# California and Texas unite to regulate data centers Bipartisan backlash leads to new restrictions on data center development - **Source:** [Business Insider](https://www.businessinsider.com) - **Published:** 2026-09-22 - **Topic:** [Business](https://brifing.si/c/business) - **Original article:** - **On Brifing:** https://brifing.si/s/c9ecbb8c-7637-4151-b8de-a0b2b282fadc ## Unlikely political alignment California and Texas, typically political opposites, have simultaneously imposed restrictions on data center development. California's Democratic Governor Gavin Newsom signed new laws requiring transparency on utilities usage, while Texas' Republican Governor Greg Abbott paused all new permits. This rare bipartisan action reflects growing nationwide concerns about data centers' environmental and economic impacts. ## California's regulatory package Newsom's legislation removes environmental exemptions for data centers and mandates disclosure of electricity and water consumption. The laws aim to prevent energy cost burdens on consumers, addressing concerns about grid strain and resource depletion. The governor framed this as protecting Californians from bearing the hidden costs of data center profits. ## Texas' permit moratorium Abbott ordered TCEQ to halt new data center permits pending audits by grid operator ERCOT and water board TWDB. This expands on last month's grid connection freeze. The governor emphasized that data centers must prove they won't jeopardize Texas' infrastructure before receiving approvals, putting resident needs before industry expansion. ## Industry pushback The Data Center Coalition expressed disappointment with California's laws, warning they create duplicative requirements and make the state less attractive for development. They argued these measures will divert jobs, clean energy projects, and tax revenue to neighboring states while acknowledging Texas audit cooperation. ## Environmental concerns driving policy Both states act amid reports linking data centers to water scarcity and rising electricity prices. Critics highlight excessive water use, energy demand spikes, and noise pollution. These facilities' resource intensity has turned data centers into a rare nonpartisan issue, with communities nationwide protesting new developments. ## Political rhetoric comparison Newsom framed California's laws as resistance to federal deregulation, protecting communities from corporate externalities. Abbott positioned Texas' pause as putting residents first, demanding industry self-sufficiency. Despite differing political framing, both approaches reflect similar substantive concerns about infrastructure strain. ## Economic trade-offs While restricting data centers addresses environmental concerns, it risks slowing tech sector growth and associated economic benefits. California already sees declining data center investment, potentially losing clean energy projects. Texas faces balancing its pro-business reputation with infrastructure protection as audits proceed. ## National implications These coordinated actions by America's two largest states signal shifting attitudes toward tech infrastructure. As data demand grows exponentially, policymakers increasingly weigh economic benefits against community impacts. The bipartisan nature suggests similar regulations may emerge elsewhere, potentially reshaping industry expansion patterns nationwide. ## Sources covering this story - https://www.businessinsider.com/california-texas-data-center-regulation-newsom-abbott-bipartisan-backlash-2026-9 — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._