Pennsylvania Executive Order establishes state compliance framework for data center development

On August 18, 2026, Pennsylvania Governor Josh Shapiro signed Executive Order (EO) 2026-05, “Protecting Pennsylvania Consumers from Data Center Impacts,” which establishes a state-level regulatory framework for data center development that he described as the “strictest guardrails in the nation.” The EO takes effect immediately and remains in effect until amended or rescinded by the Governor.

The EO follows the Governor’s Responsible Infrastructure Development (GRID) Requirements, which were announced on February 3, 2026. On May 27, 2026, the Shapiro Administration released standards establishing strict guardrails on data center developers. The EO now converts those initially voluntary standards into functional permitting conditions by requiring applicants to execute project-specific Consent Orders and Agreements and, to the extent permitted by law, incorporating the GRID Requirements as conditions into qualifying permits or authorizations.

Key details of the EO

Two-track permitting system

The EO directs the Pennsylvania Department of Environmental Protection (DEP) to 1) develop a template Consent Order and Agreement that incorporates the GRID Requirements for data centers with peak demand exceeding 25 megawatts and 2) establish a new review process for applicants who commit to those requirements.

The GRID Requirements focus on four areas:

• Energy affordability
  
  
• Transparency and community engagement
  
  
• Workforce and economic development
  
  
• Environmental protection

Track 1: Compliant developers

Developers who execute the Consent Order and Agreement and comply with the GRID Requirements receive permitting advantages.

Before submitting a new application, a developer seeking Track 1 treatment must identify for DEP the nature of the development project and provide a notice of intent to comply with the GRID Requirements; participate in a meeting with DEP; and execute a project-specific Consent Order and Agreement implementing the GRID Requirements.

After these steps are completed, the developer must provide documentation demonstrating that the project is consistent with the local comprehensive plan and that the developer has received all required local or municipal approvals. DEP may then review applications and issue qualifying permits or authorizations on a rolling basis.

Track 2: Non-compliant developers

Developers who decline the Consent Order and Agreement could face additional requirements in the DEP permitting process.

• DEP will not begin reviewing applications until the developer demonstrates consistency with the relevant local comprehensive plan, obtains all local approvals, and secures authorization for water withdrawal or wastewater discharge.
  
  
• Permits will not be issued on a rolling basis. All applications must be received and reviewed before permits are issued.
  
  
• Review of permits or authorizations is excluded from the PAyback Program established under Executive Order 2023-07, “Building Efficiency in the Commonwealth’s Permitting, Licensing, and Certification Processes,” and the Permit Decision Guarantee Program established under Executive Order 2012-11, “Permit Decision Guarantee for the Department of Environmental Protection.”

All data center projects have also been removed from Pennsylvania’s Permit Fast Track Program and are no longer eligible for expedited processing.

Tax exemption

The Pennsylvania Department of Revenue must update the Computer Data Center Equipment Exemption Program guidelines to require that sales and use-tax exemption applicants comply with the GRID Requirements.

Transparency requirements

The EO imposes new disclosure mandates on data center developers:

• Non-disclosure agreements (NDAs) in connection with data center projects are impermissible for all state agencies under the Governor’s jurisdiction
  
  
• DEP must create a publicly accessible map showing current permitting information for all proposed data center projects
  
  
• Beginning July 1, 2027 and annually thereafter, data centers must submit detailed energy and water consumption reports to DEP, including monthly consumption data by source, peak load estimates, efficiency measures, on-site generation information, waste heat recovery measures, and projected future demand

Ratepayer protections, environmental rulemaking, and municipal zoning guidance

Consumer and ratepayer protections

The Governor’s Special Counsel for Energy Affordability is directed to engage with the Pennsylvania Public Utility Commission (PUC) to advocate for the development of rules, procedures, and orders requiring utilities to adopt certain reliability and cost protections. Among other things, the EO advocates for measures that would:

• Require utilities to file with the PUC to revise their pre-emergency resource procedures, providing that they will curtail, or reduce service to, a data center before any other customers, unless the data center has secured incremental electric capacity for its entire load. Utilities must ensure that they do not classify any data centers as critical load that cannot be curtailed during a pre-emergency or emergency event.
  
  
• Approve utility tariffs that ensure that data centers are charged for the reliability backstop capacity auction costs, a one-time procurement of new electric generation resources of the PJM Interconnection regional independent transmission system operator to address a shortage of electric generating capacity due to large-load demand, as they are ultimately approved by the Federal Energy Regulatory Commission (FERC).
  
  
• Prevent any PJM reliability backstop costs from being charged to non-data center customers, even if the data center becomes insolvent. Utilities must also submit megawatt adjustments for any reliability auction targets before the auction and must register large loads in PJM’s large-load registry, including the requirement for incremental capacity to serve these loads.
  
  
• Ensure that utility tariffs provide that data centers are charged for all of the costs the utility incurs to interconnect the data center to the power grid.

Environmental rulemaking

DEP is directed to recommend new regulations to protect the environment from data center impacts, specifically examining:

• Whether to require new technologies or emissions controls for backup generators
  
  
• Whether to address the cumulative impact of multiple backup generators at a single site
  
  
• Whether regulations should address backup generators deployed as grid resources

Zoning

The Pennsylvania Department of Community and Economic Development is directed to prepare best practices on zoning standards and community benefit agreements for municipalities hosting data center developments.

Key takeaways for data center developers

Data centers under construction and future data centers

• The two-track system creates incentives to execute the Consent Order and Agreement and comply with the GRID Requirements. The requirement that local zoning approvals be obtained before state permitting could lead to earlier engagement with municipalities.
  
  
• The use of NDAs with state agencies is now impermissible. The EO does not address the use of NDAs with local governments in Pennsylvania.
  
  
• The linkage between tax exemptions and GRID compliance could create financial consequences for non-compliance beyond permitting delays.
  
  
• Data centers are required to pay all costs the utility incurs to interconnect them to the electric power distribution or transmission systems.

Operational data centers

• Data center projects are no longer eligible for the Permit Fast Track Program. Any existing data center project in the program will be immediately removed.
  
  
• New state environmental regulations related to the use of backup generators.
  
  
• Annual reporting obligations beginning July 1, 2027 will require operational data centers to track and disclose detailed energy and water consumption metrics to the public.
  
  
• Data centers that cannot withstand being curtailed (i.e., having their electric service stopped or reduced) when the utility is at risk of being short on electric generation capacity before and during emergencies will be required to purchase incremental energy supply for their entire electric power demand.
  
  
• Data centers will be charged for the costs the utility incurs in the PJM reliability backstop auction once FERC approves the auction.

The EO marks a noticeable shift in the Governor’s approach to data center development and significantly alters, without legislative amendment, the state’s permitting criteria, procedures, and structure, which may be susceptible to legal challenge.

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