Texas Governor Takes New Steps to Regulate Data Centers, Halts Permits
Texas Governor Greg Abbott has taken additional steps to regulate the data center industry in Texas, halting new permits and directing state agencies to conduct comprehensive audits of water and power usage. These actions are aimed at ensuring data centers comply with state laws and contribute to the power grid, while also protecting community water resources and preventing cost transference to Texans. The audits will inform new rules for lawmakers to consider next year.
Texas Governor Greg Abbott has announced intensified regulatory measures for the state's data center industry, asserting the necessity to "rein in an industry that was completely out of control." As part of his "affordability tour," Abbott directed the Texas Commission on Environmental Quality (TCEQ) to halt new data center permits. This pause will remain in effect while regulators conduct comprehensive audits of the power and water usage of proposed data centers.
Additionally, the Governor instructed the Texas Water Development Board (TWDB) to ensure major water consumers, including data centers, adhere to state water-use reporting laws. Abbott emphasized that data centers must provide their own power, contribute to the grid, reduce electricity costs for residents, safeguard community water resources, and not transfer their operational costs to Texans. The Electric Reliability Council of Texas (ERCOT) and the Public Utility Commission of Texas (PUCT) are also involved in these audits, with results expected by December to inform future legislative rules.
These actions come amid a tightening gubernatorial race, where Abbott leads Democratic candidate Gina Hinojosa by a narrow margin. Hinojosa expressed skepticism about the effectiveness and timing of the governor's permit pause, suggesting it could be politically motivated. Despite this, Abbott maintained that the initial pause implemented over the summer has been effective, with the new measures serving as "additional hurdles." Both Abbott and Hinojosa, along with a bipartisan group of lawmakers, support discontinuing state sales tax incentives for data centers.