Donald Trump’s ambitious plans to expand US artificial intelligence infrastructure could encounter significant delays as Texas Republicans advance legislation imposing new regulatory hurdles on data centers.
Earlier this year, the Trump administration announced a joint venture called Stargate to build 20 data centers providing computing power for AI projects. This initiative, backed by OpenAI, SoftBank, Oracle, and UAE-backed investor MGX with pledges up to $500bn, aims to help the US compete against China for technology leadership.
Texas was selected for the first data centers due to its traditionally loose regulations and existing energy infrastructure. However, the proposed Texas legislation SB6 would introduce new regulatory measures, including a six-month review process on top of the existing 6-18 month evaluation period, potentially creating a two-year approval timeline.
The bill would also require companies to pay additional fees to the Texas grid operator and install backup generators, substantially increasing construction costs. These requirements could prompt tech companies to scale back planned construction in Texas.
If companies abandon Texas for their data centers, they might not build them at all, directly undermining Trump’s AI initiative. While other states have expressed interest in hosting these projects, they lack Texas’s established infrastructure.
“These heavy-handed mandates risk stifling investment on exactly the infrastructure needed for Trump’s AI initiative,” said Vance Ginn, former associate director of economic policy at the White House OMB during Trump’s first term.
The legislation, a priority for Texas Lieutenant Governor Dan Patrick, aims to prevent another disaster like Winter Storm Uri in 2021, which caused widespread power outages and at least 246 deaths. Patrick defended the bill, stating: “Senate Bill 6 actually ensures President Trump’s Stargate Plan is a success. We have made clear we are in lockstep with the President on his goal to make America number one, and dominate China on AI.”
The prospect of increased regulatory hurdles combined with global slowdowns in computing infrastructure development and uncertainty from Trump’s tariff plans could have far reaching consequences. Microsoft has already abandoned several US data center projects, though the company says it remains on track for significant investments.
Trump’s tariffs including a 10% tariff on all imports and a 125% tariff on Chinese imports further complicate matters since many data center components come from overseas suppliers.
These challenges arise as Chinese competitor DeepSeek recently released AI models developed much faster than their US counterparts, intensifying concerns about the global AI technology race.
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