Gov. Greg Abbott has ordered Texas environmental regulators to stop issuing permits for data centers, expanding a moratorium on new projects as concerns grow over the industry’s demand for electricity and water.
Abbott directed the Texas Commission on Environmental Quality on Monday to halt permits sought by data center projects until state agencies complete ongoing audits examining their potential impact.
“Simply put, Texans must come first,” Abbott said. “Data centers must pay their own way, protect our grid and water, and complete the ERCOT and TWDB audits. Until they do, TCEQ will issue no permits sought by data center projects.”
The order marks another step in Abbott’s changing approach to Texas’ rapidly expanding data center industry. Abbott previously promoted Texas as a potential hub for artificial intelligence development, but his administration has imposed increasingly strict requirements on proposed data centers as communities raise concerns about their effects on the electric grid, water supplies and surrounding areas.
Under the latest directive, TCEQ must wait for information being gathered by the Electric Reliability Council of Texas, Public Utility Commission of Texas and Texas Water Development Board before moving forward with regulatory approvals.
The audits are examining proposed data centers’ electricity and water consumption, ownership, tax incentives and potential effects on local communities.
Abbott said TCEQ will also be expected to consider information collected through those audits when evaluating future permit applications. TCEQ has been directed to provide the governor’s office with an update on its compliance by Oct. 19.
The environmental permitting freeze builds on actions Abbott has taken throughout the summer.
In June, Abbott directed ERCOT and the PUC to require data centers to cover the costs of electrical infrastructure necessary to serve their facilities and take steps intended to prevent those costs from being passed along to residential customers.
Abbott followed that action in August by ordering an audit of data centers seeking connections to the ERCOT grid. Developers were required to provide information about their expected electricity demand and generation, water consumption and cooling systems, ownership, tax incentives and efforts to limit their effects on surrounding communities.
Projects that fail the state’s verification and audit process can be denied a connection to the ERCOT grid.
The latest TCEQ directive broadens the state’s approach beyond projects seeking traditional grid connections. Some data centers plan to generate their own electricity “behind the meter,” potentially allowing them to operate without going through ERCOT’s standard grid-connection process. ERCOT also does not cover every part of Texas.
Water use has become another focus of the state’s scrutiny.
After a state-mandated survey received responses from as few as 28% of data centers, Abbott last week directed the Texas Water Development Board to compel facilities to comply with water-use reporting requirements and pursue consequences for failures to comply with state law.
The water board was also instructed to work with ERCOT and the PUC as part of the broader audit.
“Because the information sought by the PUC, ERCOT, and TWDB is necessary to make informed decisions by each of those agencies, no other state agency shall move forward with regulatory approvals related to data centers until this information is acquired,” Abbott wrote in his letter to TCEQ.
The restrictions represent a notable shift from Abbott’s earlier embrace of the industry as Texas attempts to balance economic development and the growth of artificial intelligence with mounting concerns over the resources required to operate massive data center campuses.
