What Actions Led Up to The Permit Pause

The September directive follows two earlier actions. On August 3, the governor instructed ERCOT and PUCT to verify and audit data center projects moving through ERCOT’s grid connection process. The review seeks information on power demand and supply, water consumption and cooling, public financial assistance, potential community impacts and project ownership. Projects that do not satisfy the review requirements may be denied grid connection.

On September 14, the governor directed TWDB to enforce existing water-use survey requirements and work with ERCOT to gather additional information about data centers’ water sources and consumption. ERCOT has since issued a state and community impact request for information to specified proposed data center projects. Those responses are due October 12, and ERCOT expects to publish a report by December 10.

What the Permit Directive Covers

The September 21 letter directs TCEQ to pause issuing “all permits related to data center projects.” That language is not limited to projects seeking to connect to the ERCOT grid. Depending on the equipment and site design, a project may need TCEQ authorization for backup generators, on-site power generation, wastewater or other activities. A plan to generate power on-site therefore does not, by itself, resolve the question of state permit timing.

The letter addresses issuance of permits. It does not direct TCEQ to revoke permits already issued or order work to stop at every site. It also leaves practical questions about how the agency will handle pending applications, permits by rule, standard permits and facilities developed by a separate company to serve a data center. The effect on any one project will depend on its approvals and on TCEQ’s implementation of the directive.

TCEQ must report to the governor on its compliance with the directive by October 19. That deadline is for an agency update. It is not a date when permit issuance automatically resumes. ERCOT’s target date for its report likewise does not guarantee that approvals will restart on December 10.

What Developers Should Watch

A team with a project in development should identify which state authorizations remain outstanding and confirm whether the power plan, generator specifications, water information and emissions calculations in its project records are current. These details affect permit planning and may also inform responses to agency requests. Teams with existing facilities should assess planned equipment changes against the approvals they already hold.

As the agencies release further information, the key questions will be how TCEQ defines permits related to a data center project, which application steps can continue during the pause, and what must happen before final approvals resume. Developers should track the agencies’ written guidance and assess the effect on each site rather than assuming one timeline fits every project.

A Broader View Beyond Texas

Texas’s directive applies to state approvals in Texas. Elsewhere, agencies are examining related questions through their own processes. On September 21, California signed seven data center bills addressing electricity costs, water-use information and local review. In June, the Federal Energy Regulatory Commission directed six regional grid operators to address how large electrical loads connect to the grid, including arrangements involving nearby or on-site generation.

Those actions are separate from the Texas permit pause and do not establish that projects will move between states. Taken together, they show why developers need to document their power arrangements, resource needs and emissions obligations for the specific jurisdiction and site they plan to build.

Recommendations During the Permit Pause

Data center teams can use this time to confirm their power plans, document backup or on-site generating equipment, and assess potential air permitting, emissions testing and monitoring needs. Those needs will vary by site, equipment and the approvals already in place. Further direction from TCEQ will help clarify how the permit pause applies to individual projects.

Encino is tracking updates from TCEQ, ERCOT and TWDB and will share developments that affect emissions and permitting plans. If you have questions about how your power plan affects your emissions obligations, our team can help you work through the details.  Contact our experts today.

Disclaimer

Information current as of September 24, 2026. This article reflects publicly available information as of that date. Agency guidance may change, and the effect of the permit directive will depend on each project’s circumstances. This article is for general information and is not legal advice. Developers and operators should confirm current requirements with the relevant agencies and qualified advisors before making project-specific permitting or scheduling decisions.