On September 21, 2026, Texas Governor Greg Abbott directed the Texas Commission on Environmental Quality (TCEQ) to halt the issuance of all environmental permits for infrastructure “related to data centers.” The relevant permits include air permits – such as permits-by-rule (PBRs), standard permits, and New Source Review (NSR) permits – as well as water and waste permits. The directive follows Governor Abbott’s August order to the Electric Reliability Council of Texas (ERCOT) and Public Utility Commission of Texas (PUCT) to audit data centers requesting grid connections to ensure the reliability of the Texas grid. Texas Water Development Board (TWDB) was added to the list of auditing agencies in a September directive. The goal of these audits is to monitor data centers’ use of public utilities and verify compliance with water use and electricity reporting requirements, and Governor Abbott states that the halt on data center permitting by TCEQ will be lifted once ERCOT, PUCT, and TWDB complete their audits.
The directive clearly impacts issuance of environmental permits. However, it is unclear whether TCEQ can receive new permit applications while the audits are being conducted, or whether they can continue to review already submitted applications and issue them after the audits are complete. There are a number of Texas data center projects that are currently proposed, but there are also a significant number data centers infrastructure projects. One example is behind the meter (BTM) arrangements that provide power to data center facilities. While the scope of the August 2026 audit directive was specific to data centers, the new directive also includes facilities “related to” data centers – wording that requires clarification by TCEQ.
Next Steps
Title 30 of the Texas Administrative Code (TAC) §116.12(5) defines Begin Actual Construction as “initiation of physical on-site construction activities on an emissions unit that are of a permanent nature.” In other words, data centers in Texas are prohibited from conducting any construction activities relating to emissions units (e.g., pouring concrete pads for generators) before obtaining the appropriate air permits from TCEQ. Because this rule remains in effect, the current permitting halt is likely to affect construction timelines for data centers still awaiting permit approvals.
ALL4 will continue to monitor the development of this directive and its impact on data centers and data center infrastructure. For questions related to this matter, please contact ALL4’s Data Center Sector Lead, Sharon Sadler at ssadler@all4inc.com.
