Texas Gov. Greg Abbott ordered the Texas Commission on Environmental Quality on Monday to halt all permits sought by data centers until state regulators complete an ongoing audit of the industry. The directive effectively freezes new state environmental approvals for data center projects while officials gather information needed to evaluate their effects on the state’s power grid and water resources.

The order follows Abbott’s August directive requiring the Public Utility Commission of Texas and the Electric Reliability Council of Texas to conduct a comprehensive audit of data centers seeking connections to the Texas grid. Regulators are examining projected electricity demand, on-site power generation, water consumption, cooling systems, tax incentives, ownership, and potential effects on surrounding communities.

Abbott said the additional permitting pause is necessary because state agencies need the audit information before making decisions about data center projects. “Simply put, Texans must come first,” Abbott said. “Data centers must pay their own way, protect our grid and water, and complete the ERCOT and TWDB audits.”

The issue has become increasingly significant as Texas attracts major investments in artificial intelligence and other computing infrastructure. ERCOT is considering more than 474 gigawatts of requests to connect to the Texas grid, with roughly 90% of the new power requests coming from data centers, according to Abbott’s office. The state grid operator has estimated that its audit could involve roughly 250 to 300 projects, representing about 200 gigawatts of potential future demand.

Water use is another major concern. Abbott last week directed the Texas Water Development Board to enforce state reporting requirements against data centers that fail to provide information about their water consumption. State records show that only about 30% of the 329 data centers surveyed in 2025 submitted the required information.

Abbott has also directed state regulators to ensure data centers cover the costs of electrical infrastructure needed to serve their facilities rather than shifting those expenses to residential customers. His administration has said future standards should also address water efficiency, neighborhood impacts and taxpayer-funded incentives for the industry.

The permitting freeze will remain in place while ERCOT and the Texas Water Development Board complete their reviews. TCEQ has been directed to provide Abbott’s office with an update on its compliance with the new directive by Oct. 19.