AUSTIN, Texas — Texas Attorney General and Republican U.S. Senate candidate Ken Paxton unveiled a data center policy Monday as growing opposition to the industry becomes an issue in the 2026 midterm elections, proposing restrictions on Chinese technology, new criminal penalties and changes to tax incentives.
Paxton said his “Texas First Data Center Plan” would ban Chinese technology from powering U.S. data centers and hold data center companies criminally liable if their facilities power AI chatbots that undermine children’s safety.
He also said he would support U.S. Sen. Tom Cotton’s DATA Act, which would ease federal regulations governing off-grid power systems for data centers.
“There’s no doubt in my mind that the United States will beat the Chinese Communist Party in the AI race,” Paxton said. He said his plan would protect Texas communities while supporting the country’s position in artificial intelligence.
Paxton also endorsed Gov. Greg Abbott’s state data center policies, including proposals to prohibit AI data centers in rural neighborhoods, repeal sales tax exemptions and require data centers to pay for the electricity they consume.
Democratic state Rep. James Talarico, Paxton’s Senate opponent, accused Paxton of changing his position after accepting nearly $450,000 from data center-affiliated donors, according to NOTUS.
“Ken Paxton has taken nearly half a million dollars from the data center industry and voted to flood Texas with data centers by giving them billions in tax handouts,” Talarico said.
Talarico also criticized Paxton’s office for not issuing an opinion on a Hood County request involving a proposed moratorium on data center development.
The two candidates have proposed several similar restrictions, including requiring data centers to cover their electricity and infrastructure costs and ending tax incentives.
Paxton voted in 2013 as a state senator to create a sales tax exemption for data centers. The exemption was estimated at $14.6 million in 2014 and is now projected to cost $3.3 billion over the next two years.
Talarico has additionally proposed giving local governments more authority to decide whether data centers can operate in their communities and establishing minimum federal requirements for new projects.
The issue has gained attention as Texas continues to attract data center development. More than 300 data centers operate in the state, with at least 200 additional projects under development, according to an ABC News analysis.
Public opposition has focused on concerns over electricity costs, water use and environmental impacts, while industry representatives have argued that the projects create jobs and generate investment.
A June Texas Politics Project poll found that a majority of Texans and nearly two-thirds of rural Texans opposed building a data center in their communities.
Joshua Blank, research director of the Texas Politics Project at the University of Texas at Austin, said the issue has become politically significant because it intersects with concerns over living costs, energy and access to public resources.
Abbott has also shifted his position as opposition has grown. After previously promoting Texas as a center for artificial intelligence development, he has directed state regulators to ensure data centers cover their electricity infrastructure costs, phase out tax incentives and pause new grid connection approvals while officials assess their impact on the power grid, water resources and communities.
Democratic state Rep. Gina Hinojosa, who is challenging Abbott, has also made data centers a central issue in her campaign.
Blank said the issue presents challenges for Republicans because GOP voters remain divided over data center development.
The National Republican Senatorial Committee also warned in an internal memo that support for data centers could hurt Republican candidates in key Senate races.
