US States Impose Strict New Data Center Regulations

Governors in several major states launched a coordinated crackdown on the data center industry on September 21 and 22, 2026, citing threats to grid stability and water scarcity. Greg Abbott directed the Texas Commission on Environmental Quality to halt all air and water permits for data center projects. This directive expanded an August pause that only affected projects requesting over 75 megawatts; the new moratorium effectively stops all new construction, including projects providing their own infrastructure. Abbott mandated that data centers cover all electrical infrastructure costs and comply with water-use reporting, while announcing plans to eliminate state financial incentives for the industry.

In California, Governor Gavin Newsom signed legislation requiring data centers to disclose resource usage and removing their eligibility for environmental exemptions. Meanwhile, Virginia Governor Abigail Spanberger introduced the Data Center Accountability Framework via executive order. Her plan bans non-disclosure agreements for commercial projects of 25 megawatts or more and proposes incentives for operators to use renewable backup generators instead of diesel or natural gas.

Industry reactions have been critical, with the Data Center Coalition arguing that California's laws create business uncertainty. In Texas, the Electric Reliability Council of Texas expects to complete its grid and community impact audit by December, while the Texas Commission on Environmental Quality must provide a compliance update to the governor's office by October 19. Local governments are also acting independently, such as the City of Charlevoix, Michigan, which is drafting its own zoning ordinances to regulate future developments.