Texas Governor Greg Abbott ordered the Texas Commission on Environmental Quality (TCEQ) to pause all permit issuance for data center projects, effective immediately.

On September 21, 2026, Governor Abbott ordered the Texas Commission on Environmental Quality (TCEQ) to halt all permits sought by data centers. Addressed to outgoing Executive Director Kelly Keel, the order applies to all data center projects statewide that are in the middle of any TCEQ permitting process. The pause remains in effect until ERCOT completes its review of data centers in the interconnection process that Governor Abbott directed the Public Utility Commission of Texas (PUCT) and ERCOT to undertake on August 3, 2026. TCEQ must report to the Governor's office on its compliance by Monday, October 19, 2026.

The order prohibits TCEQ from issuing any permits "related to data center projects," regardless of whether an applicant is in ERCOT's interconnection queue. This affects all data centers, including those planning to rely entirely on behind-the-meter generation without interconnecting to the ERCOT grid. Governor Abbott's order effectively pauses all data center development in Texas until mid-December, when ERCOT anticipates completing its audit.

Because the order targets all permits "related to data center projects," its scope extends beyond data center developers themselves. Co-located and behind-the-meter generation developers that serve data centers face a permitting pause affecting several types of permits for construction, operations and equipment. Many data center developers building fully islanded facilities understood they would avoid delays from ERCOT's audit, but any such facilities without already-granted air permits or related TCEQ authorizations are now affected by the pause.

All developers of data center projects or supporting facilities must assess whether this permit pause will prevent them from meeting contractual obligations and whether they can invoke force majeure provisions, change-in-law clauses or other relief mechanisms.

**What the TCEQ Order Means**

The order directs TCEQ to pause issuance of all permits related to data center projects until ERCOT completes its review. This means TCEQ will not issue any final permits to any data center project. The order applies not only to data center developers permitting their own power generation, but also to any projects "related to data center projects" sponsored by developer affiliates or counterparties—for example, where a separate legal entity develops power generation to primarily support a data center's operations. No permits relating to data centers will issue until ERCOT's review concludes, regardless of who seeks them.

The stated rationale is informational rather than focused on specific environmental impacts to air or water. Because information sought by the PUCT, ERCOT and the Texas Water Development Board is necessary for those agencies to make informed decisions, the Governor states that no state agency shall move forward with regulatory approvals related to data centers until that information is acquired.

Although TCEQ is prohibited from issuing permits, the Governor's order is somewhat ambiguous on whether TCEQ must halt all permit processing. TCEQ could conceivably review technical aspects or carry permits through public notice and comment phases while delaying final issuance. However, TCEQ may be disinclined to advance these applications, given the Governor's requirement that "TCEQ must similarly ensure that its permitting decisions align with my directives." The Governor explained that the process will ensure TCEQ has sufficient information, including from pending audits, and time to thoroughly review all permits. To the extent TCEQ believes continued processing conflicts with halting permits, or that ERCOT's review could yield actionable environmental information, TCEQ may pause processing activities as well.

The order's applicability to TCEQ's various general and standard permits remains unclear. Permits-by-rule may be claimed or registered with TCEQ without other agency action. Standard permits require submission to TCEQ, which allows registrants to begin construction within 45 days unless the executive director objects. Governor Abbott's order clearly applies to significant permits like New Source Review air permits or Texas Pollutant Discharge Elimination System wastewater permits requiring TCEQ's final decision, but applicability to other permitting frameworks is less certain. Because the order covers any permit "related to data center projects," each authorization is potentially caught by the pause, not merely the principal air or interconnection-related approvals.

Over coming weeks, TCEQ's path forward through these issues may clarify. Given the number of TCEQ permits data centers require to build and operate, TCEQ's interpretation of this order will be essential to understanding what forward progress data center developers can make pending ERCOT's completed review.

**The Background**

Governor Abbott's TCEQ order follows his August 3, 2026 order to the PUCT and ERCOT and his September 14, 2026 order to the TWDB. In those directives, he ordered the PUCT and ERCOT to audit all data centers in ERCOT's interconnection queue to evaluate their potential impacts on the grid and Texas's natural resources, particularly water, and to ensure projects do not increase consumer electricity costs. Governor Abbott directed the TWDB to partner with ERCOT on the audit, including on water consumption, sources of supply and water-efficient technology implementation, and to compel data centers to comply with water-use reporting requirements under the Texas Water Code. Data centers failing to timely complete and return the TWDB water-use survey commit a criminal offense and become ineligible for TCEQ permits, amendments or renewals under Chapter 11 of the Texas Water Code. The Governor directed TWDB to enforce these remedies, including referral to appropriate County or District Attorneys and notice to TCEQ for possible permit disqualification. Failure to respond to TWDB's audit-related information requests triggers TWDB's independent enforcement authority.

Although Governor Abbott's prior orders affected hundreds of proposed data center projects, they affected only projects in ERCOT's interconnection queue or non-compliant with TWDB water-use survey responses. If a data center secured a non-grid power source and responded appropriately to TWDB surveys, prior orders did not impede project execution.

**Going Forward**

ERCOT is expected to complete its audit in mid-December 2026. In the meantime, on-site generation has been paused as an option for project sponsors seeking to avoid interconnection delays.

However, mid-December may not signal a return to normalcy. The TCEQ order previews the substantive regime to come, stating that data center projects must cover all electrical infrastructure costs, result in lower residential electrical bills, and must not use wa