Data centers emerge as key issue in Texas politics: where candidates for governor, U.S. Senate stand

Data centers have emerged as a critical political issue in Texas, drawing significant public backlash over concerns about water and electricity consumption, and utility costs, just months before the November election.

Democratic gubernatorial candidate Gina Hinojosa, along with other Democrats, is advocating for a moratorium on new data center construction until the state legislature can pass new protections for residents. She has also urged three-term incumbent Governor Greg Abbott to call a special legislative session to address the issue, arguing that the lack of regulations leaves communities vulnerable.

Governor Greg Abbott has responded by placing a pause on any new data center permits, mandating that projects undergo comprehensive audits by ERCOT and the Public Utility Commission. These audits will assess water and electricity usage, funding, and plans to mitigate noise and light pollution. Abbott stated during a news conference in Fort Worth that his established "guardrails" mean data centers cannot deplete community water or strain the state's power grid, must lower electricity costs, and cannot be built in rural neighborhoods. He indicated these audits would take months to complete.

In the U.S. Senate race, Democrat James Talarico unveiled his "Hold Data Centers Accountable Plan." His proposal includes ending state sales tax incentives for data centers, establishing minimum federal requirements for grid protection, environmental safeguards, job transparency, and empowering local communities in development decisions. Talarico, speaking in Abilene, also emphasized protecting Texas water by requiring new data centers to use closed-loop systems to reduce consumption.

Republican Ken Paxton introduced his "Texas First Data Center Plan," which supports Governor Abbott's state-level guardrails. Paxton's plan also includes co-sponsoring the DATA Act to streamline federal regulations and create new power systems to prevent increased electricity costs for Texans. He also proposes prohibiting AI data center construction in rural Texas, reducing local impacts, and repealing sales tax exemptions. Additionally, Paxton intends to file bills to prohibit Chinese technology in U.S. data centers and hold companies criminally liable for AI chatbot harms to children. The article notes that Hood County had previously requested an Attorney General's opinion on implementing a data center moratorium but its Commissioners Court voted against the measure. State sales tax incentives, approved in 2013, are projected to cost over $3 billion in the next two years, with both Republican and Democratic leaders now aiming to eliminate them in the upcoming legislative session.