Texas Attorney General Ken Paxton has opened an investigation into hundreds of data center developments across the state, targeting companies that may have failed to comply with water usage reporting requirements. Paxton said Texas resources, water, and energy supply cannot be sacrificed, and vowed his office will continue fighting for communities across Texas as the industry's explosive growth strains the state's water planning.
Why So Few Companies Are Reporting
Texas law requires the Texas Water Development Board to survey entities that draw on ground and surface water for industrial, municipal, and power generation purposes, and data center developers are required to submit responses. But as reported by woai.iheart.com, compliance has been strikingly weak. Only 17% of the 341 data centers operating in Texas responded to the board's survey the previous year, according to the Houston Chronicle, and the state agency lacks the enforcement power to compel data centers to complete it.
A separate survey run by the Public Utilities Commission fared somewhat better, pulling responses from 28 companies representing 92 data centers and cryptomining facilities, the Chronicle reported. Still, the gap points to a larger problem: the number of data centers in Texas jumped from 22 in 2023 to 341 last year, and the draft 2027 State Water Plan currently doesn't incorporate demand from the industry at all, per the same report.
How Much Water Are These Facilities Actually Using
Data centers use water primarily to cool their servers, a process that can be enormously thirsty depending on the technology involved. The Houston Advanced Research Center found that data centers consume an average of 793 gallons of water for every megawatt-hour, according to Nixon Peabody, and some individual facilities burn through millions of gallons daily just from cooling operations. Statewide, the firm's analysis estimates Texas data center water use could reach 49 billion gallons by the end of 2025 and climb as high as 399 billion gallons annually by 2030.
Texas isn't alone in facing this reckoning. Data centers have increasingly clustered in states that already contend with water scarcity, including Arizona, California, Virginia, and Texas, the Nixon Peabody analysis notes. Without a uniform reporting or tracking system, Texas doesn't holistically track water use by the industry, according to the Texas Tribune — a gap that has left both regulators and residents guessing at the true scale of demand.
Local Fights Are Already Breaking Out
That uncertainty has fueled friction at the county level. In Hood County, commissioners voted 3-2 to reject a proposed temporary pause on new industrial development, including data centers, the Tribune reported. The vote came amid concern over the proposed Comanche Circle development, a roughly 2,600-acre project near Tolar that would include nine data center campuses with a combined capacity of up to five gigawatts — a project residents warned could consume up to 1 million gallons of water per day at full buildout, per the Tribune's reporting.
Cooling Technology at the Center of the Debate
Some of that debate centers on the cooling systems themselves. State Sen. Charles Perry has said he wants to curb the use of evaporative cooling systems, which rely on a constant input of water that evaporates during the cooling process, according to CBS Austin. Dry or air cooling can sharply reduce direct water use, while an evaporative cooling tower still consumes water, the station reported — though certain closed-loop systems can use more electricity than water-based cooling, potentially shifting some of the water footprint onto power generation instead.
QTS executive Ryan Kuithe told CBS Austin that “since 2019, every single data center that QTS has built has been a closed-loop system that consumes essentially zero water for cooling once we're operational.” Texas lawmakers plan to take up the issue when they return to the Capitol in January, the station noted, setting up a legislative fight over which cooling standards, if any, the state should mandate.
Other States Are Moving Faster on Rules
Texas is hardly the only state grappling with how to regulate data center water use. California, Iowa, and Michigan are considering data-center reporting bills, according to Multistate.
Other states are going further still. South Carolina and Kansas are considering closed-loop cooling mandates, Multistate reported. Virginia's proposal would condition cloud-computing infrastructure grants on the use of treated wastewater in cooling systems, and Minnesota has already enacted requirements for water appropriation permits for data centers expected to use more than 100 million gallons annually, per Nixon Peabody. The wave of regulatory attention now includes Paxton's investigation into Texas's own reporting failures.
