Governor Greg Abbott has issued what he's called a "pause" on new data center approvals, until state regulators can conduct a "comprehensive audit" of their energy and water usage.
"I have pressed pause on any new data center being able to join the operations in the state of Texas," he said Sunday on ABC News' This Week. "During that pause, I have set guidelines and guardrails that all data centers have to comply with."
It was a major political moment for a governor who is closely aligned with Trump and big business, and called Texas the "epicenter of AI development" just last year.
But just weeks after ordering the audit on Aug. 3, Abbott began announcing that several big companies "comply" with it.
So what exactly is this audit? Will it actually address people's concerns about data centers?
Some of the governor's critics say it doesn't go far enough and have urged Abbott to call a special legislative session to regulate data centers. Texas Agriculture Commissioner Sid Miller said without new laws, the governor's latest directive is "all hat and no cattle."
Here's what we know.
What is a data center and why have they become so controversial?
Data centers are essentially secure warehouses filled with computers. They're used to power online services — everything from social media platforms to video streaming to financial transactions over the internet. They've existed in the United States since the 1940s, but due to the rise of artificial intelligence, more of them are popping up around the country and in Texas – and they're getting bigger.
The data center boom has brought increased bipartisan scrutiny from the public about the amount of water and electricity they'll consume, along with their sheer size and the noise some of them make. Critics also fear that everyday consumers will end up fronting the costs of the new electrical infrastructure that data centers will need to operate.
Some data centers are so large, they can't get electricity simply by going through their local utility company. They'll either have to build their own power plant or request permission to connect to the state's electric grid – a large network of power lines and transformers that brings electricity from power plants to homes and businesses across Texas. That permission must be granted by the Electric Reliability Council of Texas, or ERCOT, which manages the grid.
ERCOT classifies data centers based on their size. Large data centers, which ERCOT refers to as "large loads," use at least 75 megawatts of electricity from the power grid, while medium-sized data centers use 25 to 75 megawatts of energy. A single megawatt can power about 250 Texas homes during peak energy demand, according to ERCOT.
In the first quarter of this year, nearly 200 large energy consumers, including many large data centers, applied to connect to the Texas power grid. That's more than three times the number of requests from 2024. To power all of the large data centers that want to join the Texas power grid would require nearly five times the amount of electricity used by the entire state during record demand.
Does this "pause" affect all pending data center projects in Texas?
Many data centers are not covered by Abbott's directives because they don't need ERCOT's approval to connect to the Texas power grid.
Those include data centers with their own on-site power plants. For example, earlier this summer, Chevron announced it would build a natural gas plant in West Texas that would be solely dedicated to powering a Microsoft data center.
Medium-sized data centers, which use between 25 megawatts and 75 megawatts of electricity, are also not part of the "pause." They will just have to complete a survey about their water and energy use and other community impacts as part of Abbott's directive. There are over 150 proposed projects for such data centers across the state, according to ERCOT.
"ERCOT does not have that authority to stop (the process)" for medium-sized data centers, Chad Seely, the agency's senior vice president, told the state's utility regulators on Aug. 20. "It's really up to the local utility on where they are in that process as far as connecting them to the grid."
Still, the "medium-sized" data centers can be quite large. One 60 megawatt data center in Houston is 350,000 square feet, about the size of six football fields.
Smaller data centers – under 25 megawatts – won't have to answer any surveys as part of the audit, and they're also not impacted by the pause.
Additionally, some portions of the state's power grid in East Texas, the Texas Panhandle and El Paso are not part of the ERCOT-managed grid. The state's utility regulators do have authority over the electricity network in those areas, but it's not clear how they would use it when it comes to data centers.
What exactly does the "pause" mean?
The pause mostly applies to about 300 large data center projects, which could be a part of ERCOT's "Batch Zero," a group of data centers that the agency is evaluating so they can join the power grid.
During the pause, ERCOT must verify that these projects are actually ready to be built – for example, by providing a lease or property deed and permits. This "verification" process does not involve evaluating data centers' water usage, noise or other community impacts.
ERCOT was already planning to take that step, and to do it at the same time the agency conducted an "interconnection study" to determine how much electricity each large data center project could actually receive. Now, it has to complete the verification process before beginning the interconnection study.
Joshua Rhodes, a research scientist at the University of Texas at Austin, said this might delay some projects, but it's not a moratorium on all new data centers.
"It feels like a pause in the start of the process," he said, adding that it's unclear how long the pause will last.
After Abbott issued his directive, ERCOT said the verification process won't be done until December. But ERCOT had always projected that the separate interconnection study wouldn't be done until next April, and that estimate has not changed.
Still, Beth Garza, who previously served as the independent market monitor for ERCOT, thinks the interconnection process could take longer — either due to the governor's "pause," or because the initial timeline was unrealistic.
"I will be pleasantly surprised if in April of 2027, the industry has a clear picture of which data center loads are going to be able to move forward," Garza said.
Abbott has announced that several major companies "comply" with his recent data center directives. What does that mean?
In a recent interview with ABC News, the governor said the state will require data centers to lower electricity costs for consumers and prove that they're not taking water or energy that communities need, or causing any other nuisance for their neighborhoods. He's threatened to deny access to the state's power grid for any projects that don't meet these standards.
Since then, the governor has touted statements from major technology companies like Google and Meta, who've pledged to minimize their impacts on communities near their data centers.
But it's not clear how the state will ensure data centers are staying true to those promises.
"I think it's just a signaling thing," Garza said of these companies' statements.
What does this mean for communities who are worried about data centers coming to their neighborhoods?
It's unclear whether Abbott's "pause" will address the widespread concerns about the state's data center boom.
It generally only applies to proposed data centers that will use over 75 megawatts of power and don't have their own power plants. Even for those projects, Abbott's directive doesn't add any significant steps to the process ERCOT was already undertaking to evaluate them – it simply adjusts the order of those steps.
And after the governor asked ERCOT and the state's utility regulators to shield consumers from the costs of new data centers earlier this summer, the agencies responded with steps they had already taken in response to a 2025 state law.
Abbott also says ERCOT must collect "community impact information" from all large and medium-sized data center projects, and ERCOT says if they don't respond to a survey for such information, they will be reported to state utility regulators. But it's unclear if there will be any real penalty for not responding. Rich Parsons, a spokesman for the Public Utility Commission of Texas, said in an email that those situations "would be addressed on a case-by-case basis."
In addition, ERCOT says the survey results will only be made public in the aggregate. Individual companies' survey responses will be confidential.
The governor's spokesperson, Andrew Mahaleris, said in a statement that Abbott's "top priority is to protect Texans' safety and quality of life." He added that Abbott has called for eliminating data center sales tax breaks.
As the audit begins, Rhodes said he's curious to see what sorts of questions utility regulators and ERCOT will ask.
"The kinds of questions that they ask can drive certain behaviors, even if they're not explicitly required," he said.
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