Texas Republicans Clash Over Data Center Regulation, With Both Candidates Aligning on Water Rules
Texas Governor Greg Abbott at the Republican National Convention. (Credit: Maxim Elramsisy via Shutterstock.com)
Texas, once welcoming data center developers, is now witnessing a shift as Republicans vie for the most stringent regulations, a move that has caught Big Tech's attention in a state hosting more data centers than any other.
A Shift in Policy
According to Reuters, this change is reflected on the ballot, with data centers becoming a significant issue in both the governor and US Senate races. This marks a departure from the previous decade when the industry was primarily viewed as an economic boon rather than a political concern.
The Candidates' Stances
Ken Paxton, the attorney general running for Senate, proposes a four-point plan:
- A federal DATA Act
- Closed-loop water systems
- Ban on Chinese technology in data centers
- Criminal liability for AI safety violations
On the Democratic side, James Talarico's platform includes:
- Ending state sales tax incentives that attracted the industry
- Establishing federal minimum standards
- Giving local communities more control over projects
- Mandating closed-loop water systems
The similarity between their proposals is noteworthy, indicating a shift from ideological debate to addressing real concerns, particularly regarding utility bills.
Abbott's Position
Greg Abbott, currently campaigning on his existing measures, maintains that:
"What I have done is working... The guidelines and guardrails I’ve established are now universally adopted across the state of Texas."
However, his stance has evolved since he ordered a pause on new grid connections in August, following a $40 billion Google investment just nine months earlier.
Numbers Behind the Change
Texas had 474GW of interconnection requests—about 90% from data centers—exceeding the state's peak demand by five times. This lack of regulation led to concerns about which projects would actually materialize and transparency issues, as only 28 out of 377 companies responded when Texas requested information on their water and electricity use.
The Democratic Challenge
Abbott's Democratic challenger, Gina Hinojosa, advocates for a moratorium and a special legislative session, arguing that developers lack regulations in Texas neighborhoods. Abbott has rejected this idea, citing incomplete grid operator data and planning to address the issue when lawmakers return in January. He also aims to protect residential ratepayers from data center infrastructure costs.