Clear majorities of Texans oppose the construction of AI data centers near them, and clear majorities likewise favor more AI regulation. As such, politicians from both major parties are now pledging to rein in the booming industry.
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Gov. Greg Abbott
AI has been all over the news lately — and if you’re a proponent of the AI industry, not in a good way.
Recent surveys show clear majorities of Texans oppose the construction of AI data centers near them, and clear majorities likewise favor more AI regulation. As such, politicians from both major parties are now pledging to rein in the booming industry.
Here’s a quick recap of what’s been said about AI center development from some of the state’s top elected leaders, and what we might expect during the upcoming 90th Texas Legislature convening in January.
What Leaders are Saying
Both Gov. Greg Abbott and Lt. Gov. Dan Patrick have called for new restrictions on data centers development. In many respects, this rhetoric represents a shift from less critical prior positions taken earlier. For instance, Gov. Abbott back in 2025 called Texas the “epicenter of AI development.”
What specifically has Gov. Abbott called for? In a June 10 letter to PUC chairman Thomas Gleeson, he directed the regulatory agency to ensure that “residential electric bills are not negatively affected” by data centers and that the agency take action to ensure data centers pay their own infrastructure costs. The governor also pledged to work with the Texas Legislature to ensure data centers add to the state’s electric capacity, to require new data centers have more efficient water use technology, to require data centers to report annually to the PUC their water and electric usage, to repeal unnecessary incentives for data center construction, and for the implementation of other measures such as land setbacks.
Lt. Gov. Dan Patrick
The governor also has directed regulatory agencies to take specific action related to data centers. On Aug. 3, for instance, he called for the PUC to halt all interconnection approvals for data centers pending a review of their water and energy consumption and their implications for property rights. On Sept. 21, he directed the Texas Commission on Environmental Quality to halt all environmental and operational permits for data centers until the grid and water audits are finalized.
Lt. Gov. Dan Patrick previously expressed support for AI Data Center development with the caveat that they should not undermine grid reliability. “Texas should be the “world leader in AI …(but) the key is to ensure they have the power they need without a major impact to our electrical grid,” he said in January 2025. To that end, the lieutenant governor has added data centers to the interim charges he has given to Senate committees for further investigation. Patrick also has expressed support for a provisional moratorium on AI Data Center development.
What can we expect during the upcoming Texas Legislature
Judging from comments made by lawmakers and regulators, we also have a growing sense of what sort of AI-related legislation might be considered by the Texas Legislature when it convenes in January.
First, let’s consider what sort of ideas have been floated in legislative hearings.
- More County Authority
Currently, cities possess some regulatory authority over AI data center land use that counties lack. This has led some cities to contemplate the annexation of data centers located along municipal outskirts to exert more development control over them. As such, Rep. Cody Vasut of Angleton and other lawmakers have floated the idea of giving counties more regulatory land-use authority to control AI data centers. - Ending Tax Exemptions
Data centers received sales tax breaks under laws adopted in 2013 and 2015. The annual cost to the state treasury of those tax breaks previously were estimated at $5.4 million but now have ballooned to more than $1.5 billion. Sen. Joan Huffman, chair of the Senate Finance Committee, has said that it may be necessary to repeal the sales tax exemption for data centers. - Bring Your Own Power
Lawmakers might consider facilitating a process whereby data center developers would be authorized to connect to the grid in an accelerated fashion if they invest in their own dedicated off-grid electric generation. For that to occur, certain statutory requirements would have to be clarified.
In a letter to Gov. Abbott regarding AI data center development, PUC Chairman Gleeson also has enumerated possible legislative changes. These include clarifying ERCOT’s authority to directly communicate shut-down instructions to AI data centers during emergencies (as opposed to going through the interconnection utility), to requiring AI data center to register both with the PUC and ERCOT; and to require AI data centers to comply with legislation meant to prevent foreign control over critical infrastructure.