Texas Orders Penalties for Data Centers That Skip Water-Use Reporting

Texas Governor Greg Abbott ordered the state’s water agency on September 14 to start penalizing data centers that have not completed a legally required water-use survey, citing a three-year compliance rate below 30%. The directive, sent as a letter to the Texas Water Development Board (TWDB), covers both past reporting failures and any future ones, and asks TWDB to report back on enforcement progress by October 14.

What was actually ordered

In the letter to TWDB Chairwoman L’Oreal Stepney and Executive Administrator Bryan McMath, Abbott said data centers and other major water users “appear to have committed civil and criminal violations” by not returning the board’s annual water-use survey, which the Texas Water Code requires from facilities using large volumes of water. Per the governor’s office and the Texas Tribune, TWDB surveyed 22 facilities in 2023 (32% responded), 67 in 2024 (28% responded), and 329 in 2025 — of which 267 were new to the agency’s tracking, and only 22.5% of those responded. Survey responses covering 2025 water use were due in March 2026.

The Texas Water Code treats a missed survey as a Class C misdemeanor and grounds for the TCEQ to deny permits, permit amendments, or permit renewals. Abbott’s letter directs TWDB to refer non-compliant operators to county or district attorneys and to notify TCEQ. It also tells TWDB to coordinate with the Public Utility Commission of Texas (PUCT) and ERCOT, which Abbott separately directed on August 3 to audit the water and power use of every data center advancing through ERCOT’s interconnection process. As one illustration of the scale involved, the Texas Tribune reported that Bitdeer’s Rockdale facility — a compliant filer — disclosed more than 300 million gallons of water use in a year, comparable to a town of roughly 3,500 residents.

What it means for buyers of power

Texas is one of the largest colocation and hyperscale markets in the world, built partly on ERCOT’s deregulated, fast-moving interconnection process — our colocation price index tracks a commercial rate of 8.66c/kWh there as of September 2026, among the cheaper large US markets. Our catalog lists 99 facilities in the state (Texas data center directory), 87 of them operational. That speed-to-power advantage is exactly what this directive puts under more scrutiny: it stacks a water-reporting enforcement push on top of the ERCOT interconnection audit Abbott ordered in August, meaning new Texas capacity now faces two separate compliance checkpoints it didn’t face a year ago.

For buyers with capacity on order or under LOI in Texas, the immediate risk isn’t a construction halt — unlike Thailand’s recent pause on 166 projects or Malaysia’s non-AI freeze in Johor, Abbott’s order targets reporting compliance, not new approvals directly. But operators still finalizing water sourcing and disclosure — see our WUE benchmarks guide for how site cooling choices drive that exposure — should expect closer TCEQ review at permitting stage, and possibly slower turnaround on permit amendments if TWDB acts on the referral authority Abbott is invoking.

What we don’t know yet

Abbott’s letter sets an October 14 deadline for TWDB to report progress, but doesn’t specify how many enforcement referrals will actually be filed or how quickly TCEQ would act on a permit denial tied to a water-survey gap. It’s also unclear how this reporting enforcement will mesh procedurally with the separate ERCOT interconnection audit — whether the two reviews run on the same timeline for a given project, or independently. We’ll track how this affects reported outages, delays, or new permit denials in our incident log as enforcement actions surface.