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By Amanda Greenwood
Associate News Editor
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Greg Abbott, the Republican Governor of Texas, has ordered state regulators to penalize data centers that refuse to comply with the mandatory requirements to report on how much water they use. This is the latest attempt by Texas to regulate and pace the rapidly growing data center industry as concerns increasingly rise over its impact on the water supplies.
In a September 14 directive to the Texas Water Development Board (TWDB), Abbott said that major water users, including data centers, appear to have "committed civil and criminal violations" by failing to provide information required under the Texas Water Code.
He instructed the agency to take action against past and future noncompliance and to coordinate with the Electric Reliability Council of Texas (ERCOT) on a broader audit of data center water consumption.
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"Data centers must share the duty to protect Texas water," Abbott said.
Although, today, data centers account for less than 1 percent of statewide water use, researchers at The University of Texas recently warned that data centers could account for between 3 percent and 9 percent of Texas water use by 2040, depending on growth rates, cooling technologies and power generation choices.
What Are the New Penalties?
Under Texas law, data centers and other major water users that receive a water-use survey from the TWDB must report information about their water consumption to the state.
According to Abbott, facilities that fail to submit the required information can face criminal consequences and may become ineligible for permits, permit renewals, or amendments from the Texas Commission on Environmental Quality (TCEQ).
The governor also instructed TWDB to refer any potential violations to county or district attorneys, if and when appropriate.
This order follows a growing concern among Texas officials that incomplete reporting has created significant gaps in the state's understanding of industrial water demand. Less than 30 percent of data centers responded to a state-mandated water-use survey in recent years, according to reporting by The Texas Tribune.
Why Texas Is Taking Action
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The crackdown comes as Texas experiences explosive growth in AI infrastructure and large-scale data centers.
TWDB relies on water-use surveys to help produce the state's long-term water plan, which guides infrastructure investment and future supply planning.
Abbott said the agency can’t possibly accurately forecast Texas' water needs without detailed information on existing and projected consumption from some of the state's fastest-growing industrial users: "TWDB cannot perform that task if it is denied the detailed information necessary to assess both existing and anticipated water consumption across Texas."
The governor's order also builds on a separate directive issued in August requiring ERCOT and the Public Utility Commission of Texas (PUCT) to conduct a comprehensive audit of data centers seeking grid interconnection. That audit requires operators to disclose their water consumption, water sources, and water-efficiency technologies. If they fail to provide this information, projects can be denied connection to the Texas grid.
The Growing Water Debate
The dispute reflects a broader debate over the environmental footprint of data centers, particularly those supporting AI systems.
A 2026 report from the Houston Advanced Research Center (HARC) estimated that Texas data centers consumed approximately 25 billion gallons of water in 2025. The organization projected annual demand could rise to between 29 billion and 161 billion gallons by 2030, potentially representing as much as 2.7 percent of statewide water use.
Dr. Margaret Cook, HARC's vice president of water and lead author of the report, said: "Texas' water planning process has a structural blind spot," adding that "ERCOT has begun developing processes to manage large load interconnections for energy, but no parallel process exists for water planning."
What Abbott's Order Means for Data Centers
Abbott's directive shows that Texas is becoming more and more aggressive about policing the resource demands of AI infrastructure, even while continuing to encourage and court investment in the technology.
For operators, the immediate message is clear: failure to disclose water usage could now carry legal, permitting, and operational consequences. Data centers seeking to expand or connect to the Texas grid could face more scrutiny over how much water they consume, where that water comes from, and what measures they’re taking to improve efficiency.
As the state's AI boom continues to accelerate, officials appear determined to make sure they have a crystal-clear picture of the AI industry's impact on one of Texas' most valuable resources: water.
Newsweek has contacted Abbott's office for comment, via email, and is awaiting a response.
Contact Newsweek editors on this story: Matthew Robinson and James Debens
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