President Donald Trump criticized Texas Governor Greg Abbott’s decision to pause approvals for new data centers, calling the move a mistake in an interview released Friday. Abbott ordered a temporary halt on approvals for facilities seeking connections to the state’s electric grid while regulators conduct a comprehensive audit of their electricity and water consumption.
Key developments
- Abbott’s order: On Monday, Abbott announced the pause, citing concerns over data centers’ strain on the state’s power grid and water resources. The review will assess expected electricity and water use, cooling systems, tax incentives, and ownership structures. Projects failing to meet state requirements may be denied grid connections.
- Trump’s response: In an interview with Punchbowl News, Trump argued that Texas risks losing billions in investment by rejecting data centers, stating the industry could eclipse oil in economic importance. He emphasized that communities eager for such projects stand to gain substantial financial benefits.
State response and rationale
Abbott’s office confirmed the audit would examine electricity demand, water usage, and environmental impacts of proposed data centers. The governor’s press secretary, Andrew Mahaleris, stated that projects failing to meet state standards would be denied connections to the Texas grid. The pause applies only to new approvals, not existing facilities.
Federal perspective and economic stakes
Trump framed data centers as tremendously important for the economics, highlighting their potential to surpass oil in economic contribution. He cited Google’s $40 billion investment in Texas, announced in November 2025, as evidence of the industry’s growth. The investment includes three new data center campuses, energy initiatives, and workforce training, representing Google’s largest single-state commitment.
A May 2026 study by PwC, commissioned by the Data Center Coalition, found that the industry contributed $926.9 billion to U.S. GDP in 2024, supported 5.5 million jobs, and generated $204.4 billion in tax revenue. Trump warned that communities rejecting data centers risk losing future investment to states more receptive to such projects.
Industry concerns and community impacts
Data centers, which power cloud computing and artificial intelligence, require large amounts of electricity and water for cooling. Critics have raised concerns about noise, rising electricity costs, grid strain, and environmental impacts associated with their rapid expansion. The pause reflects growing scrutiny of the industry’s resource demands, particularly in water-scarce regions like Texas.
Next steps
Regulators will conduct the audit over an unspecified period, after which Abbott’s office will determine whether to lift the pause or impose permanent restrictions. The outcome could influence future investment decisions by major tech companies and shape Texas’ energy and water policies.