Texas lawmakers are intensifying scrutiny of artificial intelligence data centers amid concerns over their heavy demands on water supplies and the electric grid in rural areas.

In late March 2026, House Speaker Dustin Burrows and Lt. Gov. Dan Patrick, both Republicans, issued interim charges to five legislative committees. These directives call for examinations of data center growth, including total water usage, grid reliability, tax incentives and their economic costs, and regulatory frameworks to balance development with community planning.

The House State Affairs Committee, chaired by Rep. Ken King, R-Panhandle, held a public hearing on April 9, 2026, to establish a "baseline of truth" on the issue. Witnesses from ERCOT and the Public Utility Commission testified about the surge in power demands, with the grid operator's interconnection queue reaching over 410,000 megawatts, 87 percent from data centers. Water consumption emerged as a central focus, given projections that data centers could use 29 to 161 billion gallons annually by 2030 in a drought-prone state.

State Rep. Helen Kerwin, R-Somervell County, urged Gov. Greg Abbott in March 2026 to pause approvals for large-scale AI data centers in rural communities. In a letter, she cited constituent fears about depleted local water resources and strained power near the Comanche Peak Nuclear Plant, where a hyperscale facility is planned. Kerwin proposed a working group to develop standards for water use, grid connections, and public notices.

Rural counties lack the authority to halt data centers in unincorporated areas, exacerbating tensions. Facilities qualify for sales tax exemptions on electricity, water, and equipment, projected to cost the state $3.2 billion over two years. Proponents highlight Texas's advantages: abundant land, competitive power costs, and proximity to population centers, positioning the state as a hub for AI infrastructure.

ERCOT CEO Pablo Vegas told lawmakers on April 13 that the agency is shifting to a "batch interconnection" process to manage speculative projects, requiring deposits for upgrades and reserving transmission capacity. Industry representatives emphasized differences between developers and tenants like Microsoft and Google, many of whom signed federal ratepayer protection pledges.

No moratoriums were discussed, unlike in other states. Committees will report findings before the 2027 legislative session, potentially leading to new rules on resource use and local oversight. Republican leaders frame the effort as ensuring responsible growth that sustains Texas's economic edge.