Data center legislation is no longer a fringe concern: within a single week in September 2026, Texas halted environmental permits for new facilities and California’s governor signed two bills that will fundamentally alter how the state’s grid costs are allocated to large AI infrastructure projects. Politicians on both sides of the aisle are responding to voter pressure that polling now confirms has intensified sharply over the past year.
The Polling Picture Behind the Political Panic
A Gallup survey conducted between 2 and 18 March found that 71% of Americans oppose data centre construction in their area, compared with 53% opposed to a nuclear plant nearby. The margin is striking for an industry that generates neither radioactive waste nor visible pollution.
Among those opposed in the Gallup survey, roughly half cited excessive resource use: 18% mentioned water consumption and 18% mentioned energy demand, with 16% pointing to pollution and about one in five raising traffic, land use, or growth concerns. Opposition is highest in the Midwest (76%) and South (75%), and somewhat lower in the West (63%) and East (68%). Women register strong opposition at 55%, compared with 43% of men.
The shift has also been dramatic over time. New York Post polling data shows that among voters who backed Kamala Harris in 2024, support for a data centre within three miles of their home fell from 36% in January 2026 to just 22% by July, while opposition among that group climbed from 33% to 53%. Even among Trump voters, opposition rose to 33% from 26%, and support dropped nine percentage points to 34%.
What the Data Center Legislation Actually Does in Texas and California
In Texas, Governor Greg Abbott issued an audit directive on 3 August 2026, addressed to the Public Utility Commission chair and the president of ERCOT, covering approximately 474 data centre projects advancing through ERCOT’s interconnection process. Developers must disclose tax incentives received, power and water usage, cooling operations, and community impact measures, according to the Texas Governor’s office.
ERCOT responded by pausing its Batch Zero interconnection process, creating immediate uncertainty over timelines and financing, as Akin Gump’s analysis of the directive noted. Then on 21 September 2026, Abbott went further: he directed the Texas Commission on Environmental Quality to halt all data centre permits until the ERCOT audit is complete, and stated his intention to work with the Legislature to eliminate financial incentives for the sector entirely.
The reversal is considerable. Texas had claimed sales tax exemptions and high-profile projects such as OpenAI’s Stargate would make it the leading AI infrastructure hub in the United States. A February 2026 report by JLL, cited by CNBC, had forecast Texas would surpass Virginia as the world’s largest data centre market by the end of the decade. That trajectory is now in question.
California moved on the same day, 21 September 2026, when Governor Gavin Newsom signed Senate Bill 886 and its companion measure, AB 2383. SB 886, which passed the Senate 28 votes to 8, applies to data centres with an estimated peak demand of at least 25 MW taking transmission-level electrical service. It requires the California Public Utilities Commission to establish new tariffs covering transmission, distribution, generation, and interconnection costs, with the CPUC required to adopt those tariffs by 1 January 2028. The legislation takes effect on 1 January 2027 and includes a 10-year early termination fee for facilities that exit interconnection agreements early, according to Stoel Rives.
Transmission-level customers, a category that includes large data centres, currently pay rates approximately 14 to 17 cents per kWh less than distribution-level customers, according to the California Senate Energy, Utilities and Communications Committee’s analysis of SB 886. Closing that gap is the bill’s central purpose. Companion legislation AB 2383 requires data centres to comply with state clean energy procurement rules and pay incremental generation costs for at least a decade, per Ballard Spahr’s review of the signed package.
A Third State Moves Quietly
Virginia, which currently hosts the largest concentration of data centres in the world, has also acted. Governor Abigail Spanberger issued Executive Order 22, establishing a Data Centre Accountability Framework built around five pillars: transparency, environmental protection, energy affordability, clean energy, and workforce development. The order bans non-disclosure agreements in data centre approvals and excludes large projects from expedited review processes, according to Legal 500.
The industry’s counter-argument, that data centres reduce retail power rates for all customers by spreading fixed grid costs across a larger base of users, has not gained traction with legislators. The Electric Power Research Institute has put that reduction at around 4%. Whether that figure features in any state-level cost-benefit analysis, or whether the political calculus simply overwhelms the economics, will be tested when the CPUC begins its tariff-setting process ahead of the January 2028 deadline.
