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Policypublished

Trump Backs Data Centers as Paxton Proposes Texas Limits on Grid Costs and Rural Siting

The dispute is shifting from whether AI infrastructure brings investment to who pays for the power it needs, and where the facilities can be built.

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Trump Backs Data Centers as Paxton Proposes Texas Limits on Grid Costs and Rural Siting
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A proposed Texas plan would make AI data centers pay for the extra power capacity they require, rather than shifting those costs onto electricity customers. That puts Ken Paxton, the state’s attorney general and a Republican Senate candidate, at odds with President Donald Trump, who argues that data centers bring jobs and substantial local tax revenue. The tension is over what remains after construction ends. OpenAI’s planned Ohio campus is projected to create 35,000 construction jobs over six years, but only about 2,500 permanent positions. Its power demands are also enormous: a dedicated power plant is expected to cost $33 billion, with another $4 billion planned for transmission and related infrastructure. Paxton’s proposed “Texas first” plan would require new capacity, repeal sales-tax exemptions, and support a ban on data centers in rural neighborhoods. It would also bar Chinese technology from powering U.S. data centers and create criminal liability if AI chatbots undermine children’s safety. None of those Texas conditions has become law. Public resistance is rising. An Annenberg Public Policy Center survey found opposition to a data center in respondents’ own area increased from 49 percent in March to 61 percent last month. Governor Greg Abbott has paused new Texas projects over grid concerns, while New York and Pennsylvania have tightened oversight. At the federal level, the EPA has eased some air-quality requirements for data-center power plants. The key question is whether Texas can turn “who pays” and “where can it be built” into workable rules without blocking the buildout Trump supports.

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3 key points

Texas is weighing whether AI data centers must finance added power capacity instead of shifting costs onto electricity customers. Ken Paxton’s proposed “Texas first” plan would repeal sales-tax exemptions, restrict rural siting, and impose new technology and safety rules, but it has not become law. The debate comes as the economic payoff looks uneven: OpenAI’s Ohio project projects 35,000 construction jobs but only...

  1. 01

    OpenAI’s Ohio campus projects 35,000 construction jobs over six years and about 2,500 permanent positions.

  2. 02

    The Ohio project includes a $33 billion dedicated power plant and $4 billion for transmission and related infrastructure.

  3. 03

    Paxton proposes requiring capacity additions, ending sales-tax exemptions, and banning new data centers in rural neighborhoods.

President Donald Trump is defending AI data centers as sources of jobs and local tax revenue while Texas Republicans press for limits aimed at protecting electricity customers and rural communities. The conflict centers on a practical question for the AI buildout: whether large new computing campuses add power capacity or deepen demand on the grids around them.

The power problem behind the jobs pitch

Trump said communities that reject data centers are making a mistake because projects bring jobs and substantial tax revenue. But the work attached to a campus can change sharply once construction ends.

OpenAI’s planned Ohio campus is expected to create 35,000 construction jobs over six years, then employ about 2,500 long-term staffers. It is also expected to use a dedicated power plant projected to cost $33 billion, with another $4 billion planned for transmission lines and related infrastructure.

Paxton’s proposed conditions

Ken Paxton, the Republican Senate candidate and Texas attorney general, has set out a “Texas first” plan focused on the impact of data centers. He says it would cut red tape while preventing facilities from raising Texans’ electricity bills.

The proposal reaches beyond electricity

  • It would repeal sales-tax exemptions and require data centers to add to Texas’s electricity capacity rather than draw from it.
  • It would support a proposed ban on new data centers in rural neighborhoods.
  • It calls for Chinese technology to be barred from powering U.S. data centers and for criminal liability if AI chatbots undermine children’s safety.

States and federal agencies pull in different directions

Governor Greg Abbott ordered a pause on new Texas data-center projects over grid-reliability concerns. New York implemented a data-center construction moratorium in July, while Pennsylvania imposed new environmental requirements on AI projects.

Federal policy is moving toward faster construction. In July, the Environmental Protection Agency exempted data-center power plants from certain Acid Rain Program air-quality requirements; officials said the change would give companies greater flexibility in where and how quickly they build AI facilities.

Paxton’s Democratic rival, James Talarico, accused him of supporting data-center tax handouts and taking nearly $500,000 from the industry. The allegation is unadjudicated, but it shows how data-center development has become a campaign argument over the public costs attached to private infrastructure.

The unresolved question is whether Paxton’s proposed capacity and bill protections can be turned into workable requirements while allowing the buildout Trump champions. That is the bargain Texas politicians are now debating, not a condition the state has yet adopted.

Sources

  1. siliconangle.comTrump defends AI data center buildout amid pushback - SiliconANGLE
  2. theguardian.comTrump-backed Ken Paxton unveils ‘Texas first’ datacenter plan aimed at ‘negative impact’

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