AUSTIN — Texas will pause state permitting for data center projects while regulators evaluate how the rapidly expanding industry could affect electricity reliability and water supplies, Gov. Greg Abbott announced Sept. 21. Abbott directed the Texas Commission on Environmental Quality to withhold permits until reviews by the Electric Reliability Council of Texas, the Public Utility Commission of Texas and the Texas Water Development Board are completed. TCEQ must align future permitting decisions with the reviews and report an update to the governor’s office by Oct. 19. “Simply put, Texans must come first,” Abbott said in a statement. “Data centers must pay their own way, protect our grid and water, and complete the ERCOT and TWDB audits. Until they do, TCEQ will issue no permits sought by data center projects.” The governor previously ordered ERCOT and the PUC to examine data centers in the state’s electric interconnection process. That review is intended to determine whether proposed facilities could threaten the reliability or security of the Texas grid. Abbott also directed the water board to enforce existing reporting requirements for data centers and work with ERCOT to gather more information about how much water the facilities consume. Under the directives, data center developers would be expected to pay for their own electrical infrastructure, report electricity and water use, and show that their projects would not divert water needed by nearby communities. Data centers, which house servers used for cloud computing, artificial intelligence and other digital services, can require large amounts of electricity and, in some cases, water for cooling. Their expansion has raised questions about who should pay for grid upgrades and whether communities should bear higher utility costs or face added pressure on limited water supplies. Abbott said he plans to work with lawmakers during the next legislative session to end financial incentives for data centers in Texas. The permit pause and planned policy changes could affect the pace and cost of future projects as state officials weigh the industry’s economic benefits against its demands on public infrastructure and natural resources.