Texas Pauses Data Center Infrastructure Permits Pending

Texas environmental regulators have halted air and water permits for data center-supporting infrastructure after the governor ordered a review of water and grid impacts. The Texas Commission on Environmental Quality has paused all air and water permits and other authorizations for the construction or development of infrastructure directly supporting data centers. This permitting pause follows Governor Greg Abbott's September 21 directive to halt data center permits while the Electric Reliability Council of Texas and the Texas Water Development Board conduct reviews.

Abbott's directive ties the pause to the state’s review of data center water use. It mandates that data centers report electricity and water use and must not use water needed by local communities. The governor previously directed the Texas Water Development Board to compel data centers to comply with water-use reporting requirements and to work with ERCOT on the data center audit. Abbott said he intends to work with the Legislature on additional measures, including eliminating financial incentives for data centers.

ERCOT launches dual review processes

ERCOT is conducting separate evaluations: one on grid and community impacts of data centers, and another verifying eligibility for large-load interconnection. The grid operator is running two related but distinct information-gathering processes. One is a Batch Zero eligibility verification for large-load projects in the interconnection process. The other is a separate State and Community Impact Request for Information for data centers.

ERCOT's RFI seeks detailed information on grid dependency, onsite generation, water sources and consumption, cooling technology, community impacts, and ownership. Responses, including supporting documentation and a notarized attestation, are due October 12. ERCOT expects to report its findings to the Public Utility Commission of Texas on December 10.

The Batch Zero verification is a separate process that seeks information including proof of site control, financial commitment and study status. ERCOT postponed its Batch Zero transmission study while conducting this verification. The grid operator said the framework is similar to what it would have done in the Batch Zero interconnection study. ERCOT is reviewing a subset of qualifying projects with at least 25 MW of peak requested load pursuing interconnection to the ERCOT system. Trudi Webster is ERCOT's external communications manager.

ERCOT does not intend to send the State and Community Impact RFI to any entity not interconnecting a data center to the ERCOT system.

Deadlines loom for developers and agencies

Key dates are now critical for developers and state agencies. For developers, the immediate deadlines are October 12 for ERCOT's State and Community Impact RFI responses and December 10 for ERCOT's planned report to the PUC. The TCEQ will incorporate findings from ERCOT's review into its regulatory evaluations.

Ryan Vise, the TCEQ director of external relations, confirmed the agency's actions. "TCEQ has paused all air and water permits and other authorizations for the construction or development of infrastructure directly supporting data centers," Vise said. The environmental agency must provide Abbott's office with an update on compliance by October 19.

Uncertainty remains over scope and future triggers

Significant uncertainty surrounds how the pause applies to projects outside ERCOT’s review. The TCEQ has not said how the freeze will apply to projects outside ERCOT's State and Community Impact RFI. It has yet to say whether supporting infrastructure for a data center outside ERCOT's interconnection process is also subject to the pause.

Future changes to project plans could also trigger renewed scrutiny. A project that initially proposes 500 MW of demand beginning in 2028 but later becomes a 300-MW project beginning in 2030 could alter the grid infrastructure and timing assumptions made during the original review. Changes in grid dependence, onsite generation, cooling technology or water use could create similar issues requiring revalidation.

Texas has not publicly identified what changes, if any, would trigger renewed ERCOT or TCEQ review or how they would affect a project's permitting or interconnection status. The TCEQ will provide Abbott's office with an update on compliance by October 19.