New York, Texas, and 14 Other States Hit the Brakes on Data Center Construction

The data center boom that both parties cheered a year ago is now the thing both parties are running away from.

New York Gov. Kathy Hochul, a Democrat, announced the nation's first statewide freeze on hyperscale data center permits, according to The Hill. The pause blocks state environmental permits for up to a year for facilities using 50 megawatts or more of power, while New York builds out a regulatory framework. "As data center development threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it's my responsibility to take action and lead," Hochul said in her announcement, as reported by Breitbart.

Texas Gov. Greg Abbott, a Republican, moved in the same direction on Aug. 3, ordering state regulators to audit data center projects seeking connection to the grid before approving them, according to the Epoch Times. Abbott's office said the Electric Reliability Council of Texas, known as ERCOT, is currently reviewing roughly 474 gigawatts of proposed new electricity demand. That's more than five times the state's record peak load, with about 90% of those requests coming from data centers. "Our top priority is to protect Texans' safety and quality of life," Abbott said. "Simply put, Texans must come first."

At least 14 other states, including Maryland, Michigan, Minnesota, Wisconsin, and Virginia, are weighing similar measures, according to Fox News. Republican Mike Rogers has also called for a one-year moratorium at the federal level, per a report carried by The Hill.

Companies spent almost $400 billion on U.S.-based data centers in 2025, according to Fox News, with spending trending higher this year. There are nearly 4,600 data centers already operating nationwide, with thousands more planned. President Trump himself acknowledged the industry's problem, saying this week that data centers need "a little public relations help," as noted in a Washington Post opinion piece.

The Case Against the Backlash

Fox News argues the panic is overblown on the power-price question specifically. A Lawrence Livermore National Laboratory review of why retail electricity prices outpaced inflation from 2019 to 2024 offered seven explanations, and none of them involved data centers, according to Fox's reporting. The piece warns that states blocking data center construction risk repeating the mistake towns made when they excluded railroads and canals in the 19th century, potentially getting bypassed for jobs and investment.

The industry itself is also moving to defuse the fight. The White House announced in late July that Amazon, Google, Meta, Microsoft, OpenAI, Oracle, xAI, and more than 200 other companies agreed to cover 100% of the power infrastructure costs their data centers require, according to Fox News. Nineteen states have also adopted "large load tariffs" that force big power users to pay for new generation and transmission themselves.

The Case That This Is Theater

Not everyone buys that either governor is serious. The San Antonio Current reported that watchdog group Public Citizen dismissed Abbott's move as a "faux pause," arguing the audit language is vague enough to be toothless. "It's another Band-Aid," said Adrian Shelley, Public Citizen's Texas director, who argued Abbott's real approach has been to "roll out the welcome mat to corporate interests first and figure out how to protect the interests of working Texans later, if at all." Shelley called for a special legislative session to pass an actual moratorium with teeth.

The timing raises fair questions. Abbott is in a competitive reelection fight against Democratic state Rep. Gina Hinojosa, according to the San Antonio Current, which reported the two are polling close. ERCOT told the outlet its audit won't even begin until shortly after Aug. 20 and is expected to last several months. Since Abbott's announcement, at least 43 companies, including Meta, OpenAI, Microsoft, and Amazon Web Services, have publicly backed the audit. The Current notes this is "hardly a sign the governor is putting the thumbscrews to the industry."

Texas Lt. Gov. Dan Patrick raised a separate concern on X, warning that ERCOT's plan for new high-voltage transmission lines shouldn't come "at the expense of private property rights."

Public opinion backs the skeptics. Only about one-third of Americans approved of the current pace of data center construction, according to a June Reuters/Ipsos poll cited by the Epoch Times.

Whether Hochul's freeze and Abbott's audit produce real regulation or just buy political cover through the November midterms will depend on what New York's framework and Texas's audit findings actually require once they're finished. ERCOT's audit alone won't wrap up for several months, meaning Texas voters may go to the polls before anyone knows what it found.