AI’s massive appetite for power, water ignites fight in high-stakes Texas Senate race

FIRST ON FOX: There’s an ugly political fight brewing in the Lone Star State over data centers, and both candidates running for Senate are racing each other to unveil their plans to slow the AI boom in Texas.

Texas Attorney General Ken Paxton is rolling out his own plan to address what has become a political pressure point in Texas politics during this midterm cycle: how to add guardrails to the explosion of data centers across the state as voters’ concerns rise about skyrocketing power and water costs.

The four-point plan, first obtained by Fox News Digital, details steps at the federal and state levels on the issue and comes in the waning weeks of a closely watched contest for power in the Senate between Paxton and state Sen. James Talarico, the Democratic nominee.

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“There’s no doubt in my mind that the United States will beat the Chinese Communist Party in the AI race,” Paxton said in a statement. “This plan will ensure that happens while putting Texas First, protecting our culture and land, and safeguarding our families and communities. My plan will also work to ensure that data centers are not utilized to power AI platforms that endanger our children.”

His plan comes after Talarico, who has used the issue of data centers as a political cudgel against Paxton, convened bipartisan roundtables and hit the Republican nominee for taking in nearly $500,000 in campaign donations to a variety of political action committees (PACs) that support him.

“Ken Paxton took nearly half a million dollars from data center companies and has ignored Texans in Hood County who asked him to help block a data center development in their community,” Talarico campaign spokesperson JT Ennis told Fox News Digital.

“While Ken Paxton funnels data center money into his campaign, James is fighting to hold data centers accountable. Texans can’t afford a Senator who’s bought by big data center companies,” he continued. “Texans can’t afford Ken Paxton’s corruption.”

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He’s also not scot-free from receiving data center-adjacent money, either.

Talarico’s political operation, through his Lone Star Rising PAC, has received about $10 million from LinkedIn co-founder Reid Hoffman, an advocate for data centers who has argued about the value that they present in the AI arms race against China.

“While James Talarico and his campaign infrastructure accept millions of dollars from data center-affiliated donors and put their interests first, I will lead with Texans at the forefront. That’s exactly why I am proud to release my 4-Point Plan that will put Texans First and protect our communities,” Paxton said.

The first three pillars of Paxton’s plan address actions against data centers at the federal level.

They would see Paxton author two bills in the Senate to prevent Chinese technology from powering data centers or being used in American infrastructure and creating criminal liabilities for data center companies if the centers empower AI chatbots that undermine children’s safety.

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He would also join as a co-sponsor on the DATA Act, a bill from Sen. Tom Cotton, R-Ark., that would create a new federal category for data centers to produce their own independent power away from preexisting power grids.

Talarico’s offering would repeal state tax exemptions for data centers, mandate that data centers cover 100% of grid connection costs, and require closed-loop water recycling systems. It would also give local governments the power to veto project developments.

Paxton similarly wants to undo sales tax exemptions for data centers, something he notably supported over a decade ago while in the state legislature.

Back in 2013, when he was serving as a freshman state senator in the Texas Legislature, Paxton voted in favor of 100% sales tax exemptions for data centers, which passed on a nearly unanimous vote out of the state Senate.

While that exemption required a hefty ground-floor investment of $200 million and employment requirements to receive, it also sparked the present-day boom in data centers.

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Meanwhile, at the state level, Paxton would also push Texas Gov. Greg Abbott’s new directive unveiled earlier this month to effectively freeze the data center explosion.

Abbott touted earlier this week that his directive has so far halted roughly 1,800 data center projects in the Lone Star State. It requires data centers to disclose how much power they’re using and whether they will produce independent power, their water consumption, financial incentives they’ve received, a plan to lower the impact on local communities and documented ownership of the center.

“These guidelines are now the universally applied standard in Texas,” Abbott said on X.