Governor Abbott’s Environmental Permitting Freeze Expands Pause on Texas Data Center Development to All Texas Data Centers Pending Statewide Audit
On September 21, 2026, Texas Governor Greg Abbott issued an order halting all permits sought by data centers from the Texas Commission on Environmental Quality (TCEQ) until the Public Utility Commission of Texas (PUCT) and Electric Reliability Council of Texas (ERCOT) can complete the comprehensive audit initiated by the governor in early August.[1]
Sidley European Real Assets Update
2026 has so far been another year of contrasts. The first half of the year has been shaped by geopolitical and macroeconomic uncertainty, including escalating tensions in the Middle East and continued concerns over potential disruption to energy supplies through the Strait of Hormuz. Combined with persistent inflationary pressures, higher cost of debt, and the prospect of interest rates remaining higher for longer, this has led to a cautious M&A environment across Europe and the U.S. In the UK, we have also, of course, had a change of Prime Minister, the impact of which will become clearer in the coming weeks.
Sidley European Private Equity Infrastructure Update
Sidley’s European Private Equity Infrastructure Team has released its 2025 end-of-year update, featuring insights on geothermal energy considerations in the UK, UK real estate diligence, EU digital regulatory updates, employment rights bill updates, and changes to the verification of your identities via Companies House.
White House AI Action Plan Signals Environmental Regulation Reform for Data Centers
On July 23, 2025, the White House released “Winning the Race: America’s AI Action Plan” (“AI Action Plan”), outlining over 90 planned federal policy actions the Trump administration plans to implement to speed up artificial intelligence development across the United States. This rapid growth in domestic AI will result in an unprecedented U.S. demand for energy and require siting of significant electric generation assets to operate supporting infrastructure. Electricity demand from data centers represents a major new source of electricity demand and redundancy that will likely require a modernized approach to permitting and regulation to support sufficient growth on the Trump administration’s desired trajectory. For additional information on the impact of AI growth and the challenges of associated data center permitting, see Sidley’s blog posts here and here.
U.S. Department of Energy: U.S. Grid Faces Urgent Reliability Challenges Amid AI-Driven Load Growth and Plant Retirements
A new report by the U.S. Department of Energy provides a comprehensive assessment of the adequacy and reliability of the U.S. electric grid and warns that without urgent reforms and investment, the U.S. electric grid will be unable to support the nation’s economic ambitions, particularly in artificial intelligence (“AI”) and digital infrastructure. The report responds to recent executive orders emphasizing the need for a uniform, data-driven approach to evaluating grid reliability, particularly in the face of accelerating power plant retirements and surging electricity demand from data centers and AI applications.
