Gov. Greg Abbott ordered the Texas Commission on Environmental Quality on Monday to stop issuing new permits for data centers, strengthening his moratorium on the industry’s development in Texas.
The move comes as rapid data center development statewide angers Texas communities ahead of Abbott’s November reelection bid.
Abbott sent the letter to TCEQ Executive Director Kelly Keel, directing the agency to halt all permits to data centers until the Electric Reliability Council of Texas, the state’s nonprofit electric grid operator, and the Texas Water Development Board, which handles state water resource planning, complete an audit of data centers seeking to be built in the state. Those efforts seek information about planned data centers’ electricity use, water use, impact on local communities, ownership information and use of tax breaks.
“Simply put, Texans must come first,” Abbott wrote. “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.”
TCEQ will need to consider the information collected in the audit when it approves future permit applications, necessitating the pause on approvals, Abbott wrote.
The new pause continues Abbott’s reversal on the rapid development of data centers in Texas, which he said in November he wants to become an “epicenter of AI development.”
In June, Abbott first ordered ERCOT and the agency that regulates it, the Public Utility Commission of Texas, to require data centers fully fund the costs of electric infrastructure needed to serve them and take other measures to reduce electricity costs to residents.
On July 17, PUCT Chair Thomas Gleeson responded to Abbott with his own letter outlining efforts the agencies have already taken and calling on the Legislature to grant them more authority to regulate the industry.
Abbott then announced his moratorium on new data centers connecting to the state’s electric grid, ordering ERCOT on Aug. 3 to ensure data center developers provide information on tax breaks they will receive; power use and generation; water use and cooling operations; efforts to reduce impacts on local communities; and ownership of the facility. Any projects that fail Abbott’s ordered “comprehensive verification and audit” should be denied connection to the grid, the governor said.
Abbott’s latest order appears to address concerns that data center developers who build “behind the meter,” or create their own power generation source so they may bypass electric grid approval, would not be delayed by the ERCOT audit. The ERCOT region also does not encompass the entire state, although the PUC and TWDB jurisdiction does.
After as few as 28% of data centers responded to a state-mandated water usage survey, used to determine how much water will be needed in the future, Abbott last Monday directed the TWDB to penalize data centers that do not report their water usage. Abbott instructed the TWDB to partner with the PUC and ERCOT in their audit of the facilities.
“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 the letter to TCEQ Monday. “This action is consistent with my whole-of-government approach to ensure Texans’ natural resources and way of life are protected.”
