Texas Governor Greg Abbott has halted all new data center permits from the state’s environmental agency until the state completes its large-scale audit of facilities seeking to connect to the ERCOT grid.

The directive, issued to the Texas Commission on Environmental Quality, will effectively freeze all state-issued ​permits to data center developers. Texas is fast becoming a new hotspot for data center development. At present, ERCOT is considering more than 474GW of connection requests, which is more than five times the state's record peak electricity demand. Of that capacity, approximately 90 percent is attributed to data center load.

“Simply put, Texans must come first,” Abbott ​said in a statement. “Data centers ​must pay ⁠their own way, protect our grid and water, and complete the [audits]."

The audit was ordered by Governor Abbott last month and mandated the Public Utility Commission of Texas (PUCT) and ERCOT to complete a comprehensive audit of all data center projects currently advancing through ERCOT’s interconnection process.

As part of the audit, the PUCT and ERCOT have been instructed to gather information detailing the extent to which data centers are paying their own way or, depending on the state, the extent to which they are providing their own power or relying on the grid, the extent to which they are bringing their own water supplies and/or reusing water rather than relying on local communities, whether they are using measures to reduce impacts on neighboring property owners and communities, and finally information detailing the ownership and controlling interests in the project.

Earlier this month, ERCOT said that it intends to complete the audit by December. If that is not the case, some have warned that the audit could have a significant impact on the US’ data center buildout.

A Bloomberg report said the audit has put about 20 percent of the US’ data center pipeline at risk of delay. The financial impact of Governor Abbott's audit, which would affect almost 49.8GW of projects seeking a grid connection, could be as much as $8 billion by the first quarter of 2027. Should the pause extend further, the risk would become more extreme.

The move is part of a broader push by state legislators to temper the growth of the sector, due to fears of reliability, rising utility costs, and environmental impacts. In July, New York became the first US state to impose a moratorium on new data center builds.

While New York is the first to enforce a statewide moratorium, several other US states have seen similar legislation proposed. In Maine, a bill passed both houses that would have imposed an 18-month moratorium, but it was ultimately vetoed by the governor.

Although moratoriums have long been used at the local level, officials in Minnesota, Virginia, New Hampshire, Vermont, Oklahoma, Maryland, Georgia, Pennsylvania, South Carolina, Wisconsin, and Michigan have also introduced bills calling for statewide bans on new developments.