Pennsylvania Gov. Josh Shapiro signed an executive order on Aug. 18 that raises the bar for large data center development in the state, directing agencies to condition favorable permitting treatment and tax benefits on compliance with new energy, infrastructure, environmental, workforce, and community requirements.
Executive Order 2026-05 applies its central permitting provisions to data centers with peak demand above 25 MW. It immediately removes all data center projects from Pennsylvania’s PA Permit Fast Track Program, restricts state agencies from entering nondisclosure agreements involving data center projects, and directs the Department of Revenue to require applicants for the state’s Computer Data Center Equipment sales and use tax exemption to comply with Shapiro’s Governor’s Responsible Infrastructure Development (GRID) Requirements.
The order also directs Shapiro’s Special Counsel for Energy Affordability to press the Pennsylvania Public Utility Commission (PUC) for a series of electricity-sector changes. Among them are proposals to curtail data centers before other customers during certain grid emergencies unless they have secured incremental capacity for their full demand, prevent data centers from receiving critical-load exemptions from curtailment, and assign them costs associated with interconnection and PJM reliability measures.
The action expands the Governor’s Responsible Infrastructure Development (GRID) framework, which Shapiro first introduced earlier this year. The executive order now applies that framework across permitting, tax benefits, local approvals, and utility regulation, seeking to assign more of the costs and risks associated with data center development to the projects that create them.
The governor’s office said the order is intended to “weed out speculative proposals and hold bad actors accountable for their attempts to run roughshod over Pennsylvania communities.”
“Starting today, AI data center developers who want to do business in our Commonwealth must respect our communities and abide by these stringent requirements,” Shapiro said at the signing. “I want to be clear: these are not voluntary standards—they are legally-binding requirements to operate here in the Commonwealth.”
GRID Moves From Incentive Framework to Permit Condition
Shapiro first released the full GRID standards on May 27 as conditions for developers seeking Commonwealth support, including coordinated project assistance, faster permitting, and access to state tax incentives. The standards cover four areas: energy affordability, transparency and community engagement, workforce and economic development, and environmental protection.
However, the Aug. 18 executive order followed a notable legislative stall. The Pennsylvania House on June 24 passed HB 2650, which would codify GRID in state law and make GRID certification a condition for the existing data center sales and use tax exemption. The House has also passed measures allowing municipalities to temporarily pause new data center applications while updating land-use rules and requiring annual energy and water reporting. However, all three bills remain pending in the Republican-controlled Senate.
“The House passed the GRID Requirements as legislation on a bipartisan basis to put those standards in place. The Senate has refused to even bring it up for a vote,” Shapiro noted in his signing remarks on Tuesday. “In fact, the Senate Majority Leader even said he had no intention of taking action to regulate data center development. The absence of legislative approval has left me with no other option but to protect the people of Pennsylvania by taking executive action to put the strictest guardrails in the nation in place to stop the predatory developers and bad proposals.”
Under the Aug. 18 executive order, the Pennsylvania Department of Environmental Protection (DEP) must develop a template Consent Order and Agreement for data centers above 25 MW. Developers that choose the GRID path must notify DEP of their intent to comply, meet with the agency to identify required permits and local approvals, and execute a project-specific agreement incorporating the GRID requirements. DEP can then review qualifying permits on a rolling basis, but cannot issue them until the developer demonstrates consistency with the local comprehensive plan and secures all required municipal approvals.
Developers that decline to execute the agreement face a more restrictive review process, given that DEP cannot begin reviewing their permit applications until they have documented local approvals and any required water-withdrawal or wastewater-discharge authorizations. Those applications also cannot be reviewed or issued on a rolling basis and are excluded from the PAyback and Permit Decision Guarantee programs. Effectively, while the order does not bar a developer from seeking permits without GRID compliance, it reserves the administration’s preferred permitting path and other state support for projects that accept the standards.
As the governor’s office made clear, energy affordability is central to the framework. “Developers must bring their own power and pay for all the costs associated with that electricity,” Shapiro said. “They will not be permitted to saddle homeowners and businesses with added costs because of their development.”
Under GRID, developers must build, bring online, or buy incremental capacity sufficient to meet project demand and cover the associated interconnection, transmission, distribution, network-upgrade, ancillary-service, and dedicated-facility costs. The standards also impose phased clean firm energy requirements, beginning at 10% in 2027 and rising to 32% by 2035.
In addition, the order gives municipalities a stronger gatekeeping role by requiring qualifying projects to document consistency with local comprehensive plans and obtain all required municipal approvals before DEP issues state permits. “If the local community doesn’t approve a project, the state won’t approve it either,” Shapiro noted. Applicants that refuse the GRID agreement must obtain those approvals before DEP even begins reviewing their applications.
The administration has paired the policy with a May 2026 local-government toolkit covering zoning, infrastructure capacity, resource use, fiscal impacts, and community benefits. The guidance says data center development decisions are “inherently local” and urges municipalities to scrutinize power supply, grid-upgrade costs, water use, and other infrastructure impacts. GRID-certified developers must also submit community outreach and benefit plans and disclose information including expected peak demand, water use, building footprint, end users, and energy sourcing.
Finally, the order removes existing data center projects from the PA Permit Fast Track Program and bars future data center projects from participating. The Fast Track program, administered through Pennsylvania’s Office of Transformation and Opportunity, coordinates permitting for large, complex projects across state agencies to give applicants a more structured path through the review process. Shapiro said at the signing that Fast Track has been “an incredible asset” for projects such as Eli Lilly’s Lehigh Valley investment and the Bellwether district in Philadelphia, but “it’s not right for this kind of development.”
The order also prohibits agencies under the governor’s jurisdiction from using nondisclosure agreements for data center projects and directs DEP to create a public map showing permitting information for proposed projects known to DEP or the Department of Revenue. Beginning July 1, 2027, operating data centers must submit annual reports detailing energy and natural gas consumption, peak usage, water consumption and sources, efficiency measures, generation additions, waste-heat recovery, and projected energy and water demand.
So far, DEP has received permit applications associated with 20 proposed data center facilities, and more than 100 facilities have been publicly reported as proposed statewide, the order notes. Fourteen existing or developing locations hold active certificates under the state’s Computer Data Center Equipment Program.
Shapiro added at the signing that no AI data center is yet operating in Pennsylvania and that only five have received the permits they would need to begin operating. He contrasted the speculative pipeline with two projects he endorsed last summer—a Salem Township site in Luzerne County and a Falls Township site in Bucks County —that together represent $20 billion in new investment.
Shapiro Pushes PUC Action on Curtailment and PJM Costs
While the executive order’s power-sector provisions do not directly order utilities or the PUC to act, it directs Shapiro’s Special Counsel for Energy Affordability, Patrick Cicero — a former consumer advocate who worked with Shapiro at the state attorney general’s office — to advocate before the commission for new rules, procedures, and orders addressing data center reliability and cost exposure. Proposals include requiring utilities to revise their pre-emergency Interim Resource Adequacy Service (IRAS) and emergency load-control procedures so data centers are curtailed before other customers during qualifying events unless they have secured incremental capacity covering their full demand. The order also calls for rules preventing utilities from treating data centers as critical load exempt from curtailment. PUC Chairman Stephen DeFrank endorsed the executive order at the signing ceremony.
On cost allocation, the executive order directs the Special Counsel for Energy Affordability to press the commission for tariffs that would charge appropriate data center customers for costs associated with PJM’s proposed Reliability Backstop Procurement (RBP). As POWER reported Aug. 20, the RBP is a one-time procurement PJM proposed to address the 6,831.3-MW capacity shortfall from its 2028/2029 capacity auction. The administration also wants protections preventing those costs from shifting to non-data-center customers if a data center becomes insolvent or cannot pay its assigned share.
For now, Shapiro is also seeking PUC action to ensure data centers pay all commission-jurisdictional interconnection costs caused by their development. Utilities would be expected to register large loads in PJM’s proposed Large Load Registry, submit adjustments affecting the RBP procurement target, and implement credits associated with PJM’s proposed Interim Resource Adequacy Service (IRAS) after federal regulators act on the pending filings.
Those provisions address the state-level pieces of PJM’s broader response to large-load growth. Under PJM’s proposed framework, electric distributors and state regulators retain authority over how retail customers are curtailed and how wholesale backstop costs are ultimately assigned. However, the executive order also appears to extend Shapiro’s broader push for changes at PJM. His administration says legal action and subsequent settlements helped establish and extend capacity-market price caps through the 2027/2028 delivery year. Shapiro has also pressed for faster interconnection, improved load forecasting, and a stronger state role in PJM decision-making.
States Are Tightening Scrutiny of Large Data Center Loads
Pennsylvania’s move follows increasingly aggressive state intervention in how large data center projects are permitted, interconnected, and charged for their effects on the power system.
Earlier this month, Texas Gov. Greg Abbott’s directive, as POWER reported on Aug. 4, ordered the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to verify and audit data center projects seeking grid access. Abbott also required information on projected electricity and water use, on-site generation, public incentives, ownership, and community impacts, and warned that projects failing to comply with the verification process could be denied interconnection.
In July, New York Gov. Kathy Hochul imposed a temporary statewide moratorium on certain approvals for new or expanding hyperscale data centers capable of consuming 50 MW or more while the state develops a broader regulatory framework. The administration said the pause is intended to address transmission, infrastructure, environmental, and ratepayer impacts associated with large data center development. Likewise, Illinois Gov. JB Pritzker on June 5 directed the Department of Commerce and Economic Opportunity to pause processing agreements under the state’s Data Center Investment Program beginning July 1 after lawmakers failed to advance broader legislation. Pritzker simultaneously outlined a framework addressing energy affordability, reliability, water use, and local impacts.
In May, Florida Gov. Ron DeSantis signed Senate Bill 484 requiring large-scale data centers to bear their full cost of service and prohibiting utilities from shifting those costs to residential and small-business customers. The law also preserves local zoning and permitting authority, allows communities to reject projects, requires disclosure of certain development agreements, and restricts utility service to data centers controlled by designated foreign countries of concern.
While Shapiro’s executive order takes effect immediately, several pieces still depend on implementation. For now, DEP must develop the template Consent Order and Agreement and public data center map, while the Department of Revenue must revise its guidance for the Computer Data Center Equipment sales and use tax exemption. The Special Counsel for Energy Affordability must also pursue the requested tariff and curtailment changes before the PUC. Finally, the executive order also states that its provisions must be implemented consistent with applicable state and federal law.
—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).
