Data Center Rush Poses Conflicts for Law Firms With Energy Ties

The data center boom in Texas is creating conflicts for law firms that represent both major utilities and data center developers. Three of the largest firms in Texas - Vinson & Elkins, Baker Botts, and Jackson Walker - are advising both utility companies like Oncor Electric Delivery, CenterPoint Energy, and Texas-New Mexico Power, as well as AI data center developers like Fermi Inc., LandBridge Co., and CloudBurst Data Centers Inc. This has led to concerns about managing the competing interests of utilities trying to serve growing electricity demand, and data centers needing fast power connections. Law firms are using conflict waivers and ethical walls to try to navigate these conflicts, but may ultimately have to pick sides as Texas imposes new regulations on data center power use. The governor signed a law last year directing the Public Utility Commission of Texas to enact new rules to ensure data centers pay their fair share and limit their impact on the state's power grid. Major utilities, tech giants, and energy market players are all pushing to shape these new regulations, creating challenges for law firms caught in the middle.