Texas Attorney General Paxton proposes data center regulations

Texas Attorney General Ken Paxton, who is also running for U.S. Senate, has unveiled a plan to impose regulations on data center development within the state. According to an August 24 report by Fox News, Paxton's initiative aims to address increasing public concern over rising power and water costs, as well as the safety implications of artificial intelligence chatbots. The proposal seeks to establish sweeping liability for data centers powering AI, mandate that data centers cover grid-related costs, and grant local governments increased power to obstruct new data center projects.

Ross Marchand, an attorney and executive director of the Taxpayers Protection Alliance, criticized Paxton's plan in an opinion piece for the Houston Chronicle, arguing it would be detrimental to Texas's economy. Marchand contends that the proposal, which he likens to a similar stance taken by Democratic senate nominee state Rep. James Talarico, would eliminate jobs, deter innovation, and primarily enrich trial lawyers through a wave of litigation stemming from vague liability standards. He highlights that data center construction has created over 216,000 jobs since 2022 and contributes significantly to the state's GDP.

Marchand refutes the premise that data centers are major consumers of water and power, citing an analysis that shows they account for only 0.3% of Texas's water consumption and 3% of its electricity usage in 2025, with newer facilities adopting resource-saving technologies. He argues that concerns about power grid strain and water supplies should be addressed through market-driven utility pricing and infrastructure upgrades rather than restrictive policies. Marchand asserts that adopting such regulations would undermine Texas's pro-business environment, driving investment and jobs to more business-friendly states.