Texas Gov. Greg Abbott is turning water disclosure into a more consequential test for the state’s rapidly expanding data center industry. On Sept. 14, Abbott directed the Texas Water Development Board to use its enforcement authority against major water users that fail to provide required information. The move puts an administrative reporting obligation closer to the center of infrastructure decisions that have traditionally focused on electricity, land and network connectivity. It also links water compliance with the broader state review of data centers seeking access to the Texas power grid. “Data centers must share the duty to protect Texas water,” Abbott said in a statement accompanying the directive. “The Texas Water Code requires a complete and accurate water use survey. I direct the Texas Water Development Board to use its enforcement authority to penalize past failures and to impose legal consequences for any future failure to comply.”

Texas Puts Water Reporting Inside Data Center Strategy

The immediate issue is not a new water tax or a new cooling standard, but compliance with an existing reporting regime. TWDB collects annual water-use information from municipal public water systems and industrial facilities, including operating data centers that use more than 10 million gallons annually, to help inform Texas’ long-term water-demand projections and state water planning process. The survey covers operating data centers that use more than 10 million gallons of water annually, a level TWDB considers a significant industrial use. It does not currently capture the specific cooling technology responsible for a facility’s water demand, an omission that leaves an important engineering variable outside the reporting framework. For infrastructure investors, the significance extends beyond the annual survey because Abbott’s separate August directive requires PUCT and ERCOT to audit water consumption, water sources and water-efficient technologies for data center projects advancing through ERCOT’s interconnection process.

The compliance record explains why Abbott has escalated the issue. TWDB surveyed 329 data centers in 2025, but only about 30% submitted responses, according to records cited by The Texas Tribune. Of those facilities, 267 were new to the agency’s tracking system, and only 22.5% of those newly tracked facilities responded. Response rates remained low as TWDB expanded the number of data centers receiving the survey, from 22 facilities in 2023 to 67 in 2024 and 329 in 2025. The low response rates leave TWDB without complete information for water-demand projections that help inform Texas’ long-term state water planning process.

Abbott Links Water Disclosure to Grid Access

Abbott’s latest directive does not stand alone. In August, he ordered the Public Utility Commission of Texas and the Electric Reliability Council of Texas to conduct a comprehensive audit of data centers moving through the state’s interconnection process. That audit seeks information on water consumption, water sources and the technologies facilities use to manage heat. Projects that fail to complete the audit face denial of permission to connect to the state’s power grid under the governor’s directive. The state is using two separate mechanisms: TWDB’s statutory water-use survey for qualifying operating facilities and the PUCT-ERCOT audit for data center projects advancing through ERCOT’s interconnection process. For developers, water information now forms part of ERCOT’s audit process for covered data center projects, alongside the electricity-related information required before those projects can advance.

“TWDB’s water use surveys serve a similarly important purpose as this data center audit. TWDB must coordinate with PUC and ERCOT to ensure that covered entities provide critical water use information in response,” Abbott said in his Monday letter. “Any failure to respond to the audit’s request for water use information would trigger TWDB’s independent enforcement authority.” The wording matters because it frames the water survey as part of a larger regulatory information system rather than an isolated paperwork requirement. It also gives TWDB a defined role in an interagency process that now touches water planning, electricity infrastructure and data center development. Abbott has asked the water board to provide an update on compliance and enforcement by Oct. 14. That deadline gives state officials a near-term point at which the industry could learn how aggressively the state intends to pursue historical reporting failures.

Texas Data Center Growth Is Raising the Stakes

Texas ranks among the largest US data center markets by facility count, with Pew Research Center’s April 2026 analysis placing it second to Virginia for both operating and planned facilities. Data center inventories vary by source and methodology. Research counted 296 operating and 170 planned facilities in Texas using backed information accessed in February, placing Texas behind Virginia among the states included in its analysis. The expansion also increases the importance of accurate water-use reporting for state planning. TWDB uses annual survey information to inform water-demand projections for the next 50 years, while Abbott has said the agency cannot develop the state water plan effectively without detailed information on existing and anticipated consumption. A single project may negotiate its own supply arrangements, but hundreds of projects can collectively alter assumptions used by utilities, municipalities and water planners.

The water numbers help explain the political urgency. HARC estimates that Texas data centers currently consume about 25 billion gallons of water annually when electricity generation and cooling systems are included. Its analysis projects annual consumption could reach between 29 billion and 161 billion gallons by 2030, with the upper end representing as much as 2.7% of the state’s total water use. HARC says the range reflects uncertainty around the pace and scale of future development and the assumptions used to model infrastructure demand. The organization argues that Texas’ existing planning framework has a blind spot because historical consumption data cannot fully capture an industry expanding at the speed of AI infrastructure. That distinction is important for developers because water availability can look adequate under historical planning assumptions while becoming constrained under a much faster construction scenario.

Reporting Is Becoming an Infrastructure Gate

Texas now requires water information through two distinct processes that reach different stages of data center development. TWDB’s statutory survey covers qualifying operating facilities, while Abbott’s August directive requires data centers advancing through ERCOT’s interconnection process to provide detailed information on water consumption, water sources and water-efficient technologies. Projects that fail to complete the ERCOT audit must be denied interconnection. A developer once could treat water reporting as an obligation handled after the facility entered operation. The state’s latest approach increasingly places water information alongside the questions that determine whether a project can secure grid capacity and proceed through approvals. However, the underlying law and enforcement structure remain more complicated than the governor’s directive might suggest.

The potential consequences extend beyond a reporting dispute. The Texas Tribune reported that state law requires covered entities to submit survey responses and that failure can constitute a Class C misdemeanor. It also reported that entities may need to respond to the survey to qualify for certain state financial assistance or environmental permits. Abbott has characterized the apparent failures by major water users as potentially involving civil and criminal violations, raising the stakes for companies that previously treated the survey as a low-priority administrative task. Meanwhile, the state’s own data shows that noncompliance has become particularly pronounced as the number of facilities under review has expanded. For operators, the practical question is no longer simply whether the state knows their water consumption, but whether incomplete disclosure could affect permits, legal exposure or infrastructure access.

Water Compliance Could Reshape Texas AI Infrastructure

Abbott’s warning arrives as Texas reassesses how quickly it can absorb the next wave of data center investment. The state has already moved toward greater scrutiny of power demand, with the August audit targeting facilities seeking access to the ERCOT grid. The water directive adds another layer by asking TWDB to pursue compliance with a reporting regime that informs the state’s long-range water planning. Together, the measures suggest that Texas is moving away from treating data centers solely as large electricity customers. The state is increasingly evaluating them as infrastructure-intensive industrial users whose projects must fit within several constrained systems simultaneously. For developers and hyperscalers, that changes the definition of site readiness from having land, fiber and power toward proving that the entire resource stack can withstand scrutiny.

The immediate policy question is how far enforcement will go and whether the agencies involved can coordinate effectively. Abbott has given TWDB a clear political mandate, but the existing division of authority means implementation will matter as much as the announcement. The industry will also watch whether water disclosure becomes more detailed as Texas gains a better picture of facility-level consumption and cooling systems. A more complete dataset could eventually allow planners to distinguish between projects that impose materially different demands despite similar electrical footprints. That would give regulators a stronger basis for evaluating future developments without relying solely on broad assumptions about data center resource use. It could also give developers a clearer framework for proving that a project can scale without creating an avoidable conflict over scarce water resources.