Pennsylvania spent two years courting AI data centers with fast-tracked permits and a generous tax exemption. On Tuesday it started charging admission.
Governor Josh Shapiro signed Executive Order 2026-05 on Aug. 18, converting the Governor's Responsible Infrastructure Development (GRID) standards from a voluntary best-practices document into a condition of doing business. The order, titled "Protecting Pennsylvania Consumers from Data Center Impacts," directs the Department of Environmental Protection to withhold review of a data center's permit applications unless the developer has executed a Consent Order and Agreement, a legally binding contract with the state carrying penalties for noncompliance, and has already obtained every required local approval. Developers who decline are not banned outright, but they go to the back of the queue: DEP will not open their files until local approvals are secured and every construction permit has been found compliant.
"If you want to build a project here in the Commonwealth of Pennsylvania, you will now be subject to a consent order, which will be a legally binding agreement between the developer and the Commonwealth of Pennsylvania with penalties should you not meet each and every requirement under GRID," Shapiro told reporters at the signing, calling the package the "strictest guardrails in the nation."
The commitments inside that consent order are the real story. Developers must pay the full cost of the new electricity generation, transmission, distribution and supporting infrastructure their projects require, without shifting those costs onto Pennsylvania households and businesses. They must meet strict water conservation requirements, hire and train local workers, sign community benefit agreements funding schools and local infrastructure, and conduct public outreach early enough for residents to shape design decisions. Operators will report annual energy and natural gas consumption, peak hourly usage, and total and maximum-day water demand to DEP. Nondisclosure agreements, the instrument that kept most of these deals opaque at the township level, are now impermissible.
Effective immediately, every AI data center proposal is removed from the PA Permit Fast Track Program administered by the Office of Transformation and Opportunity, and no data center project will be considered for it again. The Department of Revenue will rewrite guidelines for the Computer Data Center Equipment Exemption Program so that applicants failing GRID lose the sales and use tax exemption, the single largest state subsidy these projects collect. The administration also published a public map tracking every proposal that has engaged DEP. The scale explains the urgency: DEP counts more than 100 proposed Pennsylvania projects in publicly sourced databases, 58 that have engaged the department on permitting, 15 that have filed at least one permit application, and only five holding every permit needed for a first construction phase.
That gap between 100 proposals and five permitted projects is Shapiro's stated target. He singled out developers pursuing six campuses of roughly 50 server warehouses in Archbald Borough, a Lackawanna County town where one proposal alone, the Wildcat Ridge campus, would place 14 buildings and 588 backup diesel generators on more than 574 acres. A developer has moved to force six of the borough's seven council members to recuse themselves. Meanwhile, projects with real power behind them keep moving: Homer City Redevelopment's 3,200-acre campus in Indiana County, anchored by a 4.5 GW gas plant that would be the largest in the United States, and Amazon's Salem Township campus in Luzerne County, part of a $20 billion state commitment, sited beside Talen Energy's Susquehanna nuclear station under a 1.92 GW power purchase agreement running to 2042.
Why It Matters
The fight over data centers has stopped being about land use and become a fight about who pays the electricity bill. In PJM Interconnection's most recent capacity auction, data centers accounted for $6.3 billion of $16.4 billion in total capacity charges, according to Joseph Bowring, president of PJM's independent market monitor. Across the last four base residual auctions, data-center-driven charges totaled $29.4 billion, or 46 percent of $63.6 billion. Those costs are socialized across PJM's 67 million customers, which is the polite way of saying a retiree in Erie is subsidizing the capacity reservations of a hyperscaler in Luzerne County.
Executive Order 2026-05 attacks that arrangement from two directions. The consent order forces developers to fund their own generation and interconnection upfront. Separately, Shapiro directed Special Counsel for Energy Affordability Mark Szybist to press the Public Utility Commission on three reforms: curtailment protocols so data centers lose electric service before other customers when the grid is stressed, a mechanism for utilities to bill data centers rather than everyone else for the "reliability backstop" auctions PJM runs to secure new power plants, and rules requiring accurate, transparently disclosed load forecasts. "Growth should pay for growth, while we protect the reliability and affordability that Pennsylvanians depend on every day," said PUC Chairman Steve DeFrank.
That principle is spreading. New York's Kathy Hochul ordered a one-year ban on large data centers, Arizona's Katie Hobbs won a three-year moratorium on the state's data center tax exemption, JB Pritzker halted new exemptions in Illinois, and even Greg Abbott has told Texas regulators to hold projects pending a ratepayer study. Pennsylvania's version is the most structurally aggressive because it uses contract law rather than a moratorium: a signed consent order is enforceable in court long after the political weather changes.
What To Watch
Shapiro says he "without question" has the authority to do this. Expect that to be tested, likely by a developer already deep in a local fight. Watch whether the state Senate, whose Republican leadership declined to move House-passed bills codifying GRID, acts before the midterms, and watch Republican nominee Stacy Garrity, who responded that Shapiro "lit the fuse on the chaos we are seeing in community after community." The operational question is simpler: how many of the 58 DEP-engaged projects actually sign a consent order. Bowring's preferred fix, pulling data center load out of the capacity market entirely and procuring it through a dedicated auction, remains the more radical option on PJM's table. Pennsylvania just made it likelier.
“Growth should pay for growth, while we protect the reliability and affordability that Pennsylvanians depend on every day.”— Steve DeFrank, Chairman, Pennsylvania Public Utility Commission