Texas Sent 156 Data Centers a Warning Letter About Their Water Use. The Law Behind It Can Only Fine Them $500.

On June 23rd, Texas state Rep. Cody Harris sat in front of two empty chairs at a hearing of the House Committee on Natural Resources. He had invited representatives of two companies building data centers in Texas, Diode Ventures and Calypso, to explain how much water their projects actually use. Neither one sent anyone.

I invited two witnesses today who refused to come answer questions, Diode Ventures and Calypso.Rep. Cody Harris, Texas House Committee on Natural Resources

Nobody made them show up, and that's the actual story here, not the empty chairs. Texas law requires large water users, including data centers, to answer a water-use survey the Texas Water Development Board runs every two years to plan the state's future water supply. The board's list of data centers to survey grew from 22 facilities in its 2023 round to 341 in the survey covering 2025, a rough measure of how fast the industry has built here. At the time of Harris's hearing, roughly 17% of those 341 had responded. Skipping the survey is a Class C misdemeanor. The Water Development Board has said plainly that it has no authority to prosecute anyone for ignoring it; enforcement would have to come from a local prosecutor or some other agency willing to take the case. Four months after the hearing, none had.

Three directives in six weeks

Gov. Greg Abbott moved in three steps after Harris's hearing made the nonresponse rate public. On August 3rd, he ordered the Public Utility Commission and ERCOT to audit every data center working its way through the state's grid interconnection queue, freezing their advancement until the audit is finished — a queue that, by ERCOT's own count, holds several hundred gigawatts of proposed large-load capacity, more than the Texas grid has ever had to plan for at once. That interconnection freeze was its own story in August, and this is the same governor reaching for a second, then a third, lever. On September 14th, he directed the Water Development Board to actually enforce the reporting law it already had on the books and to run its own audit of data-center water use in coordination with ERCOT, with a compliance update due back to his office by October 14th. A week later, on September 21st, he told the Texas Commission on Environmental Quality to stop issuing permits to data center projects outright. "Until they do, TCEQ will issue no permits sought by data center projects," his office said. TCEQ has to report on its own compliance by October 19th. ERCOT doesn't expect its audit finished until December, so the freeze is likely to run for months, not weeks.

The water-survey deadline came due on October 14th, and the next day, Attorney General Ken Paxton's office sent letters to 156 data center developments spread across roughly 30 Texas counties — Harris, Montgomery, and Waller counties around Houston, Tom Green County out in West Texas, and dozens more — telling each one to correct or complete its answers to the Water Development Board's survey. "I am actively investigating data centers across Texas to make sure that Texans and our natural resources are protected," Paxton said in the announcement. His office didn't name which companies received letters, or say whether any of the 156 have actually broken the law.

The fine was never the point

Here's the gap sitting underneath all three directives, reported in detail by the Texas Tribune the day before Paxton's letters went out: the statute behind this entire push caps the fine for skipping the survey at $500, and the agency that runs the survey can't prosecute anyone itself. State officials told the Tribune they don't actually know whether a data center has ever been fined under it. A $500 misdemeanor means nothing to a company spending billions of dollars on a single campus, and Paxton's letters don't pretend otherwise.

What they do instead is cheaper, and I'd argue sharper. They put all 156 recipients on notice that an open water-survey complaint now sits next to every other state approval that company needs: the interconnection audit ERCOT just launched, the permit freeze TCEQ is enforcing, the renewal that comes up eventually no matter how the first two shake out. A $500-fine law that nobody enforces becomes a real problem the moment noncompliance with it shows up as a flag on a file at an agency that can say no to something that actually matters. That's the enforcement mechanism forming here, not the misdemeanor statute on the books. A regulator with weak penalties and broad permitting power doesn't need a bigger fine. It needs a reason to open the file, and three overlapping state actions inside two months just handed Texas 156 of them.

An election built around the same complaint

The timing lands in the middle of one of the most competitive U.S. Senate races in the country. Paxton is the Republican nominee running against Democratic state Rep. James Talarico, and both campaigns have built dueling plans around this exact problem. Paxton's own four-point Texas First Data Center Plan calls for closed-loop water systems at new sites, among other things. Talarico's Hold Data Centers Accountable Plan goes further: it would end the state sales-tax breaks that helped pull the industry into Texas in the first place, give local governments more control over new projects, and also require closed-loop systems. Talarico has accused Paxton of taking campaign donations from the data-center industry while his office runs this investigation; Paxton's campaign has returned fire over a pro-Talarico PAC's own data-center-investor donors. Neither side disputes that the underlying fact is real: most data centers in Texas simply haven't answered a legally required survey. They disagree about who actually fixes that, and both are glad to be seen trying a few weeks before voters start deciding.

For anyone doing real diligence on a Texas site right now, the number that matters isn't $500. It's 83%, the share of surveyed data centers that, as of Harris's hearing this summer, hadn't told the one state agency legally entitled to ask how much water they actually use. A developer's own stated water draw, in a pitch deck or a county application, isn't the same thing as a figure any agency has verified — and this year, most of them weren't even trying to put one on the record. The honest version of that number tends to live somewhere else: a municipal utility's own capacity filings, a groundwater district's well permit, a wastewater interlocal agreement. Not marketing material.

Harris himself has already said the misdemeanor-and-nothing-else approach needs to change. Disclosing water use and its source should be "a baseline expectation" going forward, he told the committee back in June, calling it "a low bar that we're going to be looking to set next session." Texas's legislature doesn't meet again in regular session until 2027, which means the $500 cap and the Water Development Board's lack of prosecuting power are both likely to stay exactly as they are through every deadline in this piece. Whatever teeth this investigation ends up having before then will come from Abbott's and Paxton's executive and civil authority, not from a statute the legislature hasn't gotten around to fixing yet.

What to watch next: TCEQ's October 19th compliance report, whatever the Water Development Board tells Abbott's office about the audit he ordered, and whether any of the 156 letters Paxton sent this week produce an actual correction, let alone a fine. None of those three deadlines will tell Texans how much water their new data centers are using. They'll tell us whether the state is finally willing to make a company answer, now that it's asked three different ways in two months.