Texas Governor Greg Abbott has ordered the state’s environmental regulator to stop issuing all new permits related to data centers until the Electric Reliability Council of Texas completes an audit of the existing queue of projects seeking to connect to the state grid.
The audits were first ordered in August, when Abbott also imposed a moratorium on new grid approvals for data centers. The latest directive widens that pause to include environmental permits processed through the Texas Commission on Environmental Quality.
A February report from JLL said Texas was on course to surpass Virginia by the end of the decade and become the world’s largest data center market. Abbott’s order on Monday, however, could slow that expansion.
Last month, BloombergNEF analysts said Texas’s pause could put at risk “almost 20% of the U.S.’s 253-GW data center pipeline,” or nearly 50 gigawatts of proposed capacity. They estimated that the impact could translate into more than $8 billion in lost data center revenue by the first quarter of 2027.
A report by advocacy group Data Center Watch also said $68 billion in new data center development was delayed or canceled last quarter because of local opposition. According to CNBC, that risk is now spilling into financial markets as well.
The report added that Anthropic’s anticipated IPO filing is expected to cite negative public sentiment toward AI and data centers as a risk factor in its prospectus.
Data center expansion has become a major issue in the 2026 midterm elections. A recent NBC News poll found that 64% of Americans would be less likely to vote for a candidate who “supports building local data centers.”
Abbott, who is in a close race for a fourth term against state Rep. Gina Hinojosa, has been drawn directly into that backlash. He has had to retreat from his 2025 claim that Texas, thanks to sales tax exemptions for qualifying data centers and high-profile projects such as OpenAI’s Stargate, would become the “epicenter of AI development.”
The moratorium announcement also said Abbott will work with the Legislature in the next session to eliminate any financial incentives for data centers. The Texas Commission on Environmental Quality is expected to update the governor’s office on compliance with the directive by Oct. 19.
