President Donald Trump criticized Texas this week for temporarily halting approvals for new data centers, putting him at odds with Gov. Greg Abbott's decision to require developers to disclose more information before connecting new facilities to the state's electric grid.
"I saw Texas the other day sort of is against data centers," Trump said during a nearly hourlong interview with Punchbowl News released Friday. "I think it's a mistake. And I'm not taking positions, I just think it's a mistake, because there are other communities that want it. When a community wants it, it means a lot of money is going to come into that community."
Trump later called data centers "tremendously important for the economics" and said Texas risks losing investment if projects move elsewhere.
"For Texas to say no to data centers is a mistake in the sense that it could be bigger than oil," he said.
Abbott announced the pause Monday, directing state agencies to conduct what he called a comprehensive verification and audit of proposed data centers before allowing them to connect to the Texas grid.
The order requires regulators to determine whether projects are receiving tax incentives, how much electricity and water they will consume, what cooling systems they plan to use, what steps developers have taken to reduce impacts on surrounding communities and who owns the facilities. Abbott said projects that fail the review should be denied grid connection.
Abbott's office said Friday the governor's order is intended to protect the state's electric grid, not stop data center development.
Spokesperson Andrew Mahaleris said fewer than 10% of data center companies responded after the state asked developers to report projected power and water use.
"Many are unaware that [the Electric Reliability Council of Texas] is tracking a more than 500% increase in peak electricity demand. This unprecedented growth could endanger the reliability and stability of the Texas electric grid," Mahaleris said. "The Governor's pause requires data centers to provide [Public Utility Commission of Texas] and ERCOT with the required information for them to make fully informed decisions. Simply put, Texans must come first."
The order represents an unusual shift for Abbott, who has long promoted Texas as a destination for business investment. Last November, he called the state the "epicenter of AI development" while announcing Google's $40 billion investment in Texas, which included new data center construction.
The issue has also become increasingly political as more communities push back against proposed projects. Residents in rural parts of Texas have raised concerns that large data centers could strain local water supplies, increase electricity demand and create noise, light and air pollution.
Abbott's Democratic opponent, Gina Hinojosa, argued the governor's order does not amount to meaningful oversight.
"Abbott's call for a 'pause' could be for one day – and no one buys it," Hinojosa said in a statement this week. "He's taken millions from data center CEOs while giving Texans lip service to non-existent restrictions."
