Democratic U.S. Senate nominee James Talarico on Wednesday called for a broad set of tighter regulations on data centers in Texas, seizing on what has become a potential political liability for Republicans who until recently had embraced the explosion of artificial intelligence-driven development in the state.
“Texas should be a leader when it comes to innovation and technology, but that only works if Texans get a say and get a share of that economic growth — and that’s not what’s happening right now,” Talarico said at a news conference in Austin where he rolled out his plan. “We’re often told in our politics that we have to choose between policies that are pro-growth and pro-people. I reject that choice, and the plan that we’re outlining today to hold data centers accountable, I think, strikes a balance between welcoming those investments while also protecting working people.”
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Talarico’s proposals include:
- setting minimum federal requirements to protect the grid, environment, jobs and transparency related to new data center development, “preventing a race to the bottom for communities competing to recruit data centers;”
- ending “sweetheart tax deals for big tech companies” by repealing the state’s data center sales tax exemption;
- ensuring large energy users pay for their own infrastructure and grid interconnection costs;
- requiring data centers use closed-loop water systems that reuse a fixed amount of water;
- granting local communities the authority to approve and reject data center development in their towns;
- releasing government records detailing individual tax break data for data center facilities in Texas.
Talarico is among several Texas Democrats pushing back on data centers, calling the rapid influx of the facilities in Texas a product of corporate greed and Republican leadership more sympathetic to big business than everyday people. State Rep. Gina Hinojosa, the Democratic candidate for governor, visited Amarillo and Lubbock over the weekend on a tour focused on rural communities’ concerns about data centers, and she was poised to announce her own data center plan Thursday.
“Data centers are jacking up utility bills across the state of Texas,” Talarico said. “Billionaire-backed politicians are giving sweetheart tax deals to giant AI companies and then sticking us with the bill.”
The Texas Tribune reported in April that the state is poised to lose $3.2 billion in tax revenue over the next two years because of a sales tax exemption granted to data centers that lawmakers first approved in 2013, when the facilities were smaller and used fewer resources. Local officials have asked the state to give them more authority to regulate data center development in their communities. Tracking data center growth in Texas is also difficult, as the state does not log new data center construction, and information about their location and energy use has not been made public.
Republican officials, including Gov. Greg Abbott and Lt. Gov. Dan Patrick, have recently projected greater concern around the impact of data center development on communities, though President Donald Trump remains a staunch advocate for the rapid growth of AI-related facilities. Talarico’s GOP opponent, Attorney General Ken Paxton, has been quieter on the issue. A spokesperson for Paxton’s campaign did not immediately provide comment Wednesday.
Recent public polling found that a majority of Texans oppose the construction of data centers in their community, with opposition strongest in rural communities, where data centers are more likely to be built and which have historically voted red.
Last week, state Rep. Vikki Goodwin, state Sen. Sarah Eckhardt and Clayton Tucker — the Democratic nominees for lieutenant governor, comptroller and agriculture commissioner, respectively — backed a moratorium on data center development.
“This isn’t about being anti-technology, it’s not about being anti-AI,” Tucker, who has made reining in data center development central to his campaign, said. “It’s about who controls that AI. Because right now, it’s not us. It is a few greedy folks from Wall Street, from Silicon Valley, some of them not even based in the United States.”
Talarico did not call for a moratorium, saying he wanted to support innovation and technology while ensuring local communities had a say in projects looking to build near them. Projects that did not meet “basic guardrails,” he said, should not move ahead.
His plan overlaps significantly with a sweeping regulatory scheme Abbott proposed last month. Abbott later also called for a ban on data center development in “rural neighborhoods.”
The three-term governor, who is running for a fourth, previously championed the growth of data centers, declaring in November that Texas would become the “epicenter of AI development” while announcing Google had made a $40 billion investment in cloud and artificial intelligence infrastructure in the state. Lawmakers passed an addition to the sales tax exemption in 2015, during Abbott’s first term.
Talarico said Wednesday he didn’t know the details of Abbott’s plan, but that he was “willing to work with anybody, including the governor, to pass these commonsense regulations.”
“It should be plain for anybody to see, whether it’s the governor or whether it’s our campaign,” he said. “All of us are hearing the same thing from Texans all over the state, and that is that we don’t have a balance between welcoming growth and protecting people.”
In a statement to the Tribune after the news conference, Talarico said the governor “signed one of the country’s biggest data center giveaways. If he is serious about helping working Texans, he should immediately end these sweetheart tax breaks for data centers.”
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