Texas lawmakers urged to address data center regulation; Hays County enacts water protection pause

Hays County officials have enacted an "emergency water protection review period," effectively pausing data center construction until the end of the year. This move, driven by public pressure, includes the creation of a review board to assess critical groundwater impacts of such water-intensive projects. The Austin American-Statesman's Editorial Board highlights this local action as evidence of counties struggling to manage a data center boom that the state has largely failed to regulate, despite Texas being poised to become the world's largest data center market by 2030.

Governor Greg Abbott has directed state energy and utility regulators to protect residential ratepayers from data center expansion costs and plans to work with lawmakers next session. However, the editorial criticizes the state's slow response, noting that data centers are attracted to Texas's "business-friendly climate" and weak regulatory systems. For instance, less than a third of data center companies complied with mandatory water use surveys, preferring to pay small fines.

The editorial urges the Legislature to prioritize several measures, including allowing utilities to charge data centers higher rates for water and electricity to cover infrastructure upgrades and prevent residential rate increases. It also calls for empowering counties to designate suitable data center sites, regulating noise levels, and removing costly tax exemptions. Additionally, it stresses the need for strict enforcement and increased penalties for non-compliance with water and energy use reporting.