AG Ken Paxton Unveils Four-Point Texas Data Center Plan
Texas AG Ken Paxton has unveiled a four-point plan to regulate the state's data center industry, aiming to limit costs and risks. The proposal includes federal legislation to restrict Chinese technology and penalize companies for AI harm, support for independent power generation, and state actions like repealing tax exemptions and backing Gov. Abbott's new audit standards for grid interconnection. These measures seek to address concerns over electricity consumption, water usage, and community impacts.
Texas Attorney General Ken Paxton has introduced a four-point plan aimed at managing the rapid expansion of the state's data center industry. The proposal seeks to mitigate associated costs and risks while supporting the infrastructure needed for artificial intelligence. Paxton's plan includes advocating for federal legislation in the U.S. Senate to prevent Chinese technology in American data centers and impose criminal liability on data center companies whose AI platforms harm children. He also proposes co-sponsoring the DATA Act, which would enable qualifying data centers to generate their own electricity, aligning with former President Donald Trump's framework for streamlined permitting.
At the state level, Paxton supports repealing Texas' sales-tax exemption for data centers and endorsing Governor Greg Abbott's recently established audit standards. These standards, enforced by the Public Utility Commission of Texas and ERCOT, require developers to disclose information on electricity consumption, water use, public incentives, and community impacts before interconnecting with the state grid. Companies like Google, Rowan, and CleanSpark have committed to these standards, while Diode Ventures withdrew an East Texas project after failing to meet them.
The statewide debate, which Trump has cautioned could be a "mistake" for Texas, focuses on critical issues such as electricity consumption, water use, taxpayer incentives, noise, and local control. The immense scale of proposed data center development, with ERCOT tracking nearly 90% of large-load interconnection requests from data centers, has heightened concerns about grid capacity. A temporary restraining order in Westlake, North Texas, has also highlighted local opposition and issues with public notice regarding a proposed data center. Paxton's federal proposals would require congressional action, while state measures depend on the Texas Legislature and regulatory bodies.