Texas AG Ken Paxton qualifies support for data centers: 'A yes with conditions'

Texas Attorney General and Republican U.S. Senate candidate Ken Paxton outlined what he called a conditional “Texas first” approach to data center development in an attempt to quell opposition from residents concerned about losing their water, particularly in rural areas, and spikes in utility rates.  

Speaking to an audience of small business owners and community leaders at the “In Dialogue: Texas” event hosted by the United States Hispanic Business Council (USHBC) in Fort Worth on Saturday, Paxton said he sees data centers as essential rather than optional. “This is not an extreme yes-no. This is a yes with conditions,” he told USHBC President and CEO Javier Palomarez. 

Under his plan, Paxton said any new data center would be required to generate enough of its own power so it doesn't draw electricity from the grid and raise rates for other customers. Facilities would also need closed-loop water recycling systems “so that you’re not draining the water resources of whatever county or city you’re in.”

Paxton further insisted that Chinese hardware, software or other components be banned from the facilities. “We also need to make sure that the Chinese are not, they don’t have their hardware, their software, whatever components. They can have nothing to do with our data centers because we all know we’re competing against them and it may be a competition for survival,” he said.

Allowing China to gain an advantage in artificial intelligence, he warned, would enable it “to dominate us and to hurt us, which is their goal.”

Location is also a key factor, Paxton added, who said data centers need not be placed in residential neighborhoods when “there’s plenty of open space in Texas.” He voiced support for Gov. Greg Abbott’s temporary moratorium, while urging eventual progress with “reasonable restrictions so that these data centers are not harming people. They’re actually benefiting.”

The economic upside is significant, he argued. Data centers create “jobs of the future” and “really good paying jobs,” he added, claiming they are “an economic boom for the country and it’s going to be an econ huge economic boom for Texas. So, let’s take the good and get rid of the bad.”

Palomarez noted Texas already ranks near the top nationally with roughly 450 data centers, behind only Virginia.

USHBC, which advocates for the nation’s 4.5 million Hispanic-owned firms contributing more than $850 billion annually to the economy, hosted the nonpartisan conversation as the first in a two-part series with leading Senate candidates.

Paxton’s opponent and Democratic U.S. Senate nominee, Texas state Rep. James Talarico, was scheduled to speak with the organization on Wednesday night. Talarico has pushed for new regulations on data centers amid growing voter frustration over rising utility bills, water use and lack of community input.

In July, Talarico called for safeguards on water use, electricity demand and community impacts. He advocated requiring large energy users like data centers to fund infrastructure improvements rather than passing costs to consumers, allowing local communities a greater say, and ensuring good-paying union jobs and fair tax contributions.

“Data centers are jacking up utility bills across the state of Texas,” he said at an appearance in downtown Austin. “Billionaire-backed politicians are giving sweetheart tax deals to giant AI companies and then sticking us with the bill.”