Texas’ AI Data Center Boom Is Becoming a Fight Over Water

Across Texas, a territorial dispute has erupted over the construction of artificial intelligence data centers. In August 2026, Governor Greg Abbott issued a moratorium on 248+ planned AI data center projects due to concerns about their impact on the state's power grid. The Electric Reliability Council of Texas (ERCOT) has received 474 gigawatts in connection requests, more than five times the state's peak demand typically experienced during summer and winter months.

However, the controversy is not limited to one region; instead, it is concentrated in two areas: Cameron County in the Rio Grande Valley and Hays County just outside of Austin.

In Cameron County, the issue revolves around water supply from the Rio Grande River. A Scottish-based company named Eneus has an option to purchase 1,775 acres of land near Valley International Airport in Harlingen, where a data center campus with a potential capacity of up to 2 gigawatts would be constructed. However, the project has not been officially proposed to local authorities.

The local Brownsville City Commission has scheduled public hearings to consider a 90-day moratorium on approving new data centers, with their primary concern being the limited supply of the Rio Grande River. The river has a history of extreme weather fluctuations, leading to water scarcity problems for residents and agriculture.

State Senator Juan Chuy Hinojosa has scheduled hearings to discuss the issue, aiming to base the state's response on research rather than speculation. However, the same question remains: who has the legal authority to halt data center development?

Simultaneously, in Hays County, a similar dispute is unfolding regarding water scarcity and its potential impact on the local community. Rancher Torrie Martin, whose family ranch is located near a proposed data center site in San Marcos, claims that existing projects have already affected her water supply and livestock. The San Marcos City Council, after a prolonged public hearing, rejected a proposed $1.5 billion data center in February 2026 and subsequently banned new data center development within city limits in June 2026.

Hays County also paused approvals for water-intensive development until the end of 2026. However, the legality of these local measures is in question, as a state senator has warned the Texas Attorney General that counties do not have the authority to impose moratoriums on development projects. Hays County has since delayed making its moratorium permanent due to the legal threats surrounding the issue.

In summary, both regions - Cameron County and Hays County - are grappling with the same issue of water scarcity due to the development of AI data centers. While Cameron County relies on the Rio Grande River, which has a history of water scarcity, Hays County has already implemented measures such as city-level bans and a county-wide pause on approvals until 2026.

The central question remains: who holds the power to approve, pause, or deny data center development projects in Texas? The issue persists, with both local and state governments struggling to find a resolution.