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ARTICLE · 24 AUGUST 2026

Data Center Industry Responds In Wake Of Texas' Dynamic Regulatory Changes

Holland & Knight
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Texas Governor Greg Abbott has ordered a comprehensive verification audit of data center projects in ERCOT's interconnection process, fundamentally altering the regulatory landscape for the industry. The directive introduces new "community impact" requirements covering tax incentives, water usage, noise controls, and ownership disclosure, while state legislators threaten to repeal sales tax exemptions.

United StatesEnergy and Natural Resources
Mike Warner
Mike Warner
Brian Thornton
Brian Thornton
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Holland & Knight has reported on the dramatic political and regulatory shift in Texas data center policy in 2026. Three weeks ago, Gov. Greg Abbott directed state regulators to conduct a "comprehensive verification audit" of data center projects advancing through the Electric Reliability Council of Texas' (ERCOT) "Batch Zero" interconnection process before any additional projects move forward.

ERCOT immediately responded with an announcement that it would seek a "good-cause exception" from delivering on its previously scheduled August 7, 2026, announcement of qualified projects for approval under Batch Zero. In the wake of these events, industry stakeholders have begun to issue statements expressing a willingness to comply with the governor's directives.

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