Texas Orders Halt to New Data Center Permits Pending Audit

Texas Governor Greg Abbott ordered the state’s environmental watchdog to withhold permits for new data centers until an audit of risks to the power grid is complete.

No authorizations can be given until the Electric Reliability Council of Texas, or Ercot, completes its review, Abbott said in a statement on Monday.

The governor is doubling down on an effective moratorium on new AI hubs amid concern that the vast sites are compromising the state grid and water resources. The proliferation of data centers is set to be a key issue in midterm elections in November, with President Donald Trump’s enthusiasm for expansion coming up against mounting public concern — in part over soaring power bills.

Data center projects must prove they can cover all electrical infrastructure costs, use no water needed by local communities, and result in lower bills for households, Abbott said in the statement. The governor also said he would work with state legislators to eliminate any financial incentives for the hubs.

The permitting halt comes amid growing opposition to data centers across the US. Some 45 projects, worth $68 billion, were blocked or delayed by local pushback between April and June, according to research group Data Center Watch. Trump, meanwhile, has sought to drive the industry forward, warning that a slowdown could offer China an advantage in the AI race.

Energy powerhouse Texas has, until now, been at the forefront of the AI boom, but it has also struggled to connect data centers to the grid. Abbott last month ordered Ercot, along with the Public Utility Commission of Texas, to audit all data centers in the grid queue before issuing further approvals. Regulators subsequently set a mid-December deadline for project reviews.