Texas has moved quickly in recent months to tighten oversight of data center development across the state. Developers now face expanding audit and disclosure demands regarding electricity consumption, water use, and community impacts, along with growing local opposition.
As scrutiny from regulators and communities grows, developers should have legal and communications counsel coordinate closely – ideally from a project’s inception – so that regulatory filings, public statements, and stakeholder communications remain consistent and project changes are explained before they fuel opposition, enforcement risk, or legal challenges.
Recent Actions
In response to concerns over data centers’ impacts on electricity costs, water resources, and quality of life, Governor Greg Abbott – who in November 2025 declared Texas “the epicenter of AI development” – has tightened conditions for data center development through a series of directives and new “guidelines and guardrails” that require developers to address and disclose infrastructure costs and community impacts.
In June, he directed the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to take steps to ensure data centers pay for the electricity infrastructure required to power them and pledged to pursue legislation addressing water efficiency, usage reporting, tax incentives, and community impacts. In August, he directed PUCT and ERCOT to audit data centers advancing through ERCOT’s interconnection process. Just last month, Governor Abbott directed the Texas Water Development Board (TWDB) to enforce water-use reporting requirements and penalize developers for past and future noncompliance and ordered the Texas Commission on Environmental Quality (TCEQ) to halt data center permits until the audit concludes. Audit responses were due on October 12, and failure to complete them can prevent a project from advancing through the interconnection process. Failure to comply with applicable water-use reporting requirements can have separate enforcement and permitting consequences.
The Communications Challenge
The new regulatory requirements make it critical that data center developers effectively engage with local communities, environmental groups, utilities, and other stakeholders, each of which has their own priorities and concerns.
Engagement occurs at different stages of development as project specifications and regulatory requirements evolve, increasing the risk that disclosures become outdated or inconsistent. As a result, developers must be nimble, transparent, and consistent with their stakeholders. Consistency does not mean that projections can never change. Instead, it means the project team should explain what changed, why it changed, when the new information became available, and which prior representations are no longer current. Developers that cannot do so face legal exposure, loss of public trust, and delays that can jeopardize projects.
For example, a change in projected electricity consumption, noise levels, or water usage may be reflected in updated regulatory submissions, while earlier materials with outdated projections remain in circulation. In one recent situation, a data center developer lowered its projected electricity consumption as it refined the project. Earlier regulatory submissions subsequently surfaced showing significantly greater electricity demand. The outdated filings put the developer in a defensive communications posture, creating the perception that it was engaging in “bait and switch” tactics and would increase electricity consumption once the project was approved. As a result, the developer faced increased community opposition, more fodder for legal challenges, and significant project delays that could have been avoided. Without a timely explanation, legitimate project changes (even favorable ones) can raise questions about representations made during the approval process and erode trust.
Communications Recommendations
To reduce legal risk, maintain stakeholder trust, and satisfy reporting requirements, project developers and their legal and communications counsel should establish a disciplined process to manage project disclosures and representations from site selection to ribbon cutting and beyond.
Project development teams should take the following actions:
1. Centralize project facts, disclosures, and key messaging in a single source of truth. Assign clear responsibility for verifying and updating underlying information and maintain a log showing when key assumptions or estimates were revised. A project-specific database can help legal, communications, government affairs, and technical teams work from the same information while tailoring communications to different stakeholders.
2. Distinguish facts from projections, assumptions, and open questions. Developers should clearly identify projections and other aspects of the project that may evolve over time and explain the underlying assumptions. Projects often go through multiple iterations due to evolving regulatory requirements, technological advances, customer needs, and stakeholder feedback. Transparency through a project’s evolution can help developers to maintain credibility as details change.
3. Designate authorized spokespeople who can effectively convey the message and establish a review process. Spokespeople should be trained by communications advisors and equipped to communicate with relevant stakeholders, while legal and technical teams review materials statements for accuracy and consistency. Internal and external project materials (e.g., presentations, websites, FAQs, community-facing materials, etc.) also should be routed through reviews to ensure all messaging is consistent and accurate.
4. Establish a formal process for stakeholder feedback. Record, evaluate, and respond to stakeholder feedback. Track any project changes and assign responsibility for communications follow-up. Having this infrastructure in place will help developers be responsive and determine whether they are meeting their commitments.
5. Reconcile new information with prior disclosures before it becomes a credibility problem. Continuously review earlier regulatory submissions, public statements, and other materials as plans and requirements evolve. Project teams should assess whether earlier disclosures require proactive updates or clarification with affected stakeholders.
Final Thoughts
As new disclosure requirements put more project information into legal, regulatory, and public forums, project developers and their legal and communications counsel should coordinate to ensure that all project representations are accurate and consistent. They also should distinguish current facts from projections and commit to updating stakeholders when material project details change. Discipline in these communications can reduce legal and regulatory risk, preserve credibility with decision makers and local communities, and keep approvals and timelines on track.
Beau Falgout is a founding partner at August, a Chambers-ranked strategic communications firm. Based in Dallas, Falgout advises companies and high-profile individuals on litigation, investigations, crises, and activist campaigns. He previously led in-house M&A and integration communications at Medtronic and advised clients across industries at a global communications agency.
Matt Harrison is a partner at August, a Chambers-ranked strategic communications firm. Based in New York, Harrison advises companies and individuals on high-profile litigation, government investigations, and corporate crises where legal considerations, business objectives, and public perception intersect. He previously led an in-house consulting group at a commercial litigation law firm, where he worked alongside trial teams to develop case narratives related to complex disputes.
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