Texas Governor Greg Abbott ordered the Texas Commission on Environmental Quality (TCEQ) on 21 September 2026 to halt all air and water permits for infrastructure directly supporting data centers, broadening an August moratorium that had left gaps for smaller projects and self-generated power. The pause will remain until ERCOT and the Texas Water Development Board complete a comprehensive grid and community impact audit of more than 400 data centers’ energy and water usage, which ERCOT expects to finish in December. Houston Public Media reported the directive.
Key points
- Abbott’s 21 September directive to TCEQ applies to all air and water permits, closing loopholes in an August ERCOT moratorium limited to grid connections of 75 megawatts or more
- ERCOT and the Texas Water Development Board are auditing more than 400 data centers; completion expected in December
- TCEQ must respond to the directive by 19 October
- BloombergNEF estimates nearly 50 gigawatts of U.S. data center capacity, or almost 20% of the national pipeline, is at risk
- Abbott faces re-election in November after previously promoting Texas as the “epicenter of AI development”
The August moratorium’s gaps
In early August, Abbott directed ERCOT and the Public Utility Commission of Texas to halt approvals for new data centers pending an audit. But ERCOT said it lacked authority to stop grid connections for facilities requesting less than 75 megawatts — enough electricity to power nearly 19,000 homes, according to Houston Public Media. Projects building their own power plants to bypass the grid entirely, known as behind-the-meter generation, also fell outside the moratorium. The ERCOT-managed grid does not cover East Texas, the Texas Panhandle or El Paso, leaving those regions under the Public Utility Commission’s authority with no clear mechanism to block data center connections.
Abbott’s 21 September letter to TCEQ Executive Director Kelly Keel closes these routes. “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, according to the Texas Tribune. The governor directed TCEQ to respond by 19 October.
ERCOT’s audit and TCEQ’s permit pause
ERCOT and the Texas Water Development Board are conducting a survey of more than 400 data centers on energy and water usage, with questions made public Friday, according to Houston Public Media. Individual company responses will remain confidential. TCEQ spokesperson Ryan Vise confirmed in an email to Houston Public Media that the agency “has paused the issuance of all air and water permits and authorizations related to the construction or development of infrastructure directly supporting data centers while ERCOT completes its comprehensive grid and community impact audit.”
“Simply put, Texans must come first,” Abbott said in a news release on Monday. “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.”
Governor Greg Abbott, news release, 21 September 2026
The audit requirement builds on Abbott’s August order that data center developers provide information on tax breaks, power use and generation, water use and cooling operations, community impact efforts, and facility ownership. The Texas Tribune reported that after only 28% of data centers answered a state-mandated water survey, Abbott on 14 September ordered the Texas Water Development Board to penalize non-responding facilities and to coordinate with ERCOT and the Public Utility Commission on the audit.
BloombergNEF’s $8 billion revenue estimate
The permit halt threatens a significant portion of planned U.S. data center capacity. BloombergNEF analysts found that “almost 20% of the U.S.’s 253-GW data center pipeline” would be at risk from the Texas pause, or nearly 50 gigawatts in proposed capacity, according to CNBC. CNBC reported that BloombergNEF estimates the pause could put upwards of $8 billion in data center revenue at risk by the first quarter of 2027. A February JLL report cited by CNBC had placed Texas on track to surpass Virginia as the world’s largest data center market by the end of the decade.
The data center buildout has become a contested issue in the 2026 midterm elections. An NBC News poll found 64% of Americans would be less likely to vote for a candidate who “supports building local data centers,” CNBC reported. Abbott, who is seeking a fourth term against state Representative Gina Hinojosa, has reversed his 2025 position that Texas would become the “epicenter of AI development” through sales tax exemptions for qualifying data centers and projects like OpenAI’s Stargate. His press release on the moratorium stated that “next session, Governor Abbott will work with the Legislature to eliminate any financial incentives for data centers.” Abbott’s critics have urged him to call a special session to pass new data center laws before the legislative session begins in January.
ERCOT expects to complete its audit in December.
