On Data Centers, Texas pols must decide if the state’s water supply is an oasis or a mirage

Big Tech companies have looked to Texas as an oasis for their data centers.

Texans are saying it might be a mirage, that the water supply might not be able to handle them, and they are talking about it publicly.

Yesterday, the Texas Senate Committee on Water, Agriculture, and Rural Affairs ran a marathon, day-long hearing to talk about an issue that residents throughout the country—including the Lone Star State—have been yelling about for the better part of a year: protecting water and resources from data centers.

“We’re 20 years behind. We’re behind in grid capacity. We’re behind in water capacity pre-AI,” Sen. Charles Perry, the committee’s chairman, said, calling the industry the “public poster child” for a capacity problem Texas had deferred for years.

 “Do we have the political courage to push that agenda through? Because the only thing separating us from more power and more water is resource — state, local and federal,” Perry, a Republican, said. 

Texas already hosts almost 200 hyperscale data centers, the most of any other state. It has been attractive to developers because large swaths of real estate sit in locations without any zoning restrictions to stop them. 

Perry said he has written standalone water consumption legislation pertaining to data centers, but that new concerns arise that keep fattening the proposal. It’s expected to be considered during the 2027 legislative session, he said.

With residents beginning to rise up and demand a slowdown or stop to the continued expansion of data centers across the state, Texas lawmakers examining the water demands of data centers found themselves staring at the same constraint already reshaping the state’s electric grid: Texas can attract industrial growth faster than it can build the infrastructure needed to support it. 

Preliminary state data describe a water footprint that remains modest in statewide terms but is growing into a planning problem. 

The state’s Public Utility Commission said it had received responses from 57 companies covering 168 facilities, including 144 data centers, while the preliminary analysis presented to senators relied on 49 companies and 155 facilities.

 Among 81 operating facilities that reported 2025 consumption, total water intake approached 1.3 billion gallons, with potable water accounting for about 74 percent, or 964 million gallons. Perry translated the total to roughly 4,000 acre-feet against annual statewide use of about 17 million acre-feet, an amount far below one percent, then warned that the comparison obscures the velocity of the buildout and the much larger scale of the projects now seeking power, land and water.

Texas entered that buildout with an infrastructure deficit that predates artificial intelligence, which is why Perry repeatedly resisted casting data centers as the sole cause of the state’s shortage. 

The latest state water plan is roughly five million acre-feet short of projected need, he said, while the electric grid is also trying to absorb a historic queue of large-load requests. 

Lawmakers found the state’s visibility into the industry nearly as limited as its available capacity. Texas has no comprehensive registry of data centers, the agencies built their survey list from a patchwork of sources, and officials cautioned that even the 377 facilities contacted do not represent a definitive inventory. 

The water-use survey is mandatory under the Water Code and failure to respond is a Class C misdemeanor, but enforcement belongs to local prosecutors, leaving the agencies able to identify nonresponders without showing whether anyone has faced consequences.

 Municipal systems can meter large customers precisely, while industrial wells in unincorporated areas may not be metered at all unless they sit inside a groundwater conservation district.

The regulatory gap is widest in the “white zones” Perry described, where a project sits outside a groundwater district and beyond a municipal water system. Surface-water rights, municipal drought rules and district pumping permits create controls elsewhere, but a large user in an uncovered area may drill into groundwater with little state or local oversight.

 “If you’re in what I call a white zone — no water district — there’s really not a whole lot you can do in that regard,” Perry said, turning what might otherwise look like a technical mapping issue into a likely legislative fight over groundwater governance, private-property rights and the conditions attached to a data center’s utility connection.

Also Read: On Data Centers, Abbott Just Made a Mess in Texas

Drought policy exposes a similar asymmetry between the two resources data centers need most. Senate Bill 6 established a framework for ERCOT to manage large electric loads during grid emergencies, but witnesses said Texas has no comparable statewide mechanism to curtail data-center water use when household, agricultural and commercial supplies are under pressure. 

The Water Development Board also lacks authority to dictate cooling technology, charge large users impact fees or make them direct participants in the state’s financing programs, even though the water plan assumes local strategies will be built and paid for. 

Perry reduced that problem to a line likely to follow lawmakers into the next session: 

“A plan not funded is no plan at all.” Sen. Roland Gutierrez, a Democrat, pushed the argument toward the industry’s sales-tax exemption on electricity, calling it “billions of dollars in giveaways to billionaires” and urging the state to redirect that revenue toward water infrastructure.

Those testifying, including members of the public, outlined concerns.

 “I’m concerned about water for Texas and the noise, light, and air pollution from data centers. I respectfully ask the committee to advance a practical, coordinated framework for regulating data centers in Texas,” said Texas resident Larry Linnenschmidt. “That framework should require water transparency and conservation. Meaningful review and approval authority for the Texas Water Development Board, groundwater conservation districts, and county commissioners courts. 

“These protections are especially important for rural communities,” Linnenschmidt said. “Rural local governments often have limited zoning authority and fewer resources to negotiate enforceable protections.”

A resident who described herself as a former commodities trader, echoed him.

Melissa Beckett, former commodities trader testifying as an individual: “First, potable quality fresh water must not become a commodity for which Texas families compete. I’m glad to hear that this has not been discussed today,” said Melissa Beckett. “Second, new extra large industrial facilities should use non-potable water or water alternatives. Potable quality fresh water should be prohibited. I am pro-business, pro-capitalism, and pro-free markets. But markets should help people prosper, not prioritize commerce at their expense. Hyperscale data centers represent a new frontier for free markets. 

“They are backed by some of the world’s wealthiest companies and consume extraordinary resources,” Beckett said. ”Ordinary market forces cannot protect families from an industry with unlimited purchasing power.”

Asman Mahmud, the Bayou City Waterkeeper, pointed out “blind spots” in the data.

“As you know, Texas ranks second nationally for data centers, with 50 in the Houston area alone. The Houston Advanced Research Center projects annual water use by Texas data centers projected to reach. Up to 29 to 161 billion gallons by 2030,” Mahmud said.”  Now that range is wide because Texas does not currently have a public reporting system for data center water use, so providers are not really planning for demand that they cannot see. This blind spot also covers indirect use. Facilities using water-free cooling technology still carry a water cost since most of our grid that they’re connected to runs on water-intensive natural gas.”

Developers who testified countered the industry’s worst-case image with projects designed to put capital into the same public systems their facilities will depend on. 

Google said it has committed more than $500 million to public water and wastewater upgrades in its data-center communities, including tens of millions of dollars in Ellis County, and announced a $4.5 million contribution to replace an aging pipeline in Vernon. QTS said every data center it has built since 2019 uses closed-loop cooling that consumes essentially no water in normal operation, that 97 percent of its operating portfolio now uses that approach, and that the company has pledged $250 million over the next decade for Texas water infrastructure, conservation and community projects.

A West Texas developer offered the hearing’s clearest example of a data center becoming a water supplier rather than simply another customer. 

After worsening conditions at the Greenbelt Reservoir accelerated a project originally planned for 2030, the company said it would tap brackish groundwater beneath its Childress campus, build a 16-mile pipeline and reverse-osmosis plant, and deliver one million gallons of fresh water a day to the Greenbelt Water Authority.

 “Entirely at our expense, we will build a sixteen-mile pipeline, a reverse-osmosis system, and we will drop a million gallons a day of totally fresh water into the Greenbelt Water Authority,” the developer testified, describing infrastructure that would ultimately belong to the public authority and develop a supply the region already needed before the data center arrived.

The water hearing unfolded one day after ERCOT delayed the first classifications under its new Batch Zero process for large-load interconnections, linking the committee’s resource debate to a grid queue that is being forced through its first serious validation exercise. In a market notice earlier this week, 

ERCOT said it needed additional time for data validation and due diligence and would notify transmission and distribution providers later in the week, after the Public Utility Commission granted a good-cause exception to the original schedule. Senators said the base portion of Batch Zero represents roughly 60 gigawatts of prospective demand and estimated that 80 to 90 percent of it comes from data centers, much of it dependent on transmission expansions that include the Permian Basin Reliability Plan.

 The delay does not resolve which projects are real, but it postpones the first formal sorting of committed loads from speculative requests at the same moment water planners are trying to determine how many of those projects will be built, where they will land and what supplies they expect to use.

Perry’s distinction between “good actors” and “bad actors” now points toward a legislative bargain in which access to Texas growth is paired with disclosure, efficient cooling, drought planning and direct investment in the infrastructure that makes a project possible. 

The hearing supplied examples of companies willing to build pipelines, desalination systems and public upgrades, but it also exposed a state that cannot yet say with confidence how many facilities exist, how many are coming or how much water the full queue will require. 

Texas is unlikely to close the door on an industry tied to its economic and national-security ambitions, and the next session will instead determine whether lawmakers can turn voluntary examples into enforceable terms before the grid and water systems are asked to carry more than they can support. Perry’s closing standard left little ambiguity about the direction of travel: “Companies that cannot comply should not apply.”