Texas Targets Data Centers Over Water Usage, Threatens Permit Denials

Texas is escalating its scrutiny of the booming data center industry, with Governor Greg Abbott directing state regulators on Monday to impose penalties on facilities that fail to disclose their water consumption.

The move signals a tougher regulatory environment for the rapidly expanding artificial intelligence infrastructure in the state, which has become a global hub for such development.

Regulatory Directive

In a statement, Governor Abbott's office announced that the Texas Water Development Board (TWDB) has been instructed to "impose legal consequences" on non-compliant entities. The state is currently surveying data centers and other large-scale water consumers to gather information on their current and projected usage.

The governor's office stated that some major users, including data centers, "appear to have committed civil and criminal violations" by not providing the required information to the TWDB. This directive is part of a broader state-level overhaul of how these resource-intensive facilities are regulated.

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Consequences for Data Centers

The most significant penalty for non-compliance is the potential denial of essential permits. According to the announcement, any data center that fails to return the water use survey by the specified deadline will be denied new or renewed environmental permits necessary for their operations.

This measure could effectively halt the construction of new facilities or the expansion of existing ones, creating a significant operational risk for companies in the sector. The action follows a previous state decision to halt the connection of new data centers to the Texas electrical grid pending a review of their power and water demands.