Gov. Greg Abbott on Monday ordered state regulators to stop approving new data centers seeking to connect to the Texas electric grid until developers undergo a comprehensive audit, responding to mounting concerns over the industry's rapid expansion and its impact on the state's power and water resources.
The directive marks Abbott's strongest action yet to slow the state's data center boom, though it is unclear how long the review will take or how many projects will ultimately be affected.
"Our top priority is to protect Texans' safety and quality of life," Abbott said in a statement. "Any project that fails to comply with the requirements set forth by the PUCT and ERCOT, and by state law, must be denied connection to the Texas grid. Simply put, Texans must come first."
Abbott instructed the Public Utility Commission of Texas and the Electric Reliability Council of Texas to verify information from developers before approving new grid connections. The review will examine planned electricity demand and generation, water use and cooling systems, tax incentives, ownership and efforts to reduce impacts on surrounding communities.
The governor's order applies to projects advancing through ERCOT's interconnection queue, which currently includes more than 1,800 projects requesting over 474 gigawatts of electricity — more than five times the grid's record peak demand. Abbott said roughly 90% of those requests come from data centers.
The order immediately affects ERCOT's ongoing review of large-load projects. The grid operator said Monday it is pausing its "batch zero" transmission planning study while it reviews Abbott's directive. It remains unclear whether the audit will apply only to those projects or to every proposal currently in the interconnection queue.
Abbott pointed to a lack of transparency from the industry as a key reason for ordering the audit.
State lawmakers have spent much of the year pressing for answers about how much electricity and water data centers consume and what tax incentives they receive. The governor specifically cited poor participation in a recent PUCT survey designed to collect information on water consumption, cooling systems and electricity demand.
Of the 377 companies the PUCT said it contacted, only 28 completed the survey. During a June hearing, Rep. Brad Buckley, R-Salado, called that level of participation "pretty pathetic."
The survey, developed with the Texas Water Development Board, is intended to help the state better understand the industry's growing demands on water and electric infrastructure as officials plan for future growth.
Texas has emerged as one of the nation's fastest-growing markets for data centers. While there is no official state or federal database tracking the facilities, the Texas Tribune has identified at least 335 operating data centers statewide and another 248 planned for development. Texas trails only Virginia in the number of facilities and is expected to continue growing.
Not every project will be affected by Abbott's order. Some developers are building on-site power plants that allow them to operate without connecting to the ERCOT grid, while other regions of Texas, including El Paso, are served by different electric systems.
The Data Center Coalition, which represents many of the country's largest technology companies, said it supports a thorough review as long as regulators complete it efficiently.
"Done correctly, this review can showcase the good actors in the data center industry rather than delaying them unnecessarily, ensuring Texas will continue to be the national leader in economic development," spokesman Dan Diorio said in a statement.
Abbott's announcement comes after months of resistance from local governments and residents seeking greater oversight of large data center developments. Hill County briefly adopted a moratorium before rescinding it after a developer filed a $100 million lawsuit, while San Marcos became the first Texas city to approve a temporary pause on new data center construction.
Some critics, however, said the governor's order falls short because it is not a true statewide moratorium.
Texas Agriculture Commissioner Sid Miller argued Abbott's directive lacks the force of law without legislative action.
"Without legislative action, this directive is all hat and no cattle — empty political rhetoric wrapped in meaningless fluff," Miller said. "Texans need laws with teeth, not another press release designed to make it look like something is being done while hyperscale projects continue moving forward."
Environmental groups also renewed calls for lawmakers to adopt broader safeguards during a special legislative session.
"AI has real promise, but it shouldn't come at the cost of our water, our air, and our neighborhoods," said Luke Metzger, executive director of Environment Texas. "Now that the state is asking the right questions, it needs to use the answers to develop safeguards that protect Texans."
State Rep. Gina Hinojosa, D-Austin, who is running against Abbott for governor, likewise argued the directive does not go far enough.
"So nice to see another strongly worded letter from Abbott after he proudly made Texas the wild west of data centers," Hinojosa said in a statement. "Abbott's call for a 'pause' could be for one day – and no one buys it. He's taken millions from data center CEOs while giving Texans lip service to non-existent restrictions."
