Texas imposes penalties on data centers for water-use violations, tightening environmental compliance requirements.

FILE PHOTO: The steel frame of data centers under construction during a tour of the OpenAI data center in Abilene, Texas, U.S., September 23, 2025. REUTERS/Shelby Tauber/Pool/File Photo

NEW YORK, Sept. 14, 2026 – Texas, one of the world’s fastest-growing regions for artificial intelligence infrastructure, directed state regulators on Monday to penalize data centers that fail to disclose details about their water consumption.

The state has halted connections for new data centers to the electrical grid pending a comprehensive review of their power and water usage, among other operational factors. This pause coincides with a broader overhaul of how Texas regulates server warehouses.

Governor Greg Abbott directed the Texas Water Development Board (TWDB) to “impose legal consequences” on data centers and other large water-consuming entities to ensure compliance with mandatory water use reporting requirements. In a statement, Abbott’s office noted: “Major water users, including data centers, appear to have committed civil and criminal violations through failure to provide TWDB with required information about water usage.”

The state water regulator is currently surveying data centers regarding their actual and projected water consumption. Facilities that miss the submission deadline will be denied any new or renewed environmental permits required to operate or expand their sites.

Reporting by Laila Kearney in New York; editing by Franklin Paul.