Texas Gov. Greg Abbott issued a directive halting the approval of new data centers until state regulatory agencies complete comprehensive audits of proposed facilities, according to an announcement made Monday. The governor instructed the Public Utility Commission of Texas and the Electric Reliability Council of Texas to verify that developers provide detailed information about tax incentives, power consumption, water usage, cooling operations, community impact mitigation efforts, and facility ownership before receiving grid connections.
The data center sector has expanded rapidly across Texas, with ERCOT currently tracking more than 1,800 projects in its interconnection queue representing over 474 gigawatts of electricity demand—more than five times the grid’s peak capacity record. Approximately 90 percent of new power requests originate from data center developers, according to Abbott’s statement. Texas has become the second-largest data center market nationally behind Virginia and is positioned to lead the country. The state has at least 335 operating data centers with approximately 248 additional facilities in planned development stages, though no comprehensive state or federal database exists for tracking them.
Abbott’s action reflects growing concerns among state leaders and the public about the industry’s rapid expansion and insufficient regulatory oversight. The governor cited the low response rate to a recent Public Utility Commission survey measuring water and power usage as evidence that audits are necessary for informed decision-making. Of 377 companies notified about the survey, only 28 submitted responses. The ERCOT review process known as “batch zero” has been paused pending implementation of Abbott’s new requirements.
Responses to the directive have diverged significantly. The Data Center Coalition, representing major technology companies, expressed hope that the review would distinguish responsible developers from problematic ones while allowing audits to proceed expeditiously. However, critics including Texas Department of Agriculture Commissioner Sid Miller characterized the directive as insufficient without legislative action, calling it “empty political rhetoric.” Environmental advocates and opposition lawmakers contend that stronger measures are needed to protect water resources, air quality, and local communities, with some calling for a special legislative session to enact binding regulations on the industry.
The moratorium does not affect data centers constructing on-site power generation or facilities outside ERCOT’s service territory, such as those in El Paso. Abbott had previously directed ERCOT and the PUCT in June to require data centers to fully fund their own infrastructure costs.
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