Texas Data Center Transparency and Standards Act

By: ___________________

H.B. No. _____

A BILL TO BE ENTITLED AN ACT

relating to the regulation of data center operations in this state, including transparency reporting, universal baseline operating standards, and coordination with the Texas Energy and Intelligence Infrastructure Security Board.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. SHORT TITLE.

This Act may be cited as the Texas Data Center Transparency and Standards Act.

SECTION 2. FINDINGS AND PURPOSE.

The legislature finds that:

(1)data centers and high-density computing facilities are a critical and growing part of the Texas economy and of the nation's information-technology infrastructure;

(2)Texas welcomes responsible data-center investment that respects Texas resources, Texas communities, and Texas sovereignty;

(3)modest, transparent regulation paired with strong voluntary incentive structures, administered by the Texas Energy and Intelligence Infrastructure Security Board under Chapter 481A, Government Code, is the appropriate Texas-first response to the growth of this industry; and

(4)this chapter establishes the universal baseline of disclosure and operating standards that apply to every qualifying data center facility in this state; the voluntary incentive structure, including the certification of voluntary Power Production Compacts, is established separately in Chapter 481A, Government Code.

SECTION 3.

Subtitle B, Title 2, Utilities Code, is amended by adding Chapter 39B to read as follows:

CHAPTER 39B. DATA CENTER TRANSPARENCY AND UNIVERSAL STANDARDS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 39B.001. DEFINITIONS.

In this chapter:

(1)"Annual disclosure report" means the report required to be filed annually by the operator of a qualifying data center facility under Section 39B.003.

(2)"Board" or "TEIISB" means the Texas Energy and Intelligence Infrastructure Security Board established under Chapter 481A, Government Code.

(3)"Commission" means the Public Utility Commission of Texas.

(4)"Continuous load" means the average annual load of the facility, measured in megawatts, calculated using the trailing twelve-month average of the facility's metered draw from ERCOT, from co-located generation, or from any combination of those sources.

(5)"Data center" means a facility used primarily to house computer servers, networking equipment, data storage equipment, and associated electrical and cooling infrastructure for the processing, storage, retrieval, or transmission of digital data.

(6)"ERCOT" means the Electric Reliability Council of Texas.

(7)"Existing data center facility" means a data center facility that is operating, or that holds all required state and federal permits and has commenced construction, on the effective date of this chapter.

(8)"Qualifying data center facility" means a data center facility with a continuous load of 50 megawatts or more, whether served by a single point of interconnection or by aggregated points of interconnection on a single campus.

(9)"Texas-certified Power Production Compact" means a Power Production Compact certified by the Board under Chapter 481A, Subchapter F, Government Code.

(10)"Texas-domiciled" means a person organized under the laws of this state, with its principal place of business in this state, and registered with the secretary of state under Title 1, Business Organizations Code.

(11)"Universal baseline operating standards" means the operating standards adopted by the Board under Section 39B.004 and Chapter 481A, Subchapter G, Government Code, that apply to every qualifying data center facility in this state.

Sec. 39B.002. APPLICABILITY; EXEMPTIONS.

(a) This chapter applies to a qualifying data center facility that proposes to commence operations or to expand operations in this state on or after the effective date of this chapter, and to an existing data center facility on the transition schedule under Section 5 of the Act enacting this chapter.

(b)Aggregation of points of interconnection on a single campus is determined by the Board under rules adopted under Section 481A.017, Government Code.

(c)This chapter does not apply to:

(1)a data center facility with a continuous load of less than 50 megawatts;

(2)a state agency data processing facility operated under Chapter 2054, Government Code; or

(3)a data processing facility owned and operated by an institution of higher education for academic research purposes, provided the facility's continuous load does not exceed 25 megawatts.

(d)This chapter establishes the universal baseline of disclosure and operating standards applicable to a qualifying data center facility. Nothing in this chapter requires participation in a Texas-certified Power Production Compact under Chapter 481A, Subchapter F, Government Code. Participation in a Power Production Compact is voluntary.

SUBCHAPTER B. TRANSPARENCY REPORTING

Sec. 39B.003. ANNUAL DISCLOSURE REPORT.

(a) Not later than February 1 of each calendar year, the operator of a qualifying data center facility shall file with the Board an annual disclosure report covering the preceding calendar year that includes:

(1)the facility's name, street address, county, and operator of record;

(2)the facility's nameplate computing capacity and the facility's trailing twelve-month continuous-load average;

(3)identification of each source of water used by the facility, including municipal potable water, reclaimed water, on-site captured water, groundwater, and surface water;

(4)the facility's annual water consumption, broken down by source under Subdivision (3), in gallons;

(5)the facility's annual electricity consumption in megawatt-hours, with separately identified amounts drawn from ERCOT, from co-located generation, and from any other source;

(6)the facility's annual natural-gas consumption, if any, in million British thermal units;

(7)a description of the facility's cooling architecture, including identification of closed-loop, open-loop, evaporative, or hybrid systems on both the server side and the power side; and

(8)a yes-or-no statement of whether the facility holds a Texas-certified Power Production Compact under Chapter 481A, Subchapter F, Government Code, and, if so, the certification number and effective dates.

(b)The Board shall maintain a public registry of annual disclosure reports filed under this section. The public registry is a public record under Chapter 552, Government Code, except for trade-secret information protected under Section 552.110, Government Code, and except for security-sensitive information protected under Chapter 481A, Subchapter E, Government Code.

(c)The Board shall publish on or before May 1 of each calendar year a consolidated public report containing nonproprietary aggregated information from the annual disclosure reports filed under this section.

SUBCHAPTER C. UNIVERSAL BASELINE OPERATING STANDARDS

Sec. 39B.004. UNIVERSAL BASELINE OPERATING STANDARDS.

(a) A qualifying data center facility that commences operations on or after the effective date of this chapter, and an existing data center facility undertaking a material expansion of continuous load on or after that date with respect to the expanded load, shall:

(1)use a closed-loop cooling system for power-side equipment, including for generator-set cooling and uninterruptible power supply cooling;

(2)disclose every water source identified under Section 39B.003(a)(3) at the time the operator files an application for an operating license under Chapter 481A, Government Code, or for ERCOT large-load interconnection under Section 39.107, Utilities Code, whichever is earlier; and

(3)comply with the universal baseline emissions standards adopted by the Board under Chapter 481A, Subchapter G, Government Code, including the standards for nitrogen oxides emissions and continuous public emissions monitoring applicable to on-site combustion equipment.

(b)The standards under Subsection (a) are the universal baseline that applies to every qualifying data center facility. The stricter Net Water Neutrality standard adopted under Chapter 481A, Subchapter K, Government Code, applies only to a facility that holds a Texas-certified Power Production Compact under Chapter 481A, Subchapter F, Government Code, as a benefit of that certification.

Sec. 39B.005. RESOURCE-USE DISCLOSURE AT APPLICATION.

(a) Not later than the 90th day before the date a qualifying data center facility proposes to commence operations or to commence an expansion of continuous load, the operator shall file with the Board an initial resource-use disclosure that includes:

(1)the information that would be reported under Section 39B.003(a)(1) through (7) on a projected, full-build-out basis;

(2)the operator's identification of every water source on which the facility intends to rely, including the volumetric reservation, contract, or permit number for each source;

(3)the operator's identification of every electricity source on which the facility intends to rely, including any co-located generation project and any contracted off-take arrangement; and

(4)a declaration of "yes," "no," or "undecided" regarding the operator's voluntary pursuit of certification of a Power Production Compact under Chapter 481A, Subchapter F, Government Code.

(b)An "undecided" declaration under Subsection (a)(4) does not prejudice an operator's later election to pursue or to forgo certification.

(c)The Board shall, by rule, establish the form and the filing procedure for the initial resource-use disclosure required by this section.

SUBCHAPTER D. TEXAS-FIRST PROCUREMENT POLICY

Sec. 39B.006. TEXAS-FIRST PROCUREMENT POLICY.

(a) It is the policy of this state that, in connection with a procurement decision made by a state agency under Chapter 2054, Government Code, or by an institution of higher education for a data processing service or co-location service exceeding the exemption thresholds under Section 39B.002(c), a Texas-certified data center facility and a Texas-domiciled data center operator are preferred over a comparable facility or operator that does not meet either standard.

(b)This section binds the State of Texas and its agencies and institutions in their own procurement decisions. This section does not bind a private actor and does not require a private actor to prefer any particular operator, facility, or vendor.

(c)The Board shall publish, in consultation with the Department of Information Resources, a model contract clause implementing the preference under Subsection (a).

SUBCHAPTER E. ENFORCEMENT

Sec. 39B.007.

ADMINISTRATIVE PENALTIES; FAILURE TO REPORT. (a) The Board may impose an administrative penalty against the operator of a qualifying data center facility that:

(1)fails to file an annual disclosure report required by Section 39B.003;

(2)fails to file an initial resource-use disclosure required by Section 39B.005;

(3)knowingly files a false or materially misleading report or disclosure under Section 39B.003 or Section 39B.005; or

(4)fails to comply with the universal baseline operating standards under Section 39B.004 to which the facility is subject.

(b)The administrative penalty may not exceed $5,000 per day per violation, and may not exceed $250,000 in the aggregate per violation. Each day a violation continues is a separate violation for purposes of accrual, subject to the aggregate cap.

(c)The Board shall, by rule, adopt a penalty matrix that considers:

(1)the seriousness of the violation;

(2)the history of previous violations;

(3)the amount necessary to deter future violations;

(4)efforts to correct the violation; and

(5)any other matter that justice requires.

(d)Administrative penalties collected under this section are deposited to the credit of the general revenue fund.

(e)Judicial review of an administrative penalty under this section is governed by Chapter 481A, Subchapter L, Government Code.

SECTION 4.

Section 39.107, Utilities Code, is amended by adding Subsection (n) to read as follows:

<u>(n) A large load customer, as that term is used in this section, that is a qualifying data center facility under Chapter 39B is also subject to the transparency reporting requirements of Chapter 39B and to the operating-license and coordination requirements of Chapter 481A, Government Code. This section may not be construed to require duplicative filings, and to the extent of any inconsistency between this section and Chapter 39B with respect to a qualifying data center facility, Chapter 39B controls.</u>

SECTION 5. SAVING AND TRANSITION.

(a) An existing data center facility that is operating on the effective date of this Act shall file the initial annual disclosure report required by Section 39B.003, Utilities Code, as added by this Act, not later than the 180th day after the effective date of this Act, and annually thereafter under that section.

(b)The universal baseline operating standards under Section 39B.004, Utilities Code, as added by this Act, apply only to a qualifying data center facility that commences operations on or after the effective date of this Act, and to a material expansion of continuous load by an existing data center facility commenced on or after that date with respect to the expanded load. An existing data center facility is not required to retrofit equipment in place on the effective date of this Act to meet the standards under Section 39B.004.

(c)Nothing in this Act requires an existing or a new qualifying data center facility to enter into a Power Production Compact. Certification of a Power Production Compact under Chapter 481A, Subchapter F, Government Code, is voluntary.

(d)An application for ERCOT registration or for a large load interconnection that is pending on the effective date of this Act and that, if granted, would result in a qualifying data center facility under Chapter 39B, Utilities Code, is subject to the initial resource-use disclosure requirement under Section 39B.005, Utilities Code, as added by this Act, on the schedule provided in that section.

SECTION 6. EFFECTIVE DATE.

This Act takes effect September 1, 2027.

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Drafted by Will Campbell for Texas, HD-109 — Pre-filing Draft v1.0

90th Texas Legislature, Regular Session

TEXAS DATA CENTER TRANSPARENCY AND STANDARDS ACT