On September 21, Governor Greg Abbott directed the Texas Commission on Environmental Quality, the state’s primary environmental regulator, to halt all permits sought by data center projects until the Electric Reliability Council of Texas completes an audit of data centers already in the ERCOT interconnection queue. The directive is comprehensive: TCEQ “shall issue no permits sought by data center projects,” and no state agency is to move forward with any regulatory approval related to data center development until the audit results are available to the Public Utility Commission of Texas, ERCOT, and the Texas Water Development Board. The TWDB has its own parallel audit underway, directed by Abbott on September 14, focused specifically on water consumption.

The reversal is not subtle. Abbott spent much of 2025 branding Texas as the “epicenter of AI development,” touting the state’s sales tax exemptions for qualifying data centers and celebrating high-profile projects like OpenAI’s Stargate facility as evidence that Texas was winning the competition for AI infrastructure investment. The September 21 press release announcing the permit halt is the administration’s formal acknowledgment that this position is no longer sustainable. “Next session, Governor Abbott will work with the Legislature to eliminate any financial incentives for data centers,” the release states, which is about as complete a reversal of a prior policy position as political language produces.

The six conditions Abbott has set for any data center project to proceed are specific and demanding. Projects must cover all electrical infrastructure costs. They must demonstrate that their development results in lower residential electricity bills. They must complete the ERCOT audit. They must avoid using water needed by local communities. They must report their electricity and water usage. And they must comply with setback requirements protecting surrounding communities. These are not soft suggestions pending legislative consideration. They are prerequisites that, as of September 21, every pending data center project in Texas must satisfy before receiving any further state regulatory approval.

The political context explains the timing precisely. Texas was on track to surpass Virginia as the state with the largest data center market in the world by the end of the decade, according to a February 2026 report from JLL. Abbott is running a tight race for his fourth term against state Representative Gina Hinojosa. A recent NBC News poll found that 64 percent of Americans say they would be less likely to vote for a candidate who supports building local data centers, and Abbott has been caught directly in the middle of the backlash that number represents. Some 45 data center projects worth $68 billion were blocked or delayed by local pushback between April and June 2026 alone, according to Data Center Watch, and the communities organizing against them are spread across both parties and every demographic that the midterm map requires.

The North Carolina story is the more legally complex of the two and, from a policy perspective, potentially the more consequential. Amazon is building a $10 billion hyperscale data center campus in Richmond County, on a 650-acre site that will ultimately include 21 data center buildings. Duke Energy, the state’s regulated monopoly utility, had proposed to power the campus partly through a new gas-fired plant, and partly through nearly 60 temporary diesel generators while the permanent power infrastructure comes online. The North Carolina Utilities Commission’s GOP majority rejected the gas plant component of that plan, and the basis for the rejection was the Trump administration’s Ratepayer Protection Pledge, which Duke Energy had publicly signed in July 2026.

The Ratepayer Protection Pledge, which Trump announced at a July 23 event at the Environmental Protection Agency headquarters, requires large energy users to negotiate agreements ensuring that data centers are placed in a separate rate class and agree to cover the costs of their own power and infrastructure rather than spreading those costs across the residential and small commercial ratepayer base. Duke Energy signed that pledge alongside Amazon, Google, Meta, Oracle, xAI, OpenAI, and approximately 200 other stakeholders. Twenty-three Republican governors also signed on at the same event. The pledge is voluntary at the federal level, which is exactly the gap that North Carolina’s Republican-led Utilities Commission, Governor Josh Stein, and Attorney General Jeff Jackson have been pushing to close ever since.

The North Carolina Utilities Commission’s rejection of the gas plant proposal represents the state-level enforcement mechanism that Jackson and Governor Stein had been demanding. Duke Energy’s plans for the Amazon data center had already drawn significant public opposition on grounds that go beyond the ratepayer cost issue. Amazon and Duke together applied for permits covering 649 diesel-fired generators on the Richmond County site: 592 backup emergency generators under Amazon’s permit application and 57 temporary primary-power generators under Duke’s separate application. Environmental advocates at the Southern Environmental Law Center and NC WARN argued that filing two separate permit applications for generators on the same property was an attempt to avoid the stricter regulatory review that would apply if the combined emissions from 649 generators were evaluated together, as a single pollution source. An August 5 North Carolina State University analysis confirmed that evaluating the applications separately materially understated the combined hazardous air pollutant and volatile organic compound emissions the facility would produce.

The community context for this opposition is specific and documented. Richmond County, where the Amazon campus is located, is a predominantly lower-income community that already carries a disproportionate pollution burden relative to the state average. Amazon’s own report concluded that the county is “within the two least healthy ranges in the state” for health and well-being, and the CDC classified the census tract where the facility is located as “highly burdened” by pollution. The data center’s 649 diesel generators would add a substantial new emission source to a community that the applicants’ own documentation acknowledges is already at the bottom of state health rankings. Hundreds of Richmond County residents turned out at a July 30 public hearing in Rockingham to oppose the permits, in one of the more striking examples this year of a local community in a deeply Republican county organizing against a major technology industry investment.

The AI industry and its advocates spent the past several years building a narrative in which data center development and energy demand were straightforwardly positive: jobs, investment, technological leadership, and national security in a competition with China that the administration has made a central pillar of its economic argument. That narrative is not false, but it is incomplete, and the missing portion of it is now appearing in the form of frozen permits, rejected gas plants, hundreds of residents at public hearings in rural courthouses, and a polling number that would unsettle any Republican running in a competitive district: 64 percent of Americans less likely to vote for candidates who support local data center development.

What the Texas and North Carolina situations share is the same underlying demand: the costs of AI infrastructure must not be distributed to people who had no voice in the decision to build it and receive no direct benefit from its operation. Abbott’s six conditions and the NC Utilities Commission’s invocation of the Ratepayer Protection Pledge are both expressions of the same political reality, which is that the elected officials who represent the communities nearest to data centers are now accountable to constituents who are paying higher utility bills, seeing water resources competed for, and watching massive facilities go up in their backyards with diesel generator counts in the hundreds. The constituency for AI infrastructure is diffuse: the benefits are national and largely invisible to any individual. The constituency for cost protection and clean air is local and immediate, and in 2026 midterm politics, local and immediate has a structural advantage.

President Trump has dismissed the backlash against data centers and warned that slowing AI infrastructure development risks ceding advantage to China. That argument may be strategically valid and politically ineffective at the state and local level simultaneously, which is the specific bind that Republican governors and commissioners in Texas and North Carolina are navigating right now. Abbott reversed his entire prior position on data centers because his reelection race is tighter than it should be for an incumbent governor. The NC Utilities Commission used the president’s own voluntary pledge as the basis for rejecting a utility plan that would have cost residential customers money they were not consulted about spending. Neither of these is the outcome the AI buildout advocates expected when the year began, and neither shows any sign of reversing before November.

Sustainable Action Now: Climate and Energy Coverage

We cover the data center energy fight, the ratepayer protection battle, and the climate consequences of how AI infrastructure gets powered and where. Texas froze the permits. North Carolina rejected the gas plant. This fight is just getting started.