Texas Governor Greg Abbott has directed the state's environmental agency to suspend all data center-related permit approvals until the Electric Reliability Council of Texas (ERCOT) completes its review of the existing queue of data centers seeking grid connection. The governor's office initially ordered such a review in August, when Abbott halted new approvals for data centers connecting to the power grid. This latest directive expands the suspension to include environmental permits managed by the Texas Commission on Environmental Quality (TCEQ).

According to a February report from JLL, Texas was on track to surpass Virginia as the world's largest data center market by the end of this decade, but Abbott's Monday directive could slow that trajectory. Analysts noted last month that Texas's pause puts nearly 20% of the United States' "253 gigawatts (GW) of data center construction and planned projects" at risk—amounting to roughly 50 GW of proposed data center capacity. This could lead to more than $8 billion in lost data center-related revenue by the first quarter of 2027.

A report from the advocacy group Data Center Watch highlighted that $68 billion worth of new data center projects were delayed or cancelled last quarter due to local opposition—a risk now spreading into financial markets. The highly anticipated prospectus from Anthropic is expected to list public negativity toward AI and data centers as a risk factor. Data center construction has become a prominent issue in the U.S. 2026 midterm elections, with a recent poll showing 64% of Americans would be less likely to vote for a candidate who "supports building local data centers."

Abbott, who is running for a fourth term and is locked in a tight race against state Representative Gina Hinojosa, finds himself at the center of this backlash. He has had to walk back his earlier (2025) comments, when he declared Texas would become "the center of AI development" due to sales tax exemptions for qualifying data centers and high-profile projects like OpenAI's "Stargate." The press release on the permit suspension states: "During the next legislative session, Governor Abbott will work with the legislature to eliminate financial incentives for data centers." The Texas Commission on Environmental Quality (TCEQ) is expected to report progress on implementing the directive to the governor's office by October 19.