Texas Governor Greg Abbott halted new data center approvals and directed audits of existing facilities, effective immediately.

Amid growing public backlash to the rapid expansion of data centers across Texas, Gov. Greg Abbott announced Monday a moratorium on data center approvals until regulatory agencies can audit proposed facilities seeking connection to the state's electric grid.

Abbott directed the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to conduct comprehensive audits requiring data center developers to disclose tax incentives they will receive, power consumption and generation capacity, water use and cooling operations, efforts to mitigate local impacts, and facility ownership. Any projects failing the audit should be denied grid connection, the governor said.

"Our top priority is to protect Texans' safety and quality of life," Abbott stated. "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."

The audit scope remains unclear. ERCOT currently tracks more than 1,800 projects in its interconnection queue—the line for energy-intensive projects seeking grid connection—representing over 474 gigawatts of electricity, more than five times the grid's record peak demand. Approximately 90% of new power requests are data centers, according to Abbott. ERCOT announced Monday it is pausing its ongoing "batch zero" review of some projects.

Texas operates at least 335 data centers and has 248 more in the planning pipeline, making it the second-largest data center market nationally behind Virginia and positioned to claim the top spot. However, some data centers are building on-site power generation to bypass traditional grid connection, and the ERCOT region excludes portions of the state like El Paso.

Abbott's directive came after data centers showed poor compliance with a PUCT survey on water and power usage. Of 377 companies notified about the survey, only 28 submitted responses. The survey, developed by the PUCT with the Texas Water Development Board, collects information on water consumption, cooling systems, electricity demand, and power sources to inform state water planning.

In June, Abbott had already directed the PUCT and ERCOT to require data centers to fully fund their own electric infrastructure and take other cost-reduction measures. State law requires the PUCT to report survey findings to the governor and Legislative Budget Board by year's end.

The Data Center Coalition, representing major tech companies, expressed hope that the audit could distinguish responsible developers from irresponsible ones. "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.

However, critics argue Abbott's directive falls short of a true moratorium. Texas Agriculture Commissioner Sid Miller called it "vague" and "empty political rhetoric" without legislative teeth, urging a special legislative session to establish enforceable regulations. Environment Texas Executive Director Luke Metzger echoed this call: "AI has real promise, but it shouldn't come at the cost of our water, our air, and our neighborhoods. 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, an Austin Democrat running against Abbott, said his directives do not go far enough, citing millions in campaign contributions from data center executives despite promised restrictions.

Abbott's announcement reflects escalating legislative scrutiny over data centers' electricity and water consumption throughout the legislative year. Locally, Hood County rejected two moratorium attempts in February, Hill County approved and later rescinded a moratorium after a $100 million lawsuit threat, and San Marcos became the first Texas city to issue such a moratorium in June. Nationally, New York Gov. Kathy Hochul faced criticism from President Donald Trump for issuing a year-long pause on large data center construction.