Council looks to expand AI policies, examine energy and water needs for data centers - Austin Monitor (2025)

Later this week, City Council will consider a substantial expansion of the city’s artificial intelligence oversight, incorporating detailed guidance on workforce protections, public transparency, and the environmental impacts of growing AI infrastructure. The resolution on Thursday’s agenda builds on a policy passed in February 2024, but goes further by requiring audits, defining acceptable AI uses, and mandating human oversight of AI decisions affecting city employees and operations.

The proposed resolution directs the city manager to conduct a regional environmental study, in partnership with Austin Energy and Austin Water, focused on the anticipated growth of data centers over the next decade. That assessment will examine their energy and water demands, the potential impacts on utility rates and ways to promote clean energy usage and water efficiency in their operation.

The policy also introduces reporting requirements on how data centers might affect long-term infrastructure capacity in Austin’s utility service area, reflecting a broader concern that AI technology could strain local resources if not managed carefully.

The resolution, which is sponsored by Mayor Pro Tem Vanessa Fuentes, also sets guidelines to prohibit the use of AI by the city in areas such as real-time employee surveillance, biometric data collection, and automated decisions in policing or personnel matters. It includes language that creates a “no displacement without consultation” labor policy, requiring prior notice and dialogue with union representatives if AI deployment is expected to eliminate or alter city jobs.

The City Manager would be required to create notices informing city staff about any AI system used to evaluate their job performance, wages, or work conditions. Those evaluations would have to include an appeals process including human review.

Fuentes said the city needs to take steps to manage the move of AI into city operations, while also preparing city-owned utility companies for the increased demands of data centers located in her district and elsewhere in southeast Travis County.

“AI is transforming our economy, reshaping our labor market, and in a lot of ways, it’s introduced new powerful efficiencies in the workplace. But as part of that, we know that there are some real risks associated with AI,” she said. “One area of particular focus for me as the representative of the Southeast is around our energy usage. Texas has done a lot around trying to bring more data centers into Texas, and just knowing what the activity going on in our region, for me, was really important for the city to assess the environmental impact around data centers and how that might impact our resources that we have here locally.”

The proposed steps mark a substantial shift from the original AI policy passed in February 2024, which emphasized general principles such as transparency, fairness, and bias mitigation but left implementation details to be developed over time. That resolution called for the creation of an advisory committee and high-level accountability processes but did not address AI’s physical infrastructure needs or its impact on city services and workforce conditions with the same level of specificity.

The new resolution reflects rising concerns about energy infrastructure in Central Texas as AI and other data-heavy industries drive increased demand for land, water and energy.

At a recent infrastructure summit hosted by the Austin Chamber of Commerce, industry leaders from the Lower Colorado River Authority and private energy firms said that demand from new data centers is creating capacity challenges across the region. They warned that some data centers require as much power as a city of 100,000 homes, and that current infrastructure is not sufficient to meet such dramatic increases.

In the first half of 2024, data center construction in the Austin-San Antonio corridor more than quadrupled compared to the previous year, reaching 463.5 megawatts (MW) of capacity under construction—96% of which was pre-leased. This expansion positions the region to become the second-largest data center market in the U.S., trailing only Northern Virginia.

The Austin data center market is projected to grow 7% annually through 2031, with the growth in AI technology demanding increasing power and cooling requirements that significantly increase energy densities. The Electric Reliability Council of Texas (ERCOT) anticipates that grid capacity will need to increase from 85,000 MW to 150,000 MW within six years to accommodate the growing load from data centers and other high-demand industries.

In addition to technical standards, the resolution also calls for a public awareness campaign and community engagement on AI deployment, with regular updates and policy recommendations to be reviewed by the AI Advisory Committee and the city’s Technology Commission.

An initial report on AI-related training, auditing, and infrastructure planning is due to Council by October 2025, followed by annual reports tracking impacts on workers and city operations. As AI adoption continues to grow, city officials appear committed to balancing innovation with safeguards that protect civil rights, public resources, and the integrity of government services.

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