Texas Landowner's Data Center Toolkit

Executive Summary

Texas is experiencing rapid growth in data center development driven by increasing demand for cloud computing, artificial intelligence (AI), and digital infrastructure. These projects can generate investment, tax revenue, and infrastructure improvements, but they also raise important questions for neighboring landowners regarding water use, electricity demand, air quality, property impacts, and community benefits.

This toolkit provides Texas landowners with factual information about proposed data center projects and their potential effects on surrounding properties and communities. It explains key topics including water consumption, groundwater resources, electric-grid demand, backup generators, air emissions, noise, lighting, and changes to rural land use. The toolkit also discusses property-value considerations, methods for documenting potential impacts, and opportunities for public participation during permitting and development processes.

Because data centers are a relatively new form of large-scale development, many questions remain unresolved. Potential impacts often depend on project size, location, environmental conditions, and community characteristics. As a result, claims that a data center will automatically benefit or harm neighboring properties should be evaluated carefully using site-specific information.

The goal of this toolkit is to promote transparency, informed decision-making, and constructive engagement. By understanding available information, asking informed questions, and participating early in public processes, landowners can better evaluate proposed projects and their potential long-term implications.

What Are Data Centers and Why Is Texas Experiencing a Boom?

Data centers are facilities that house computer servers and related equipment used to store, process, and transmit digital information. They support services such as cloud computing, video streaming, online banking, and artificial intelligence (AI). Because these facilities operate around the clock, they require significant electricity, cooling, and telecommunications infrastructure.

Texas has become a leading destination for data center development due to growing demand for AI and cloud services, abundant land, a business-friendly climate, and access to the ERCOT electric grid. Hundreds of facilities are already operating or planned across the state. While supporters cite economic benefits, many landowners and communities are increasingly focused on potential impacts to water resources, electricity demand, air quality, infrastructure, and rural land use. Understanding these issues can help landowners evaluate proposed projects in their area.

How Much Water Do Data Centers Use?

Water is essential to many modern data centers because servers generate large amounts of heat that must be removed to maintain reliable operations. While some facilities rely on air cooling, many large data centers use water-based cooling systems because they can be more efficient, particularly in hot climates such as Texas.

Water consumption varies based on facility size, climate, and cooling technology. Evaporative cooling systems consume water as it evaporates to remove heat, while closed-loop systems recycle water and generally use less. Data centers also contribute to indirect water consumption through electricity generation, as many power plants require water for cooling and other operations.

The rapid growth of cloud computing and artificial intelligence (AI) is increasing demand for new data centers. AI-focused facilities often require greater computing power, resulting in higher energy and cooling needs. Researchers at the University of Texas Jackson School of Geosciences project that data centers currently account for approximately 1% of Texas water use, but that demand could increase to 3–9% by 2040 as artificial intelligence and cloud computing continue to expand.¹ The study notes that actual water consumption will vary depending on facility design, cooling technology, climate, conservation practices, and the location of future development.²

Water use has become a growing concern because many Texas communities already face competing demands from residential growth, agriculture, industry, and recurring drought conditions. In regions that depend heavily on groundwater, large-scale data center development may place additional pressure on local water resources, particularly when multiple facilities are located in the same area. Although data centers are only one category of water user, their resource needs can be significant. As a result, landowners, community leaders, and water planners are increasingly seeking transparency regarding projected water use, conservation measures, and long-term sustainability plans before major projects move forward.

Case in Point: Hood County's Comanche Circle Dispute

A proposed Hood County data center project became controversial after water district records cited large projected water demands. The developer later disputed those figures, stating the project's actual water use would be much lower. The controversy prompted unsuccessful efforts to pause new data center development, highlighting tensions between local concerns over water resources and the limited authority Texas counties have to regulate development.³⁴

Case in Point: Abilene Water Planning

As multiple large data-center projects were proposed near Abilene, local officials and residents began evaluating whether existing water supplies and infrastructure would be sufficient to support rapid industrial growth while continuing to meet residential, agricultural, and commercial needs. The discussions highlighted the importance of long-term water planning, conservation strategies, and transparency regarding projected water demand before large-scale facilities are approved. The case illustrates how even communities with established water systems may face new planning challenges as data-center development accelerates.⁵⁶

Groundwater, Aquifers, and Texas Water Law

Much of Texas depends on groundwater stored in underground geologic formations known as aquifers. Major aquifers—including the Ogallala, Edwards, Carrizo-Wilcox, Gulf Coast, and Trinity—supply water for municipalities, agriculture, industry, and private well owners across the state. Because many proposed data centers are being developed in areas that rely heavily on groundwater, questions about water availability and long-term sustainability have become increasingly important.

Texas follows the "rule of capture," which generally allows landowners to pump groundwater beneath their property, even if withdrawals affect neighboring wells. However, groundwater use is often subject to local regulation. Groundwater Conservation Districts (GCDs) serve as the primary managers of groundwater resources in many regions and may require permits for large withdrawals. Depending on the district, pumping may also be subject to monitoring, reporting, spacing requirements, conservation measures, or production limits.

When evaluating a proposed data center, landowners should determine where the facility's water will originate, whether groundwater permits are required, and which agencies oversee water use. Supplies may come from municipal systems, private wells, surface water sources, recycled water, or a combination of these sources. The potential impact of a project often depends on local aquifer conditions, existing water demands, and future growth projections.

Understanding the applicable groundwater district, local water-management plans, and aquifer conditions can help landowners assess whether a project may affect water availability over time. Reviewing permit applications, public records, and water-supply plans can provide valuable insight into how developers intend to meet long-term water needs while addressing community concerns about sustainability.

Case in Point: Project Aquila (Hill County)

Project Aquila, a large proposed data center development in Hill County, became the focus of local debate regarding land acquisition, water use, infrastructure demands, and the potential impacts of large-scale industrial development in a rural area. Community members raised questions about the project's long-term effects on local resources and whether neighboring landowners would share in the benefits generated by the development.

The project became the subject of local controversy and subsequent litigation concerning land use, infrastructure planning, and county authority over large-scale data center development.⁷⁸ The case illustrates why communities frequently seek mitigation measures, voluntary commitments, infrastructure improvements, or other forms of compensation when large projects may impose localized impacts on nearby residents.

Questions Landowners Should Ask About Water

Before a major data center project is approved, landowners may wish to seek answers to several key questions:

1. What water sources will supply the project (e.g., municipal systems, groundwater, surface water, or recycled water), and which aquifer(s) may be affected?
2. How much water is projected to be used annually and during peak demand periods?
3. Has the developer obtained or applied for all required groundwater permits and water-use approvals?
4. What conservation measures, water-recycling technologies, or efficiency practices will be used to reduce water consumption?
5. How will water use be monitored, measured, and reported to the public?
6. What commitments has the developer made regarding water conservation, drought planning, aquifer protection, and long-term water sustainability?
7. Could future expansion of the facility significantly increase water demand beyond current projections?
8. Has the project evaluated potential impacts on nearby wells, groundwater levels, or local water supplies?
9. Will new water infrastructure be required, and who will bear the costs—the developer, taxpayers, or local ratepayers?
10. Could the project increase water costs or create economic impacts for residents, agricultural users, private well owners, or other existing water users?

Obtaining clear answers to these questions can help landowners better understand the potential implications of a proposed project and participate more effectively in public discussions and planning processes.

Energy Demand, ERCOT, and Electric Bills

Data centers are among the most electricity-intensive facilities in the modern economy. They require continuous power to operate servers, cooling systems, and supporting infrastructure. As Texas attracts more data center development, particularly facilities supporting artificial intelligence (AI), energy demand has become a growing public concern.

Most of Texas is served by the Electric Reliability Council of Texas (ERCOT), which manages grid reliability and electricity transmission. ERCOT projects that data centers will be a major driver of future electricity demand growth, with some large facilities requiring enough power to serve tens of thousands of homes.

The potential impact on electric bills remains a subject of debate. Supporters argue that large industrial customers can help justify investments in new generation and transmission infrastructure. Others contend that rapid growth in electricity demand may contribute to higher wholesale power prices, increased infrastructure costs, and added strain on the grid during periods of peak demand or extreme weather.

For landowners and communities, important questions include how a proposed facility will obtain power, whether new transmission lines or substations will be required, who will bear infrastructure costs, and how future expansion may affect local energy demand. Understanding these issues can help stakeholders evaluate both the economic benefits and potential impacts of data center development.

Generators, Emissions, and Air Quality

Although data centers are often viewed as relatively clean facilities, they can have important air-quality impacts. Most Texas data centers rely on electricity supplied through the ERCOT grid, while also maintaining backup power systems to ensure uninterrupted operations during outages, extreme heat, hurricanes, or winter storms.

Backup power is typically provided by diesel or natural-gas generators. While these units generally operate only during emergencies and routine testing, they can emit nitrogen oxides (NOx), particulate matter, carbon monoxide, volatile organic compounds (VOCs), and greenhouse gases. In regions already facing air-quality challenges, such as Dallas–Fort Worth and Houston, these emissions may raise concerns for nearby residents. Construction activities can also generate dust, vehicle emissions, and noise.

As Texas attracts larger data center campuses, some projects require hundreds of megawatts of electricity and may propose dedicated natural-gas generation or other on-site power sources. These developments can create additional air-quality considerations beyond the facility itself, including emissions associated with increased electricity generation.

Case in Point: San Antonio

Vantage Data Centers sought a permit to expand its Rogers Road campus in San Antonio, increasing backup diesel generators from 32 to 65. The campus also includes on-site natural gas–fired power generation to help support operations. The proposal generated public concern regarding emissions, health impacts, and community participation in the permitting process.⁹¹⁰ The case illustrates how air quality, public transparency, and environmental review can become significant issues when large data center projects expand near residential areas. Understanding generator use, emissions, and permitting requirements can help landowners evaluate potential environmental impacts and participate effectively in local decision-making.

Understanding Air Permits and Public Records

Air emissions in Texas are regulated by the Texas Commission on Environmental Quality (TCEQ). Depending on the type, size, and operation of generators or on-site power equipment, a data center may qualify for a Permit by Rule, a Standard Permit, or a site-specific air permit. Air permits typically contain information about equipment, fuel types, expected emissions, operating limits, and monitoring requirements.

Landowners can often review permit applications, public notices, emissions inventories, compliance reports, and enforcement records through TCEQ databases or public information requests. These records may reveal how much pollution is expected, whether air-quality modeling was conducted, and whether the operator has a history of regulatory violations. Reviewing these documents early in the permitting process can help residents better understand potential impacts and identify opportunities for public participation.

Questions Landowners Should Ask About Air Quality

1. How much electricity will the facility require during normal operations?
2. Will the project use only grid power, or are dedicated power plants planned?
3. How many backup generators will be installed, and what fuel will they use?
4. How often will generators be tested, and for how long?
5. What annual emissions are projected from generators and other on-site equipment?
6. Has air-quality modeling been conducted for nearby homes, schools, or businesses?
7. Could future expansion significantly increase emissions or power generation needs?
8. Has the developer or operator received any air-quality violations or enforcement actions in Texas?
9. What monitoring, reporting, and compliance measures will be used?
10. How can residents access permit documents, emissions reports, and future public notices?

Noise, Health, and Quiet Enjoyment

Noise is one of the most common concerns raised by residents living near large data center developments. Although data centers do not generate the heavy industrial noise associated with manufacturing facilities, they often operate continuously, 24 hours a day, 365 days a year. Cooling equipment, rooftop chillers, large fans, transformers, electrical substations, and backup generators can create persistent background noise that may be noticeable from neighboring properties.

Construction activities can also produce temporary but significant noise from heavy equipment, truck traffic, grading, and infrastructure installation. Once operational, routine generator testing and maintenance activities may generate intermittent high-noise events. The intensity of these impacts depends on factors such as facility size, distance from residences, local topography, vegetation, and the effectiveness of noise-mitigation measures.

Research has found that prolonged exposure to environmental noise can affect quality of life and may contribute to sleep disturbance, stress, annoyance, and other health concerns.¹¹ (Evidence type: Analogous — this research measures road, rail, and aircraft noise rather than data centers specifically. Direct data-center health studies remain rare; see the Research & Studies library for how each source is labeled.) For many rural landowners, concerns extend beyond measurable decibel levels to the broader issue of "quiet enjoyment"—the ability to use and enjoy property without unreasonable interference from nearby industrial activities.

When evaluating a proposed data center, landowners may wish to review noise studies, projected sound levels at property boundaries, generator-testing schedules, and planned mitigation measures such as sound walls, equipment enclosures, setbacks, and vegetative buffers. Understanding how noise will be measured, monitored, and managed can help communities assess potential impacts before construction begins and identify opportunities to reduce conflicts between industrial development and neighboring land uses.

Case in Point: Granbury Bitcoin Mining Litigation

Residents near a large cryptocurrency mining operation in Granbury, Texas, filed lawsuits alleging that continuous noise from cooling fans and mining equipment interfered with sleep, quality of life, and the use and enjoyment of their property. Plaintiffs argued that the noise constituted a nuisance and sought damages and other remedies. The operator disputed the allegations and implemented certain mitigation measures, but the litigation highlighted how noise concerns can become one of the most immediate and contentious issues associated with large-scale digital infrastructure projects.¹²¹³

Although cryptocurrency mining facilities differ from traditional data centers, the dispute illustrates how persistent operational noise can generate community opposition, property-owner complaints, and legal challenges. The case underscores the importance of noise studies, setback distances, mitigation measures, and ongoing monitoring when evaluating proposed facilities near residential or rural properties.

Visual Impacts, Light Pollution, and Rural Industrialization

Data centers can significantly alter the visual character of rural and agricultural landscapes. Large facilities often include expansive buildings, cooling equipment, substations, transmission infrastructure, security fencing, and parking areas that may be visible from nearby homes, roads, and open spaces. While data centers generally have a smaller visual footprint than some industrial facilities, their scale can still change community character and viewsheds.

Lighting is another common concern. Data centers typically operate 24 hours a day and require exterior security lighting, illuminated access points, and occasional construction lighting. Excessive nighttime lighting may affect neighboring properties, reduce visibility of the night sky, and contribute to light pollution if not properly designed and shielded.

For some communities, concerns extend beyond individual projects to the broader issue of rural industrialization. Multiple data centers, substations, transmission lines, and supporting infrastructure can gradually transform predominantly rural areas into industrial corridors. When evaluating a proposed facility, landowners may wish to review site plans, building elevations, landscaping commitments, lighting designs, and future expansion plans to better understand potential long-term impacts on local character and property enjoyment.

Property Values: What We Know and Don't Know

Questions about property values frequently arise when large industrial projects are proposed, and data centers are no exception. Unfortunately, there is no simple answer. Property-value impacts vary depending on the type of development, local market conditions, distance from the facility, and community perceptions. The same project may affect neighboring properties differently depending on their location, intended use, and the characteristics of the surrounding area.

Research on industrial and infrastructure projects generally suggests that properties located closest to visible facilities, heavy truck traffic, noise sources, transmission lines, substations, or perceived environmental risks may experience downward pressure on value. Buyers often consider factors such as aesthetics, noise, traffic, and uncertainty when evaluating nearby properties. Agricultural landowners may also be concerned about changes in rural character, future development pressure, or the potential loss of open space.

At the same time, new development can produce economic benefits that support property values. Data centers may increase local tax revenues, create construction employment, improve roads or utilities, and attract related business investment. In growing communities, these benefits can contribute to stronger real estate markets. As a result, some properties may experience appreciation while others experience little change or even decline.

Data centers present a unique challenge because they are relatively new compared to other forms of industrial development, and long-term research remains limited. Existing studies have produced mixed findings, making it difficult to predict impacts with confidence. In Texas, outcomes may differ significantly between urban, suburban, and rural areas. A facility located within an established industrial corridor may have minimal effect on surrounding property values, while the same project in a rural agricultural area may generate greater concern about land-use change and community character.

Because many factors influence real estate markets, claims that a data center will automatically increase or decrease property values should be viewed cautiously. The strongest evidence typically comes from local appraisals, market analyses, sales data, and comparable developments in similar communities. Landowners may benefit from documenting property conditions before development occurs, tracking local sales trends, and consulting qualified appraisers or real estate professionals when evaluating potential impacts.

Documenting Potential Harm to Property

The most useful documentation is often collected before construction begins, creating a baseline against which future changes can be compared. Landowners concerned about potential impacts from a proposed data center should begin documenting existing conditions before construction starts. Establishing a clear baseline can make it easier to identify and evaluate changes that may occur during construction or facility operations. Useful records may include photographs, videos, property surveys, appraisal reports, well logs, water-quality test results, noise measurements, drainage patterns, vegetation conditions, and written descriptions of current property use.

Property owners may also wish to retain copies of public notices, permit applications, environmental studies, traffic analyses, developer presentations, correspondence, and meeting materials related to the project. Maintaining an organized file of project documents can help track commitments made by developers and identify changes over time.

If concerns arise during construction or operation, landowners should document specific incidents as soon as possible. Records may include dates, times, photographs, videos, weather conditions, witness observations, and descriptions of issues such as excessive noise, dust, traffic, vibration, drainage problems, flooding, light pollution, or impacts to wells and water supplies. Consistent documentation can be particularly valuable when multiple incidents occur over an extended period.

While documentation alone does not establish liability or damages, it can provide important evidence when communicating concerns to developers, regulators, local governments, insurers, appraisers, or legal counsel. Thorough records may also assist professionals in evaluating whether measurable impacts have occurred and what responses may be appropriate.

Questions Landowners Should Ask About Property Impacts

Property impacts can vary significantly depending on project size, location, and surrounding land uses. Before a project moves forward, landowners may wish to ask:

1. How large will the facility and associated infrastructure be?
2. What noise levels are projected during construction and normal operations?
3. Where will generators, cooling equipment, substations, and transmission facilities be located?
4. What measures will be used to reduce noise, lighting, and visual impacts?
5. Will new transmission lines, utility corridors, or access roads be required?
6. Has the developer conducted any property-value, traffic, or community-impact studies?
7. What landscaping, setbacks, screening, or buffering measures are planned?
8. How will construction and operational traffic affect local roads?
9. What process exists for reporting and resolving complaints?
10. How can landowners document potential impacts and seek assistance if concerns arise?

Why Compensation May Be Appropriate

Not every large development project creates impacts that warrant compensation. However, when a project imposes costs, risks, or burdens on nearby landowners while providing benefits primarily to others, communities often ask whether compensation or mitigation measures are appropriate.

Data centers can create a variety of potential impacts, including increased demand on local water supplies, changes in land use, industrialization of rural areas, construction disruptions, visual impacts, noise, traffic, and potential effects on property values. Even when a project complies with all applicable laws and regulations, nearby residents may bear costs that are not reflected in the project's economic benefits. For example, a landowner may experience increased noise, reduced scenic views, or concerns about future water availability without receiving any direct financial benefit from the facility.

Compensation can serve several purposes. It may help offset documented impacts, fund community improvements, support infrastructure upgrades, protect environmental resources, or address fairness concerns. In some cases, compensation takes the form of direct payments to affected property owners. More commonly, it is provided through community-benefit agreements, infrastructure investments, conservation programs, educational initiatives, emergency services support, or environmental mitigation projects.

Whether compensation is appropriate depends on the nature and extent of the impacts, local community priorities, and applicable legal requirements. Landowners should recognize that compensation is not automatically required simply because a project is proposed. However, communities often have opportunities to negotiate voluntary commitments, advocate for mitigation measures, and participate in public decision-making processes that influence the distribution of project benefits and burdens.

Compensation and Community Benefit Mechanisms

Communities across the United States have used a variety of mechanisms to address concerns associated with large development projects. These approaches generally seek to balance economic development with community needs while ensuring that residents share in the benefits of major investments.

One common approach is a Community Benefit Agreement (CBA), a voluntary agreement between developers and community organizations that outlines specific commitments related to jobs, infrastructure, environmental protections, public services, or other local priorities. While CBAs are most common in urban redevelopment projects, similar concepts have been applied to industrial facilities, energy projects, and large infrastructure developments.

Community benefits can take many forms. Developers may agree to fund road improvements, water-system upgrades, broadband expansion, emergency response equipment, workforce training programs, scholarships, parks, recreational facilities, or environmental monitoring efforts. Some communities have negotiated property-value protection programs, groundwater monitoring, conservation initiatives, or habitat restoration projects designed to address concerns about long-term impacts.

In Texas, benefits are often incorporated into development agreements, infrastructure agreements, tax-abatement arrangements, utility commitments, or other negotiated understandings with local governments. In some cases, developers voluntarily provide funding or services beyond what is legally required in order to build community support and address local concerns.

Landowners should carefully evaluate proposed commitments and ask whether they are documented, funded, and enforceable. Important considerations include who will pay for the benefit, when it will be delivered, how success will be measured, and what happens if commitments are not fulfilled. The most effective community-benefit programs are transparent, measurable, and subject to ongoing oversight, with clear procedures for monitoring compliance and resolving disputes.

Case in Point: Compensation and Buyout Precedents

Across the United States, communities have negotiated a variety of compensation and community-benefit arrangements in connection with major industrial, infrastructure, energy, and redevelopment projects. These agreements have included property buyouts, direct payments to affected landowners, infrastructure investments, environmental monitoring programs, groundwater protection measures, workforce-development initiatives, and community-improvement funds.

While no single model applies to every project, these examples demonstrate that developers and communities sometimes negotiate voluntary measures designed to address concerns about noise, traffic, environmental impacts, property values, or changes in community character. The existence of such precedents does not mean compensation is legally required, but it does show that mitigation and benefit-sharing mechanisms have been used in other contexts to address perceived inequities associated with large-scale development.

See the Appendix for documented examples.

Your Rights and Options

Texas landowners have several options for obtaining information and participating in decisions related to proposed data center projects. Depending on the circumstances, residents may review permit applications, submit public comments, attend public meetings, request public records, communicate with local officials, and participate in regulatory hearings. These opportunities can help landowners better understand project impacts and ensure that community concerns are considered during the decision-making process.

Landowners may also work with neighbors, civic organizations, agricultural groups, groundwater districts, or local governments to gather information and advocate for shared priorities. Early engagement is often more effective than waiting until permits have been approved or construction is underway.

Because legal rights vary by project type, location, and regulatory process, individuals should seek professional advice when necessary. Attorneys, engineers, appraisers, environmental consultants, and other qualified experts can help evaluate issues involving property rights, contracts, easements, water resources, environmental regulations, and potential compensation claims. Informed participation can help landowners protect their interests while contributing to constructive community discussions.

When Should You Seek Professional Advice?

While many concerns can be addressed by reviewing public records, participating in public meetings, and communicating with developers or local officials, some situations may warrant consultation with qualified professionals. Landowners may wish to seek legal, engineering, environmental, or appraisal advice when they observe measurable changes affecting water supplies, access, easement rights, noise, emissions, drainage, property use, or property value; when a proposed project may affect existing legal rights; or when evaluating agreements, compensation proposals, or mitigation commitments. Early consultation can help landowners understand available options and preserve relevant information while projects are still in the planning or permitting stages. Early preparation and informed participation can help landowners make better decisions and respond more effectively if concerns arise later.

Texas Resource Directory

The following organizations provide information that may help landowners evaluate proposed developments and understand available options:

• Texas Commission on Environmental Quality (TCEQ) — Air permits, water permits, environmental complaints, and public participation opportunities.
• Texas Water Development Board (TWDB) — Groundwater, water planning, aquifer information, and drought resources.
• Public Utility Commission of Texas (PUCT) — Electric utilities, transmission projects, and utility regulation.
• Electric Reliability Council of Texas (ERCOT) — Texas electric grid operations and planning information.
• Texas A&M AgriLife Extension Service — Landowner education, agricultural resources, and community-development information.
• Texas State Law Library — Public legal information and property-rights resources.

Appendix: Documented Data Center Land Acquisition, Compensation, and Buyout Precedents

The following examples summarize publicly reported data center land acquisitions, valuation analyses, and compensation-related precedents relevant to landowners evaluating data center development proposals. While many transactions remain confidential, these cases illustrate how data-center demand can influence land values and compensation negotiations.