TEXAS — The directive establishes specific operational requirements for facilities seeking approval. Data center projects must cover all electrical infrastructure costs and result in lower residential electrical bills. Facilities must not use water needed by local communities and must abide by setback requirements to protect those areas. Operators must also report electricity and water usage.

Abbott indicated further legislative action regarding industry subsidies. He will work with the Legislature to eliminate financial incentives for data centers in the next legislative session. Ed Hirs, an energy fellow at the University of Houston, commented on the shift in policy approach. Abbott was walking back "his earlier pronouncements about data centers leading to lower electricity prices," Hirs said.

Why It Matters

The suspension of permits affects a substantial portion of national infrastructure planning. With nearly 50 gigawatts of proposed capacity at risk, the decision influences almost 20% of the U.S. data center pipeline. The potential for $8 billion in revenue losses by early 2027 indicates the financial stakes for developers and the state economy. The requirement for facilities to lower residential bills and cover infrastructure costs shifts the financial burden from ratepayers to the industry.

Timeline

More than 470 gigawatts of data center projects and other large energy users were in line to connect to the Texas grid at the time of the previous grid connection freeze on August 21, 2026. The 470 gigawatts in pending connections is more than five times Texas's peak demand as of that same date. On September 14, Abbott directed the Texas Water Development Board to compel data centers to comply with water-use reporting requirements. Also on September 14, Abbott directed the Texas Water Development Board to partner with the Electric Reliability Council of Texas on an audit to obtain additional water-use information. Abbott directed the Texas Water Development Board to impose legal consequences for past and future failure to comply with state water laws on September 14.

Gov. Greg Abbott directed the Texas Commission on Environmental Quality to halt all permits for data center projects on September 21, 2026. "Simply put, Texans must come first," Abbott said in a statement on September 21, 2026. "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."

What's New

Additional reporting provides details on the scope of the governor's directives and related state actions. "Simply put, Texans must come first," Abbott said in a statement.

The Texas Commission on Environmental Quality must provide an update on its compliance with the directive by October 19, 2026.

The Public Utility Commission of Texas, the Electric Reliability Council of Texas, and the Texas Water Development Board will determine the impact of data centers on grid reliability, security, and water resources. Abbott directed the Texas Water Development Board to impose legal consequences for past and future failure to comply with state water laws.

How Sources Differ

Sources present different figures regarding the scale of data center capacity. Electric Reliability Council of Texas interconnection queue data states that more than 470 gigawatts of data center projects and other large energy users were in line to connect to the Texas grid at the time of the previous grid connection freeze. BloombergNEF analysis states that almost 20% of the U.S.'s 253-gigawatt data center pipeline, or nearly 50 gigawatts in proposed capacity, would be at risk due to Texas's pause, NEF analysts.

Reports vary in their detail regarding the status of data center projects. The Texas Governor's Office directive to the Texas Commission on Environmental Quality states that Gov. Abbott directed the Texas Commission on Environmental Quality to halt all permits for data center projects.

Sources differ on the specifics of center projects. He stated, "Simply put, Texans must come first," he said in a statement. "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 proj." Electric Reliability Council of Texas interconnection queue data states that more than 470 gigawatts of data center projects and other large energy users were in line to connect to the Texas grid at the time of the previous grid connection freeze.

Descriptions of the texas water development board role vary across documents. The Texas Governor's Office directive to the Texas Water Development Board states that on September 14, Abbott directed the Texas Water Development Board to compel data centers to comply with water-use reporting requirements.