Texas and California tighten rules for AI data centers

Texas and California have introduced new rules that make AI data centers harder to build and give local communities more control over their effects.

Texas Governor Greg Abbott expanded the reach of a de facto moratorium on new data centers until an electricity audit is completed. According to ERCOT, approvals for new connections could remain paused until December, when the audit is expected to finish. Until then, no new connections will be authorized, and projects may be unable to receive environmental permits or grid permissions.

California Governor Gavin Newsom signed rules requiring data centers to cover electrical grid connection and upgrade costs. New projects must also add clean energy to support their extra consumption. They will have to disclose water use, supply, efficiency, and drought planning to local governments, pay for related infrastructure upgrades, and meet state standards for energy, water, and fuel consumption.

At the federal level, the Ratepayer Protection Act would require developers of medium and large campuses with peak power above 100MW to pay for infrastructure upgrades and grid connections. House lawmakers recently passed the bill with bipartisan support, but it may not become law until the end of the year because of the midterm elections.

In the second quarter of 2026, local opposition blocked more than $68 billion in data center projects involving 45 proposed projects. The White House has criticized opposition to AI data centers, while President Trump said communities could miss out on jobs and money.