What Pennsylvania’s Executive Order 2026-05 Means for AI Data Centers

Pennsylvania Gov. Josh Shapiro signed Executive Order 2026-05, “Protecting Pennsylvania Consumers from Data Center Impacts,” on August 18, 2026. The order immediately establishes new conditions for data-center development, tying state permitting and certain benefits to the Governor’s Responsible Infrastructure Development, or GRID, requirements. 12

The policy is not a statewide moratorium. Instead, it creates a more demanding path for projects, particularly large facilities, and gives municipalities a decisive role before state permits can be issued.

What Executive Order 2026-05 requires

Developers must meet GRID standards

The order directs Commonwealth agencies to require data-center proposals applying for state permits to comply with GRID. The framework covers four broad areas: energy affordability, transparency and community engagement, workforce and economic development, and environmental protection. 12

For qualifying projects, compliance is not merely a voluntary pledge. Developers must make their commitments legally enforceable through the state review process.

Developers must pay the costs associated with their power demand

A central goal is to prevent ordinary utility customers from absorbing the cost of infrastructure needed to serve large data centers. The order’s energy-affordability requirements call for developers to cover the power and related infrastructure costs attributable to their projects rather than shifting those costs to other customers. 13

The requirements also address how projects obtain electricity, including provisions related to supplying or securing generation and meeting clean-energy expectations. The precise obligations depend on the applicable GRID standards and project review process. 15

Water and environmental safeguards apply

GRID includes environmental protections and strict water-conservation requirements. The order links these measures to concerns about the effects of rapid data-center construction on water resources, air quality, land use, and surrounding communities. 13

The administration’s stated rationale is that unchecked development could threaten Pennsylvanians’ rights to clean air and pure water through emissions, water use, and increased energy demand. 1

Projects must engage local communities transparently

Developers must commit to open engagement with residents and local officials. The order also adds transparency requirements intended to make project proposals and their potential impacts more visible to the public. 13

State agencies under the governor’s authority are barred from entering nondisclosure agreements involving data-center projects. That restriction is designed to prevent project details or prospective end users from being shielded from public scrutiny through state-agency confidentiality arrangements. 36

Local approval comes before state permits

The order makes municipal approval a prerequisite for state permits. Before the Department of Environmental Protection can issue permits under the relevant process, a developer must document that the project is consistent with the local comprehensive plan and obtain all required municipal approvals. 1

That changes the practical sequence of review: local governments are not simply consulted while state permitting proceeds. Their required approval must come first.

Projects above 25 megawatts face a formal DEP agreement

For a data center with peak demand above 25 megawatts, a developer seeking the specified DEP review process must notify DEP, meet with the department, and execute a project-specific, legally binding Consent Order and Agreement. The agreement must incorporate terms ensuring compliance with GRID. 1

This gives DEP an enforceable mechanism for monitoring commitments and responding if a developer fails to meet them.

Data centers lose fast-track treatment and may face tax-benefit conditions

The administration removed data-center projects from Pennsylvania’s Permit Fast Track program. 36 The Department of Revenue is also directed to make GRID compliance a condition in guidelines for the computer-data-center equipment sales-and-use-tax exemption. 3

Together, those changes make speedier permitting and certain tax advantages dependent on meeting the new standards.

Why Pennsylvania attracts AI data centers

Pennsylvania offers a combination of power resources, grid access, industrial sites, and proximity to a large East Coast market. Its position within the PJM electricity market and access to generation resources—including nuclear power—have helped make the state appealing for power-intensive cloud and AI infrastructure. 1

The executive order itself cites a PJM forecast of 74 gigawatts of summer peak-load growth through 2045, primarily associated with data-center development. 1 That projected demand illustrates both the scale of the opportunity and the pressure the administration says the sector could place on the grid.

Amazon’s planned investment reinforces Pennsylvania’s appeal. The company announced plans to invest at least $20 billion in multiple cloud-computing and AI campuses across the state, with at least 1,250 high-skilled jobs expected. Salem Township and Falls Township were identified as initial locations.

The investment signals that major technology companies see Pennsylvania as a viable base for AI infrastructure. It also helps explain the policy tension: the state wants the jobs and capital associated with data centers while requiring projects to account more directly for their community and infrastructure impacts.

Why opposition grew

The rapid expansion of proposed facilities has generated concerns about who pays for new electricity infrastructure and how communities manage the local effects of construction and operation. The order identifies several risks:

• Higher utility costs: New generation, transmission, and distribution investments could increase pressure on electricity rates if costs are recovered broadly from utility customers. 1
• Grid capacity and reliability: The order cites PJM’s independent market monitor, which found that data centers accounted for $29.4 billion, or 46%, of capacity charges across four recent capacity auctions. 1
• Environmental impacts: Large facilities can raise questions about air pollution, water consumption, noise, and land use. 1
• Limited public visibility: Confidentiality arrangements can make it harder for residents and local officials to understand who is behind a project and what it may require. 3

The supplied evidence documents public concern expressed by residents and officials about community effects, environmental impacts, and utility bills. It does not provide a specific poll, sample size, or percentage, so it cannot establish a reliable numerical measure of statewide public opinion. 3

Is Pennsylvania imposing a moratorium?

No. The order creates strict conditions and may make some projects much harder to approve, but the available evidence does not describe a blanket ban on data-center construction. Pennsylvania is still positioned to pursue data-center investment, including Amazon’s announced plans, while requiring developers to meet energy, environmental, transparency, and local-approval standards. 13

What about New York and Texas?

The available material supports the broader conclusion that Pennsylvania is part of a wider state-level response to the rapid expansion of AI data centers. 7 However, the supplied sources do not provide enough detail about specific New York or Texas measures to compare their requirements, enforcement mechanisms, or scope reliably.

The clearest takeaway from Pennsylvania’s action is its policy model: allow development, but make developers bear more of the costs, disclose more information, satisfy environmental conditions, and obtain meaningful approval from the communities where facilities would be built.