Texas is tightening data center rules around a simple requirement: usable water data.

The story moved quickly

In June, Texas officials asked data center operators for information on water consumption, cooling systems, water sources, electricity demand, grid connection, and on-site generation. The survey was developed by the Public Utility Commission of Texas in collaboration with the Texas Water Development Board to help the state understand how rapid data center growth could affect water and energy planning.

The first result was a warning sign. According to The Texas Tribune, the state received responses from 28 companies representing 92 facilities, fewer than one-third of the companies surveyed at the time of the June legislative hearing.

By August, the issue had become larger than one voluntary survey. The Tribune reported that the PUC had contacted 377 facilities and reopened the survey in July. It also reported that less than one-fifth of 341 data centers surveyed through the Texas Water Development Board's mandatory water-use process responded in 2025.

Texas then moved from asking for better information to making project-level information part of a broader statewide data center review.

Texas is building a more explicit project record

On June 10, Gov. Greg Abbott directed the PUC and ERCOT to strengthen protections around data center growth. His stated priorities included water-efficient cooling, annual electricity and water reporting, ratepayer protection, new electric capacity, neighborhood protections, and clearer responsibility for infrastructure costs.

That direction became more specific in August. The Governor ordered a comprehensive audit of data center projects and directed regulators to obtain projected annual and peak water consumption, anticipated water sources, water-reuse procedures, and the cooling technology each facility expects to use, including whether the project relies on air-cooled, closed-loop, or another water-efficient system.

The audit also reaches beyond water. Projects are being examined for electricity demand, on-site generation, public incentives, ownership, noise, lighting, setbacks, traffic, emergency response, and other community impacts.

That is significant because it changes the role of project information. Water data is moving from a technical detail buried inside design work to part of the evidence regulators and communities use to judge project readiness.

The water question is more complicated than gallons per year

A single annual-use estimate rarely tells a planner enough.

The Texas Water Development Board's own planning materials distinguish between direct water use at a facility and indirect water demand associated with the power required to operate it. The agency is also changing how data center water use is classified so the sector can be monitored more explicitly as it grows.

For a major data center project, a useful water baseline should answer at least seven questions:

• Source: Is the project using potable municipal water, reclaimed water, groundwater, surface water, or another source?
• Cooling architecture: How much demand comes from evaporative, closed-loop, air-cooled, hybrid, or other systems?
• Peak conditions: How does demand change during the hottest periods when both water and electricity systems may face the greatest stress?
• Drought performance: What happens when the host region enters drought restrictions or other scarcity conditions?
• Power interaction: Does on-site generation create additional direct water demand, and what indirect water demand is embedded in grid power?
• Expansion: What does water demand look like at the first phase, full buildout, and plausible future expansion?
• Actual performance: How will measured operating use be compared with the assumptions presented during development?

Those distinctions matter because two facilities with similar computing capacity can produce very different local water profiles depending on climate, cooling design, utilization, water source, generation strategy, and operating conditions.

Why the reporting gap became development risk

Texas is experiencing extraordinary data center growth. The Texas Tribune identified at least 248 planned projects across the state in June. That scale forces utilities and governments to make infrastructure decisions before every project is operating and producing measured data.

Planning therefore depends heavily on forecasts.

When forecasts are incomplete, inconsistent, or unavailable, public agencies have to rely more heavily on assumptions. Communities hear competing numbers. Developers face harder questions later in the process. Infrastructure providers carry more uncertainty into capacity decisions.

Texas's response shows how that uncertainty can migrate upstream. Resource reporting is now tied to a broader audit of pending projects, and the Governor has called for annual water and electricity reporting and water-efficient cooling requirements in future legislation.

In other words, the quality of the project record increasingly affects the quality and speed of the development process.

Confidentiality is a design problem with practical solutions

Industry participants have raised legitimate concerns about proprietary and competitively sensitive information. That deserves a thoughtful answer rather than an all-or-nothing transparency rule.

The practical distinction is between information the public needs for planning and information a company reasonably needs to protect.

Aggregate sensitive operating data where aggregation still supports planning. Anonymize commercially sensitive information where project identity adds little analytical value. Establish protected channels for regulators when project-specific detail is essential. Publish consistent categories and definitions so communities can compare projects without exposing unnecessary technical information.

The objective is a credible shared baseline.

Good information architecture can protect competitive interests and strengthen public planning at the same time.

Good Data Center view

The most important part of this case is the sequence.

Texas first encountered an information gap. The gap became a legislative issue. It then became part of a gubernatorial policy response. Now regulators are being asked to collect project-level information across water, power, incentives, ownership, and community impacts.

That sequence illustrates why shared facts belong at the beginning of development.

A stronger project record gives developers, utilities, governments, and communities a common basis for making decisions while meaningful design choices remain available.

For water, that record should establish the baseline, document alternatives, explain tradeoffs, define drought and peak-condition performance, identify infrastructure responsibilities, and create a way to compare projected performance with actual operations over time.

The same operating model applies to power, noise, traffic, public safety, fiscal impacts, workforce, land, and other material project systems.

Shared facts create the foundation. Practical solutions improve the design. Clear commitments define responsibility. Monitoring creates accountability.

That is how an issue moves from public controversy into project management.

What better development looks like

• Build the water baseline while site and cooling choices remain open.
• Show annual demand, peak demand, source, cooling architecture, on-site generation demand, and full-buildout scenarios separately.
• Test the project against local drought, scarcity, curtailment, and infrastructure constraints.
• Document alternatives such as reuse, reclaimed supply, closed-loop cooling, air cooling, and hybrid systems with their water, energy, cost, and reliability tradeoffs.
• Align project assumptions with local and regional water plans.
• Define which information is public, aggregated, protected, or regulator-confidential before controversy forces that decision.
• Track actual operating performance against development-stage projections and explain material differences.

Questions to carry into projects

• What information would a local water planner need to make a 20-year infrastructure decision with confidence?
• What are the project's annual and peak demands at each development phase?
• Which assumptions depend on weather, server utilization, cooling design, on-site generation, or future expansion?
• What happens operationally during drought or other water constraints?
• Which alternatives were evaluated, and what tradeoffs drove the selected design?
• What information can be shared publicly, what can be aggregated, and what legitimately requires confidential treatment?
• How will measured performance become part of the long-term project record?