Tackling AI in Texas

September 26, 2024

We're closely following the issue of AI and emerging technologies and how the State of Texas is considering them, from the standpoint of policies and regulations, to their uses by public and private actors in Texas, to their integration into state agencies, the risks and benefits of AI and emerging technologies, plus how things like ethics, data privacy and cybersecurity factor in. We want to keep you updated on this fast-moving and complex issue, which is why we’ve created this newsletter – Tackling AI in Texas.

Below you’ll find info on the news driving the day on AI in Texas, plus recaps of events we attended and info on upcoming events we've got on our calendars.

1. ? Texas lawmakers in cities, state house and Washington, DC weigh policy decisions for AI and data center surge

As developers in Texas and around the country rush to incorporate AI and build data centers to support AI, elected officials at the local, state and federal levels are weighing new regulations on AI and data center development, the Houston Chronicle reports.

Why it matters: Lawmakers in Washington, DC say they're torn between wanting to stay ahead of China and other nations developing AI, while also protecting America’s power grid.

• In the Texas Capitol, some lawmakers have suggested the state put limits on data center development. “Can we just say, ‘No, you can’t come?’" State Sen. Donna Campbell, R-New Braunfels, said of data centers at a hearing in June.
• The increase in needed electricity also raises questions of who will pay for all the grid upgrades necessary. Association of Electric Companies of Texas (AECT) president Mark Bell told the Chronicle his members are finding it difficult to get enough new generation and transmission lines to meet the demand.

The big picture: AI has been identified as crucial to the future of the U.S. economy and national security, but in our increasingly digitized economy, which is quickly embracing electricity-hungry AI platforms, leaders are faced with difficult decision when considering the need for these new technologies plus the economic boost new development brings against the stress the development places on power grids and water resources.

• Data centers are fast becoming large source of tax revenue. In Fort Worth, for instance, a new data center is expected to deliver $14 million in additional revenue to the city and local school district.
• But, the large electricity loads needed to power this progress must be considered. The Chronicle article notes that a query posed to an artificial intelligence platform like ChatGPT uses about ten times the energy of a standard search engine. On top of that, the servers powering AI also require a large volume of water to keep from overheating.

What they’re saying:

• “Daniel Culotta, our chief innovation officer, recently testified before a Texas legislative committee about the City’s policies, use, and outlook for AI tools. He emphasized that our fundamental guiding principles for using AI are security, privacy, ethical use and risk mitigation even as we recognize the enormous opportunities to create efficiencies and better serve our residents,” - Austin Mayor Kirk Watson
• "AI's advance will depend not only on the design labs of Silicon Valley, but also on the gas fields of the Permian Basin. Natural gas is driving down carbon emissions worldwide as more countries displace coal in electricity generation, and natural gas will help power the rapid growth of artificial intelligence with its insatiable demand for reliable electricity." - Chevron CEO Mike Wirth

One more thing: Earlier in September the Biden Administration announced the creation of the “Task Force on AI Datacenter Infrastructure” to coordinate policy across government, along with other actions to ensure the United States continues to lead in AI tech.

2. ?? Microsoft and Constellation Energy partner up to power AI data centers

Constellation Energy and Microsoft announced the signing of a 20-year power purchasing agreement, in which one of the reactors at the Three Mile Island nuclear power plant in Pennsylvania would be brought back online to exclusively serve the energy needs of Microsoft’s massive data centers that help support AI.

Why it matters: The project can be seen as a model for future collaborations between energy and tech, potentially facilitating additional new nuclear projects through similar power purchasing agreements as the demand for data centers continues to grow.

The big picture: This landmark deal will provide carbon-free, reliable power to support Microsoft’s data centers and AI operations.

Public support: A statewide poll shows Pennsylvania residents favor restarting Three Mile Island by more than a 2-1 margin, driven by the rising energy demands of tech companies.

What they’re saying: “Powering industries critical to our nation’s global economic and technological competitiveness, including data centers, requires an abundance of energy that is carbon-free and reliable every hour of every day, and nuclear plants are the only energy sources that can consistently deliver on that promise,” Joe Dominguez, president and CEO of Constellation Energy.

3. ?? Texas Secures First-of-its-Kind Settlement with Healthcare Generative AI Company

Texas Attorney General Ken Paxton has secured a settlement with a healthcare-focused generative AI company after alleging the company made false and misleading statements about the efficacy of its product.

• According to the AG’s office, at least 4 Texas hospitals have been providing their patients’ healthcare data in real time to Pieces Technologies. Pieces then uses its generative AI product to “summarize” patients’ condition and treatment for hospital staff.
• The AG investigation, however, found that the Pieces AI technology wasn’t as accurate and effective as the company claimed.

Why it matters: Some are opining that issues like this will lead to increased regulatory oversight in Texas with respect to generative AI and particularly its use by healthcare companies, including stricter standards for output measurement in marketing and representation.

What they’re saying: “AI companies offering products used in high-risk settings owe it to the public and to their clients to be transparent about their risks, limitations, and appropriate use. Anything short of that is irresponsible and unnecessarily puts Texans’ safety at risk,” said Attorney General Paxton. “Hospitals and other healthcare entities must consider whether AI products are appropriate and train their employees accordingly.”

4. ?? RECAP: Chairman Capriglione addresses AI in the energy sector at TXOGA “Energy Elevated Technology Showcase”

At the Texas Oil and Gas Association's (TXOGA) "Energy Elevated Technology Showcase," Chairman Giovanni Capriglione, head of the Select Committee on Artificial Intelligence and Emerging Technologies, shared insights into how AI is influencing the energy sector and the legislative landscape in Texas.

Below is our recap of the discussion between Chairman Capriglione and TXOGA President Todd Staples.

AI's Expanding Influence: AI is becoming ubiquitous, impacting every industry, age group, and country. Its applications range from enhancing efficiency in energy production to revolutionizing administrative processes in state agencies.

• Energy Demand and AI's Role: As AI technologies advance, they require significant computational power, increasing energy consumption. This symbiotic relationship positions the energy sector as both a beneficiary and a critical enabler of AI development.
• Global Competition: Texas' ability to leverage AI in energy production is not just a state concern but a national imperative. Competing on a global stage, particularly against countries like China that can rapidly deploy technology without the same regulatory constraints, requires proactive strategies to maintain technological and economic leadership.

Policy Priorities: Chairman Capriglione emphasized the need for balanced AI regulations:

1. Balanced Approach: Crafting laws that protect the public from AI misuse (e.g., deepfakes, disinformation) without hindering innovation.
2. Industry Collaboration: Encouraging partnerships to accelerate AI adoption in energy, boosting efficiency and economic growth.
3. Workforce Development: Adapting education to prepare students for AI-driven jobs, emphasizing critical thinking and adaptability.
4. Infrastructure Expansion: Investing in energy infrastructure to meet growing demands and keep Texas business-friendly.

5. ?? RECAP: Texas Senate addresses AI in higher education

The Texas Senate Subcommittee on Higher Education convened to discuss interim legislative charges, including the use of AI in higher education.

Why it matters: The adoption of AI technologies has the potential to enhance learning experiences, improve accessibility, support administrative functions, and prepare students for a rapidly evolving workforce.

Texas Higher Education Coordinating Board Initiatives

• Adapting to Innovation Initiative: Dr. Michelle Sing, Assistant Commissioner for Digital Learning, highlighted this groundbreaking effort aimed at positioning Texas ahead in the era of AI and beyond.
• Focus on Ethical and Responsible AI Use: The Board is emphasizing the examination of intellectual property aspects related to AI and exploring ethical issues to ensure responsible development and deployment of AI technologies in education.

University of Texas at San Antonio (UTSA) Advancements

• New College Launch: Dr. Taylor Eighmy, President of UTSA, announced the launch of a new college dedicated to innovation and technology in January 2026, located in downtown San Antonio.
• Industry Collaboration: UTSA held a conference with 40 companies to identify projected workforce needs, ensuring that academic programs align with industry demands.
• Global Partnerships: The university is working closely with the UT System and international institutions in Australia and other countries to foster global collaboration and knowledge exchange.
• AI Guide for Faculty and Staff: UTSA has developed an AI guide to support faculty and staff in the ethical and effective integration of AI into teaching and research.

Innovative Programs and Opportunities

• Early College Credit Programs: Texas is developing programs that enable high school students to earn college credits, leveraging AI and digital resources to create seamless education pathways.
• Statewide Collaboration: Institutions are committed to sharing resources and best practices, ensuring that advancements in AI benefit students across all regions of Texas.

The bottom line: Texas is not just adapting to the rapid advancements in AI and technology within higher education—it's actively defining the future. Through strategic initiatives, ethical considerations, and collaborative efforts, the state aims to leverage AI to enhance learning experiences, meet workforce needs, and maintain its competitive edge in the global economy.

?? On our calendars…

• The Texas Tribune and the University of Texas at Dallas are hosting a conversation on Friday, September 27 at 12 p.m. on what AI policies and programs are already in development, the challenges and opportunities AI presents for Texas schools, and how these institutions must evolve to keep up and respond to the ever-changing technology.
• The next installment of the Texas Higher Education Coordinating Board’s “AI EmpowerED” webinar series will take place on Wednesday, October 9 from 3-4pm. “Navigating the AI Frontier: Cultivating Responsible and Ethical AI Practices” will include a panel of Texas higher education experts who will explore strategies and best practices for equipping educators and students to navigate the emerging landscape of AI technologies. Panelists will share insights on promoting digital fluency, critical thinking about AI, and cultivating responsible AI practices within teaching and learning environments. Click here to register.

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