Pennsylvania Governor Restricts AI Data Center Permitting, Bans NDAs in Executive Order

Pennsylvania Governor Josh Shapiro signed Executive Order 2026-05 on August 18, 2026, removing AI data center proposals from the state’s Fast Track permitting program and prohibiting nondisclosure agreements for data center projects. The order establishes the Governor’s Responsible Infrastructure Development (GRID) Requirements, which developers must meet through a legally binding Consent Order and Agreement before the Department of Environmental Protection (DEP) will review their permit applications [4][5].

What the order requires

The GRID Requirements set conditions across five areas: energy affordability, community engagement, workforce and economic development, transparency, and environmental protection [5].

Developers must secure new generation capacity — termed “Incremental Capacity” and “Incremental Energy” — sufficient to serve the facility’s full peak demand and annual consumption, with that capacity physically deliverable to the PJM Interconnection zone where the data center sits [4]. They must pay 100 percent of all grid upgrade costs caused by their project, including transmission, distribution, network upgrades, and dedicated substations [4]. A clean-energy procurement schedule starts at 10 percent and rises to 32 percent by 2035 from dispatchable, clean firm resources located in Pennsylvania (nuclear, hydro, geothermal, or fossil with carbon capture) [4].

Water use must be reported annually, with conservation measures including closed-loop cooling where feasible. Backup diesel or gas generators face strict limits and real-time logging requirements. Projects in designated Environmental Justice Areas must implement heightened pollution mitigation and community health safeguards [4].

DEP will not issue any permit until the developer has secured all required local municipal land-use, zoning, and land-development approvals. Developers who sign the GRID Consent Order and Agreement receive rolling permit review; those who refuse face a delayed track where DEP begins review only after all local approvals are in hand [4][5].

The order also ties the state’s Computer Data Center Equipment sales-tax exemption to GRID compliance [5], and directs the Special Counsel for Energy Affordability to work with the Public Utility Commission on protocols that would shed data-center load first during grid stress and allocate “reliability backstop” auction costs to data centers, not other ratepayers [5].

A publicly accessible map of all proposed data center projects that have engaged with DEP will be updated regularly [5].

From welcome mat to guardrails

Shapiro’s order marks a sharp turn from his posture a year earlier. In 2025 he celebrated Amazon’s $20 billion statewide investment as the largest in Pennsylvania history and told a crowd in Berwick, “The future of AI is going to run right here through the Commonwealth of Pennsylvania” [1]. His administration created the Fast Track permitting system to accelerate such developments [1][5].

By mid-2026, DEP was aware of over 100 data center proposals in public databases, with 58 projects engaging DEP at some level of formality, 15 having applied for at least one permit, and five receiving all permits needed for a first phase [5]. Local opposition had grown, centered on water consumption, electricity costs, secrecy around project ownership, and the small number of permanent jobs data centers create [1]. In Luzerne County, residents organized against “Project Hazelnut” after learning through right-to-know requests that Amazon Web Services was the end user, and after the developer offered $10,000 payments to residents contingent on occupancy permits — a move critics called a bribe [1].

Shapiro acknowledged the shift in August: “I have put the strictest guardrails in the nation in place to stop these predatory developers and these bad proposals from infecting our Commonwealth” [1]. He told NBC the pause “can’t be the policy” and framed the order as a floor of conditions that almost all developers would have to meet for swift state approval [1].

Political context and industry response

The order arrived amid a national backlash against data center expansion. SemiAnalysis noted in September 2026 that midterm candidates in both parties were campaigning on stricter conditions — making data centers pay their own grid costs (15 candidates) and limit or report water use (11 candidates) — with nine of 20 gubernatorial nominees favoring a pause on new construction and 11 favoring conditions [2]. Texas Governor Greg Abbott froze TCEQ permits in September; Oregon Governor Tina Kotek expanded a state-land freeze to air and water permits through July 2027 [2].

Pennsylvania’s order preceded the November 2026 midterms, in which Democrats won control of Congress and won governorships in Texas, Ohio, and Georgia on platforms promising data-center moratoriums or conditional pauses [3]. Shapiro, who is seen as a potential 2028 presidential candidate, has been described as sounding like a populist while taking “a more moderate path” that recognizes AI’s long-term reindustrialization potential [1].

Industry analysts say hyperscalers (Amazon, Microsoft, Google) can afford the higher costs and can bring their own power, but permitting delays still threaten delivery timelines because projects cannot shift to another state without equivalent power, permits, and construction schedules [2]. The SemiAnalysis model projects 62.2 GW of U.S. net additions in 2028, with 43.5 GW in states holding gubernatorial elections this cycle [2].

What remains unclear

The order applies to new permit applications going forward [4][5]. How many of the 58 projects already engaging DEP will sign the Consent Order and Agreement versus pursue the delayed track is not yet known. The Department of Revenue will update the Computer Data Center Equipment Exemption Program Guidelines to implement the GRID Requirements [5]. The Public Utility Commission protocols directed by the order — load-shed priority, cost allocation for reliability auctions, demand forecasting transparency — are still to be developed [5].

Shapiro continues to call on the General Assembly to codify the GRID Requirements; the House has advanced legislation but Senate Republican leaders have not acted [5].