- Texas Gov. Abbott bans new data center grid connections until key audit is finished
- California Gov. Newsom introduces new laws regulating data center land, energy, and water usage
- Federal regulations could also be coming soon, but the midterms are still to go
AI data centers in the US have been dealt another blow due to new regulations and rules rolled out in Texas and California.
Texas Governor Greg Abbott has expanded the reach of a de facto moratorium on new data centers until a new electricity audit has been completed, effectively preventing any new data centers from being granted environmental permits or grid permissions.
At the same time, California Governor Gavin Newsom has signed into law new regulations which provide communities with greater control over the water, electricity, and land use of data centers built in the state.
States are backing communities, not big tech
“Simply put, Texans must come first,” Texas Governor Abbott said. “Data centers must pay their own way, protect our grid and water, and complete the ERCOT and audits” (via Politico).
According to ERCOT, which operates the Texas electricity grid, approvals for data centers to connect could be paused until December when the audit is expected to be completed. Until then, no new connections will be authorized.
Texans have been increasingly vocal about their opinions on data centers, particularly when it comes to land use, noise, pollution, and strain on the electricity grid. The issue has become such a big topic that Texas and other states have seen a jump in first-time candidates for local elections.
Abbott himself was previously pro-data center, advertising Texas as the “epicenter of AI development”, but has made a rapid pivot in stance - recently stating that data centers are getting “the backlash they deserve”.
In California, Governor Newsom’s new data center laws aim to move much of the costs imposed by data centers connecting to resources away from the public’s purse, and back onto data centers.
To this end, electrical grid connections and upgrade costs will be shouldered by the data centers requesting them, with additional requirements that new data centers will have to add new clean energy to supplement the additional energy they will consume.
More transparency is being added to data center water usage as well. Proposed projects will now have to inform local governments of water use, supply, efficiency and drought planning - with similar requirements to pay for infrastructural upgrades.
Land usage requirements are also under the regulatory hammer, with data centers no longer exempt from environmental regulations. Instead, proposed projects will have to meet state standards on energy, water, and fuel consumption while also mitigating any downstream costs for ratepayers.
Federal regulation could be coming too
Federal level regulation is making progress too.
The Ratepayer Protection Act aims to make the developers of medium and large campuses pay for the infrastructural upgrades and grid connections required for data centers with a peak power of over 100MW.
The Act was recently passed by House lawmakers with bipartisan support, and is now headed to Congress for approval. But due to the midterm elections, the Act may not be signed into law until the end of the year.
Data center opposition and state-level regulations have drawn significant criticism from the White House. President Trump said that those opposed to AI data centers are “making a mistake” adding that communities would miss out on the “tremendous amounts of jobs and money” that having a local data center would provide.
In the second quarter of 2026, over $68 billion in data center projects have been successfully blocked by local opposition with a total of 45 proposed projects being opposed.
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