Texas Lawmakers Weigh Data Center Regulations Amid Water Concerns

The Texas Senate Committee on Water, Agriculture, and Rural Affairs held a seven-hour hearing in Austin to examine the environmental impact of data centers ahead of the January 2027 legislative session. Lawmakers are proposing new regulations including water use limits, noise restrictions, and the repeal of a multi-billion dollar sales tax exemption.

State officials reported a significant lack of transparency from the industry. Temple McKinnon of the Texas Water Development Board stated that fewer than 30% of contacted facilities responded to mandated water usage inquiries, while the Public Utility Commission of Texas reported that fewer than half complied. Failure to respond to the Water Development Board can result in criminal charges enforced by local district attorneys.

Testimony from the University of Texas at Austin suggests data centers could account for 5% of total state water usage by 2030, with 60% of that consumption occurring at supporting power plants. In response, Senator Adam Hinojosa secured tentative pledges from Google, Lancium, and Quality Technology Services to support certain restrictions.

Ryan Kuithe of Quality Technology Services testified that AI, streaming, and cloud services are driving industry growth. He noted that his company has used closed-loop, water-free systems in all Texas facilities since 2019 to avoid billions of gallons of water usage. State Senator Charles Perry emphasized the need for infrastructure that supports industry leadership while minimizing costs to consumers.