Texas Governor Greg Abbott on Sept. 21 directed the Texas Commission on Environmental Quality (TCEQ) to halt all permits sought by data centers until the Electric Reliability Council of Texas (ERCOT) completes an audit.
Because the Public Utility Commission of Texas (PUCT), ERCOT, and the Texas Water Development Board (TWDB) require that information to make informed decisions, no state agency will move forward with regulatory approvals related to data center development until it is acquired.
Abbott directed the PUCT and ERCOT to audit all data centers undergoing ERCOT’s interconnection process so their development does not compromise the reliability of the Texas electric grid and does not put Texans’ natural resources at risk.
On September 14, he directed TWDB to compel data centers to comply with water-use reporting requirements, impose legal consequences for past and future failure to comply with state law, and partner with ERCOT on the audit to obtain additional water-use information.
The PUCT, ERCOT, and TWDB will determine the impact of data centers on grid reliability and security and on the water resources needed by Texas communities.
Data center projects must cover all electrical infrastructure costs, result in lower residential electrical bills, and complete the ERCOT audit. Data centers must not use water needed by local communities, must report electricity and water usage, and must abide by setback requirements that will protect the communities in which they operate, the governor's office said.
As ERCOT and TWDB conduct their audits, TCEQ must align its permitting decisions with the Governor’s directives and use the information from those audits.
TCEQ will provide an update to the Office of the Governor on its compliance with this directive by Monday, October 19, 2026.
In the next legislative session, Abbott will work with the Legislature to eliminate any financial incentives for data centers.
