Abbott Expands Texas Data Center Moratorium

Estimated Time to Read: 22 minutes

Texas Gov. Greg Abbott (R) has expanded his intervention into Texas data center development. He has directed the Texas Commission on Environmental Quality (TCEQ) to halt permits sought by the industry until data center projects complete audits being conducted by the Electric Reliability Council of Texas (ERCOT) and the Texas Water Development Board (TWDB).

The directive is not Abbott's first pause on data center projects. An August order had already stopped projects from advancing through ERCOT's interconnection process until they completed a comprehensive audit. The latest directive goes further by extending that freeze beyond grid access and into environmental permitting governed by separate laws and regulatory standards.

Questions about grid reliability, infrastructure costs, water availability, and taxpayer-funded incentives deserve serious scrutiny. The broader question is whether the governor may suspend regulatory approvals across an entire industry without new legislation, formal rulemaking, or a declared emergency.

Abbott Extends the Texas Data Center Moratorium

Abbott's actions this year have steadily widened in scope. On June 10, he directed the Public Utility Commission of Texas (PUC) and ERCOT to require data centers to fully fund the costs of the electric infrastructure needed to serve them.

His August 3 directive required the PUC and ERCOT to audit every data center advancing through ERCOT's interconnection process. No project could move forward through that process until the audit was completed, and projects that failed to comply could be denied connection to the Texas electric grid. That action already operated as a de facto moratorium, but it was confined to a particular regulatory gateway. Data centers seeking access to the ERCOT grid were required to provide information about electricity demand, water consumption, public incentives, ownership, on-site generation, and anticipated effects on surrounding communities.

The new TCEQ directive expands that approach into another agency's permitting system. In announcing the directive, Abbott said data centers must "complete the ERCOT and TWDB audits," adding: "Until they do, TCEQ will issue no permits sought by data center projects."

The letter also declares that no other state agency should move forward with regulatory approvals involving data centers until the requested information is obtained. Although TCEQ is the immediate recipient, that language suggests a broader, multi-agency freeze on Texas data center development.

The directive does not define which facilities qualify as data centers, identify every category of TCEQ permit affected, or establish a firm expiration date. Abbott instructed TCEQ to report on its compliance by October 19, but that is a reporting deadline rather than an end date for the permit freeze. ERCOT has said it does not expect to complete its audit until December, which means the TCEQ freeze will likely last at least several months, and possibly longer if the TWDB review extends beyond ERCOT's timeline.

How Abbott's Data Center Actions Escalated

From grid-access conditions and enforcement of existing law to a multi-agency permitting freeze.

Grid interconnection and existing law

Industry-wide permit freeze

1. June 10
   PUC and ERCOT

   Infrastructure cost directive

   Regulators told to make data centers fully fund the electric infrastructure needed to serve them.

2. Aug. 3
   PUC and ERCOT

   Interconnection audit

   No data center advances through ERCOT's interconnection process until audited, a de facto moratorium on grid access.

3. Sept. 14
   TWDB

   Water-reporting enforcement

   Enforce existing Water Code survey requirements, including prosecutor referrals and permit ineligibility for violators.

4. Sept. 21
   TCEQ+ other agencies

   Permit freeze

   TCEQ told to issue no permits sought by data centers; other agencies told not to advance approvals.

   Lasts until the ERCOT and TWDB audits finish. ERCOT expects December; no fixed end date.

Texas Laws Provide No Clear Authority

Two recently enacted laws could appear relevant to Abbott's directives, but neither grants the governor authority to suspend TCEQ permits.

Senate Bill 6 (SB 6), passed in the 89th Legislative Session (2025), provides the strongest statutory foundation for increased scrutiny of large electricity loads. It directs the PUC to adopt rules governing large-load interconnections, including requirements related to site control, transmission studies, financial commitments, infrastructure costs, duplicate requests, and grid reliability.

(For more on how the PUC is carrying out the law, see our testimony on SB 6 implementation before the House Committee on State Affairs.)

SB 6 assigns that authority to the PUC and requires the commission to act through rulemaking. It does not authorize the governor to halt interconnections, classify data centers separately from other large loads, or suspend environmental permits. It also does not condition TCEQ approval on completion of an ERCOT audit.

That is an important difference. SB 6 allows neutral standards based on electricity demand, generally beginning at 75 megawatts. Abbott's directive instead singles out data centers and reaches regulatory approvals outside the electric-grid process.

House Bill 149 (HB 149), the Texas Responsible Artificial Intelligence Governance Act (TRIAGA), also passed in the 2025 legislative session, does not authorize Abbott’s TCEQ directive.

TRIAGA retained a regulatory sandbox that allows certain laws or regulations to be waived or suspended while an approved participant tests an artificial intelligence system. That authority is narrowly confined to the sandbox. Participation requires approval from the Department of Information Resources and each applicable regulatory agency; testing is generally limited to 36 months, and the law’s prohibited AI practices cannot be waived.

The sandbox does not grant suspension authority to the governor. It authorizes DIR and applicable agencies to provide limited regulatory relief for approved AI testing. It does not regulate data center construction, electricity interconnection, water use, or environmental permitting.

Although data centers may support artificial intelligence services, operating an AI-related facility does not make every permit for that facility part of an AI testing sandbox. The governor’s separate role under TRIAGA is primarily limited to appointing members of the Texas Artificial Intelligence Council and selecting its chair. The council itself is prohibited from interfering with or overriding a state agency.

Nothing in HB 149 authorizes the governor to suspend TCEQ permits.

TCEQ Permit Authority Belongs to the Commission

The Texas Water Code places TCEQ's regulatory authority in the commission itself.

Section 5.013 establishes the commission's jurisdiction. Sections 5.102 and 5.103 authorize the commission to exercise its statutory powers and adopt rules necessary to carry out its duties. Section 5.122 allows the commission, by rule or order, to delegate decisions on certain uncontested permits and approvals to TCEQ's executive director.

The governor appoints TCEQ's three commissioners with the advice and consent of the Texas Senate and designates the commission's presiding officer. That gives the governor substantial influence over the agency's direction, but appointment power is not necessarily the same as legal authority to decide individual permits or suspend an entire permitting program.

TCEQ's commissioners establish agency policy and make final decisions in contested permitting matters. The executive director implements those policies and may approve uncontested applications when authority has been properly delegated. Abbott's letter does not identify a statute transferring those permitting powers to the governor.

The Texas Constitution Does Not Clearly Supply the Authority

Article IV of the Texas Constitution identifies the governor as the state's chief executive officer and requires him to ensure that the laws are faithfully executed. It also allows the governor to require information from certain state officers concerning the management and condition of their offices.

Those provisions provide a foundation for executive oversight, information gathering, appointments, and enforcement of existing law. They do not clearly grant the governor authority to replace statutory permitting standards with new conditions or suspend an agency's processing of lawful applications.

The faithful-execution duty ordinarily requires the governor to carry out laws enacted by the Legislature. Treating it as an independent power to stop the operation of those laws would invert that responsibility.

The directive may also implicate Article I, Section 28, which states that "no power of suspending laws in this State shall be exercised except by the Legislature." If TCEQ refuses to process applications under existing statutes and regulations solely because of the governor's order, an affected applicant could argue that the executive branch has effectively suspended the operation of those laws.

An applicant could also pursue an ultra vires claim alleging that state officials acted beyond the authority granted to them by statute.

The Texas Administrative Procedure Act (APA) offers a further avenue. The APA defines a "rule" as an agency statement of general applicability that implements, interprets, or prescribes law or policy (Government Code Section 2001.003). An industry-wide decision by TCEQ to stop issuing permits to an entire class of applicants arguably fits that definition. Rules generally must be adopted through public notice and comment. Section 2001.038 allows affected parties to seek a declaratory judgment on a rule's validity. A pause implemented by agency letter, without any of those procedures, would be vulnerable to that challenge.

These concerns do not establish that a court would necessarily invalidate the directive. TCEQ retains discretion under some permitting statutes, and the legal analysis could depend on the permit involved and how the agency implements the pause. Nevertheless, the absence of cited statutory authority and the order's industry-wide scope create substantial constitutional and administrative-law questions.

Emergency Authority Does Not Appear to Apply

The Texas Disaster Act gives the governor significant emergency powers after declaring a disaster. Under Government Code Section 418.016, the governor may suspend certain regulatory statutes or agency rules when strict compliance would hinder necessary action in coping with a disaster.

Abbott's data center letter does not cite the Disaster Act, identify a relevant disaster declaration, or explain how processing TCEQ permits would interfere with disaster response. It is framed as a policy directive pending agency audits, not as an emergency order addressing an imminent disaster.

Without that connection, the Disaster Act does not appear to supply the missing authority.

Water Reporting Enforcement Is Legally Different

Abbott's September 14 water-reporting directive rests on a different foundation. Texas law already requires recipients of certain TWDB water-use surveys to complete and return them. Failure to do so is a Class C misdemeanor and makes an entity ineligible for certain TCEQ water permits, permit amendments, and renewals under Chapter 11 of the Texas Water Code. Abbott directed TWDB to enforce those existing requirements against major water users, including data centers.

Questions remain about whether enforcement is being applied neutrally, but the consequences identified in that directive were tied to alleged violations of existing law.

The new TCEQ order is not similarly limited to facilities that failed to report water use, violated an environmental requirement, or became statutorily ineligible for a permit. It directs TCEQ to pause permits across the industry while other agencies gather information.

Other States Take Different Data Center Approaches

Texas is not the only state confronting the electricity, water, and infrastructure demands associated with data center development. New York, Pennsylvania, and Florida have taken different approaches, ranging from an executive moratorium to legislatively enacted standards.

New York Gov. Kathy Hochul (D) imposed the closest parallel to Abbott's action. Her July 2026 Executive Order 62 directed the Department of Environmental Conservation (DEC) to hold certain data center applications in abeyance while the state prepares a Generic Environmental Impact Statement (GEIS). The New York order is more procedurally defined than Abbott's letter. It applies to discretionary state permits for data center construction or expansion that had not been declared complete before the order. It does not suspend local permits. It defines covered data centers generally as facilities capable of consuming at least 50 megawatts, and it identifies exemptions. It also connects the moratorium to a formal environmental-review process that includes public comment and a hearing. Like Abbott's directive, however, the order contains no fixed end date; the pause lasts until the environmental review is finished.

The New York context also differs in one important respect. Before Hochul acted, the New York Legislature had passed the Responsible Data Center Development Act, which would have imposed a one-year permitting pause on data centers of 20 megawatts or more. Hochul issued her executive order instead of acting on that bill, so the executive moratorium followed a legislature that had already voted for one. The Texas Legislature took the opposite path in SB 6, choosing neutral large-load standards administered through PUC rulemaking rather than a moratorium.

Hochul's order nevertheless raises a similar executive-authority question. It cites the New York Constitution and state laws generally and directs DEC to act consistent with its obligations under the State Environmental Quality Review Act (SEQRA), but it does not identify a specific provision authorizing the governor to stop pending applications. New York therefore shows that Abbott is not alone in asserting this kind of executive power, but another governor's assertion does not establish that either action is lawful.

Pennsylvania Gov. Josh Shapiro (D) took a different approach. His Governor's Responsible Infrastructure Development (GRID) standards began as conditions for optional state support, such as expedited permitting and tax incentives. Executive Order 2026-05, signed August 18, went further. It now requires developers of data centers above 25 megawatts to sign a legally binding consent agreement to meet the GRID Requirements and to show local approval before the Department of Environmental Protection will review their permits. The order also removes data centers from the state's Fast Track permitting program and conditions access to the state's data center sales tax exemption on GRID compliance. Pennsylvania's order raises its own questions about executive authority, but it is not a freeze. Projects that accept the conditions continue through permit review on a rolling basis.

Florida Gov. Ron DeSantis (R) initially proposed data center protections in December 2025, but the restrictions were ultimately enacted through the Legislature. In May 2026, DeSantis signed Senate Bill 484 (SB 484), which took effect July 1. It applies to data centers using at least 50 megawatts at peak demand. The law requires those facilities to bear their full cost of service, preserves local authority over data center siting, creates a dedicated permitting process, and establishes water and infrastructure protections.

These examples illustrate the central Texas policy question. New York adopted a defined executive moratorium tied to a formal environmental review, following legislative action pointing in the same direction. Pennsylvania made executive standards a condition of state permit review but left a path for compliant projects to proceed. Florida enacted its protections through legislation.

Abbott's directive is broader than the New York order. Unlike Pennsylvania's order, it offers no compliance path that keeps a project moving through permitting while the state completes its review. And it lacks the express legislative authorization underlying Florida's requirements.

How Four States Are Regulating Data Centers

The policy concerns overlap. The source and limits of authority do not.

State	Approach	Scope	Legal mechanism
TexasExecutive	Industry-wide permit pause	ERCOT interconnection, TCEQ permits, and potentially other state approvals; no size threshold or end date defined	Governor's letters to agencies; no authorizing statute cited
New YorkExecutive	Limited permit moratorium	Discretionary DEC permits not yet deemed complete, for data centers of 50+ MW	Executive Order 62, tied to a formal environmental impact statement
PennsylvaniaExecutive	Permits conditioned on binding standards	State permits for data centers over 25 MW, plus Fast Track eligibility and the sales tax exemption	Executive Order 2026-05 (GRID Requirements), enforced through consent agreements
FloridaLegislative	Cost, water, and local-control requirements	Large-scale data centers (50+ MW at peak demand)	Statute: SB 484, signed May 2026

Texas Data Center Executive Action Creates a Wider Precedent

The implications extend beyond data centers.

If a governor can order state agencies to suspend permits for one lawful industry while new requirements are developed, it is unclear what prevents a future governor from using the same claimed authority against energy producers, manufacturers, agricultural operations, housing developments, cryptocurrency companies, or other politically disfavored businesses.

The relevant question is not simply whether Texans agree with Abbott's concerns about data centers. It is whether any governor should be able to freeze an industry's regulatory approvals before the Legislature changes the law. That is why restoring legislative supremacy is a core plank of the Texas Liberty Compact.

Regulatory certainty has also been central to Texas's economic success. Businesses should be able to determine their obligations from statutes and duly adopted regulations. A process in which permits can be suspended through executive correspondence introduces political discretion into what should be a predictable application of state law. As we have argued before, data centers are not the problem; bad policy is.

Texas Data Center Policy Requires Legislative Action

Texas lawmakers can require large electricity users to cover infrastructure costs attributable to their projects. They can establish transparent water-reporting standards, strengthen enforcement of existing requirements, and adopt neutral protections tied to measurable effects on natural resources and surrounding property. We outlined several of these options in our testimony on data centers before the House Committee on State Affairs in August.

The Legislature can also eliminate data center tax incentives, an issue Senate lawmakers have already begun reexamining. Ending corporate welfare would place data centers on more equal footing with other Texas businesses and allow investment decisions to reflect market conditions rather than government favoritism.

Abbott acknowledges that some of his desired safeguards have not been codified and says he will work with the Legislature to eliminate financial incentives. That admission reinforces the central concern. Policies that have not yet been enacted should not be imposed through an industry-wide permit freeze.

Neither SB 6 nor TRAIGA appears to authorize the TCEQ directive. The Texas Constitution supplies general executive responsibilities, appointment powers, and information-gathering authority, but no clear power to suspend environmental permitting for an entire industry. The Disaster Act provides broader authority only in connection with a declared disaster, a basis Abbott did not invoke.

Texas should protect its grid, water resources, taxpayers, and communities. It should do so through laws debated publicly, rules adopted through established procedures, and standards applied consistently. Executive directives should not become a substitute for the legislative process the Texas Constitution requires.

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