
The debate over data centers in Texas intensifies as the state grapples with grid reliability issues and escalating utility costs, brought to the forefront by the AI industry's significant demand for power and water.