As Texas lawmakers prepare for the 2027 legislative session, concerns over the water demands of large-scale data centers are intensifying in the Hill Country. The Blanco-Pedernales Groundwater Conservation District has formally urged the Legislature to clarify and strengthen the authority of groundwater districts to regulate industrial-scale water use tied to rapidly expanding data center development.
The district recently submitted a resolution seeking what it describes as legislative clarity on industrial water rights, warning that existing laws leave groundwater conservation districts vulnerable when confronting high-demand projects backed by major corporations. The resolution specifically calls for statutory protections allowing districts to deny permits when groundwater supplies cannot sustainably support projected demand.
Groundwater conservation districts are local entities established under Texas law to manage and protect groundwater resources within designated regions. Officials with the Blanco-Pedernales district argue that current legal gaps create uncertainty about how far districts can go in restricting water-intensive industrial developments, especially as Central Texas faces prolonged drought conditions and increasing population growth.
District leaders say the concern is not merely theoretical. The Texas Hill Country has emerged as an increasingly attractive destination for data center investment due to its large tracts of available land, growing fiber-optic infrastructure, and proximity to Austin’s technology sector. But while those characteristics appeal to developers, the district warns that the region’s aquifers may not be equipped to sustain the immense water demands associated with artificial intelligence infrastructure and large computing facilities.
The district’s resolution states that data centers can place disproportionate pressure on local groundwater supplies, particularly in areas already facing water scarcity. Blanco County and surrounding portions of Central Texas rely heavily on groundwater from the Edwards-Trinity, Trinity, and Ellenburger-San Saba aquifers, along with several smaller aquifer systems. Officials say ongoing drought has already strained municipal, agricultural, and industrial water users throughout the region.
District leadership has emphasized that agricultural operations and environmentally sensitive waterways could face some of the most severe consequences if groundwater depletion accelerates. Rivers and streams across the Hill Country depend heavily on aquifer discharge to maintain base flow, especially during dry periods. Reduced groundwater levels could threaten both farming operations and aquatic ecosystems that rely on steady spring and stream flows.
The resolution also highlights what the district considers a major transparency problem surrounding data center development. Officials argue that Texas currently lacks sufficient reporting requirements for projected industrial water consumption, making long-term regional water planning increasingly difficult. Without clearer disclosure requirements, local governments and groundwater districts may struggle to accurately forecast future demand or evaluate cumulative impacts on aquifers.
The district is also urging lawmakers to require data center applicants to evaluate emerging low-water or reduced-footprint cooling technologies before permits are approved. Officials contend that technological alternatives could lessen pressure on water resources while still allowing continued economic development.
The concerns come as the scale of Texas data center growth accelerates dramatically. A March 2026 report from the Houston Advanced Research Center estimated that Texas data centers currently consume roughly 25 billion gallons of water annually through cooling systems and electricity generation. Researchers project that number could rise to as much as 161 billion gallons by 2030, representing approximately 2.7 percent of total statewide annual water use.
Major technology investments continue to pour into Texas. Last year, OpenAI announced a $500 billion initiative involving partnerships with Oracle, Microsoft, and SoftBank, with multiple Texas projects already underway. Google also announced a $40 billion investment in AI-related data center infrastructure across the state.
Meanwhile, state lawmakers are beginning to focus more heavily on the issue. The Texas Senate Committee on Water, Agriculture, and Rural Affairs and the Texas House Committee on Natural Resources are expected to collaborate on water policy legislation ahead of the next session, where data center growth and water supply concerns are likely to become major topics of debate.
