You may be tired of hearing about Artificial Intelligence (AI), its impacts, and its future.  Whether you agree with it or not, AI is here to stay and will impact our future. It is therefore time to get ahold of AI before it completely takes over. Many states, such as Texas, Utah, Colorado, and California, have rushed to pass laws to restrict or monitor AI.[1] Each state’s law varies, regulating AI through different methods. For example, some states, like Texas, are more innovative and AI receptive.[2] However, other states, like Colorado, restrict algorithmic discrimination and stifle AI innovation.[3] These vastly different approaches have created a patchwork of regulations around the country, which serve to impede AI growth and innovation, especially since AI systems such as ChatGPT are deployed nationwide.

The difference in methodology among the states highlights the need for a federal framework of regulation. But until one is deployed, the more innovative states like Texas are welcoming AI investors and innovators to diversify and bolster their economies.[4] But even this has created problems of its own, further highlighting the need for federal regulation.

Last year, the Texas Legislature passed House Bill 149, the “Texas Responsible Artificial Intelligence Governance Act,” which took effect on January 1, 2026.[5] The Act creates Artificial Intelligence guidelines and an “Artificial Intelligence Council to support innovation and oversee compliance.”[6] Also within the Act is a “regulatory sandbox program for testing innovative AI systems.”[7] This system allows companies to test different AI models in a “sandbox” or vacuum-type environment for up to thirty-six months.[8] The environment is then monitored by the Texas Department of Information Resources (DIR) in order to ensure compliance with the program.[9] This framework has already caused major AI investors dive into Texas to take advantage of the system.[10]

For example, just a few months after the Texas Legislature passed the Act, Google announced a $40 billion investment into new data centers located in Texas.[11] Google is just one of several major AI innovators who have invested billions of dollars into data centers in Texas. Open AI similarly invested $500 billion into its “Stargate project,” which includes locations in Texas.[12] As the Governor of Texas, Greg Abbot, stated, “Texas is the epicenter of AI development, where companies can pai innovation with expanding energy.”[13]

These multi-billion-dollar investments, driven by innovation-friendly laws and independent energy capabilities, have allowed Texas to become the number one state for AI and AI innovation.[14] Yet, as Texas emerges as the top state for this wave of technology and the money continues to pour in, so do greater problems.

There are two major problems with Texas’s position on AI: electricity and water. As companies continue to build these data centers, the demand for energy arises. It is predicted that by 2030, the demand will grow by 142 gigawatts or 270%.[15] Put simply, a lot of energy is required for data centers. For example, it takes about ten to eleven gigawatts to power New York City in the summer.[16] Texas’s energy demand is twice this number, which may cause prices to rise for homeowners or cause technical problems for investors in connection with the power grid.[17]

This extreme power influx has prompted law makers to propose new rules that would require investors to pay a minimum of $50 million for data centers.[18] Furthermore, it serves as a huge risk to investors who seek to build data centers without the security of a complete electrical infrastructure.[19] Without the electrical infrastructure or the ability to tap into Texas’s full electrical grid, data centers will be ineffective and practically useless. But electricity is not the only hurdle to these data centers; massive amounts of water is required to cool the facilities.

Large data centers can use up to 5 million gallons of water per day.[20] In 2025 alone, data centers were projected to use 49 billion gallons of water to cool servers.[21] Furthermore, by 2030, this number is projected to be approximately 400 billion gallons a year due to the influx of data centers.[22] This amount of water, solely for data centers, is more than New York City uses annually.[23] As more water is  required to cool facilities,  the more citizens will have to front the costs, especially in dry climates like Texas. As such, new data centers in pro-AI states will likely cause massive infrastructure problems.

The issues in Texas serve as reminders of the need for a federal framework. As demonstrated, data centers carry massive operating costs, especially for utilities such as electricity and water. Therefore, a federal framework is necessary for uniformity across the union, so that data centers do not drain resources in isolated states like Texas.

Recent actions by the executive branch indicate that it agrees. On December 11, 2025, President Donald Trump signed an executive order to ensure a national policy framework for artificial intelligence.[24] The order sets forth a “minimally burdensome national standard” which would “forbid State laws that conflict with the policy set forth in the [executive order].”[25] The order further assigns an AI litigation Task force to challenge inconsistent state AI laws..[26]

However, the order also proposes legislative provisions that do not preempt state AI laws on categories, such as child safety, date center infrastructure, and state government procurement.[27] This broad executive order appears to entail a comprehensive and uniform system of laws that would monitor AI, while still giving it enough freedom to innovate and regulate corollary issues. As such, data centers can operate uniformly across the nation, eliminating a massive influx into one state.

As AI becomes a part of everyone’s daily lives, innovation is inevitable. State lawmakers are quickly acting to attract data centers and large companies, like Google, to their states to bolster their economies. Texas has emerged as the biggest state in that regard, but problems such as lack of electrical capacity and federal legislation could stifle or shift the existing AI infrastructure. This is just one state example of how AI innovation and its explosion into our culture exposes the need for regulation. With President Trump’s executive order, there appears to be a movement towards federal regulation that will create guidelines, while still bolstering innovation. Until then, states like Texas will likely continue to see a boost in AI data centers and the problems that necessarily arise with it.

[1] Faith Bugenhagen, Texas set to create a council to monitor certain uses of AI, CHRON (Dec. 30, 2025), https://www.chron.com/politics/article/new-texas-law-will-establish-ai-council-21267913.php?utm_source=chatgpt.com.

[2] H.B. 149, 89^th Leg., Reg. Sess. (Tex. 2025).

[3] Exec. Order No. 14,365, 90 Fed. Reg 58499  (Dec. 16, 2025).

[4] Google to invest $40 billion in Texas through 2027, CNBC (Nov. 14, 2025), https://www.cnbc.com/2025/11/14/google-to-invest-40-billion-in-texas-through-2027.html.

[5] H.B. 149, 89^th Leg., Reg. Sess. (Tex. 2025).

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Google to invest $40 billion in Texas through 2027, supra note 4.

[11] Google to invest $40 billion in Texas through 2027, supra note 4.

[12] MacKenzie Sigalos, OpenAI’s first data center in $500 billion Stargate project is open in Texas, with sites coming in New Mexico and Ohio, CNBC (Sep. 23, 2025), https://www.cnbc.com/2025/09/23/openai-first-data-center-in-500-billion-stargate-project-up-in-texas.html.

[13] Paul Cobler, Google to build three new data centers in Texas in $40 billion investment, THE TEXAS TRIBUNE (Nov. 14, 2025), https://www.texastribune.org/2025/11/14/texas-google-data-centers-ai/.

[14] Akul Saxena, Texas Emerged as Top State for AI Infrastructure, BROADBANDBREAKFAST (Nov. 21, 2025), https://broadbandbreakfast.com/texas-emerged-as-top-state-for-ai-infrastructure/.

[15] Kristi Hobbs, Item 16.2: System Planning And Weatherization Update, ERCOT (Dec. 8-9, 2025), chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.ercot.com/files/docs/2025/12/02/16.2-System-Planning-and-Weatherization-Update_Revised.pdf.

[16] New York Electricity Profile 2024, EIA (Nov. 10, 2025), https://www.eia.gov/electricity/state/newyork/.

[17] Spencer Kimball, Red-hot Texas is getting so many data center requests that experts see a bubble, CNBC (Dec. 12, 2025), https://www.cnbc.com/2025/12/12/ai-data-center-flood-texas-on-massive-scale.html.

[18] Id.

[19] Id.

[20] Miguel Yañez-Barnuvo, Data Centers and Water Consumption, EESI (June 25, 2025), https://www.eesi.org/articles/view/data-centers-and-water-consumption.

[21] Theo Burman, Texas Data Centers Use 50 Billion Gallons of Water as State Faces Drought, NEWSWEEK (Aug. 01, 2025), https://www.newsweek.com/texas-data-center-water-artificial-intelligence-2107500.

[22] Id.

[23] Water Consumption in the City of New York, NYC OPENDATA, https://data.cityofnewyork.us/Environment/Water-Consumption-in-the-City-of-New-York/ia2d-e54m/data_preview (last visited Jan. 8, 2025).

[24] Exec. Order No. 14,365, 90 Fed. Reg 58499 (Dec. 16, 2025).

[25] Id.

[26] Id.

[27] Id.

[FC1]2025? or 2026?