Key Points

• Pennsylvania's voluntary data center development guidelines are now, by executive order, binding requirements for facilities exceeding 25 megawatts of peak electricity demand.
• Developers must sign a binding agreement with PADEP before permit review begins or lose access to expedited permitting and the state's data center tax exemption.
• The order shifts grid-upgrade costs to data centers, requires load curtailment during emergencies, mandates annual energy and water reporting, and bans NDAs between applicants and state agencies.

On August 18, 2026, Gov. Josh Shapiro signed an executive order that converts what had been voluntary guidelines for data center development in Pennsylvania into binding legal requirements.

Aimed at data centers with peak electricity demand over 25 megawatts, the order is a response to growing concerns that unchecked data center growth is driving up electricity costs for Pennsylvania consumers and straining the state's power grid and natural resources.

Developers must now enter into a binding agreement with the Pennsylvania Department of Environmental Protection (PADEP) mandating compliance with the Governor’s Responsible Infrastructure Development (GRID) standards before the state will begin reviewing their permit applications.

That agreement will require developers to meet strict standards across four areas:

• Keeping energy affordable for existing ratepayers.
• Being transparent with local communities.
• Investing in Pennsylvania’s workforce and economy.
• Protecting the environment.

Developers that do not sign will face significant consequences. Permit applications will not be reviewed on a rolling basis, and they will lose eligibility for the state's sales and use tax exemption on data center equipment.

The executive order, which takes effect immediately, also targets the financial burden data centers impose on ordinary utility customers.

The Governor's Special Counsel for Energy Affordability is directed to push the Pennsylvania Public Utility Commission to adopt rules ensuring that data centers — not residential and commercial ratepayers — bear the costs of the grid upgrades and reliability measures their operations require. The Special Counsel will also advocate that the PUC require that utilities would curtail power to data centers before cutting service to any other customer during grid emergencies, unless the data center has independently secured enough capacity to cover its full demand.

Existing data centers must also begin filing detailed annual reports disclosing their energy and water consumption, and the use of non-disclosure agreements between data center applicants and state agencies is now flatly prohibited.

Takeaways

• Data centers over 25 MW of peak demand must sign a Consent Order and Agreement with PADEP incorporating the GRID standards before PADEP will review any permit application.
• Data center projects are removed from, and no longer eligible for, the PA Permit Fast Track Program.
• The sales and use tax exemption for computer data center equipment will be conditioned on GRID compliance.
• Existing data centers must file annual energy and water consumption reports.
• Non-disclosure agreements between data center applicants and Pennsylvania government agencies are not permitted.
• The Governor’s office will advocate for data centers to be subject to curtailment during emergencies and utility tariffs to mitigate the risk that costs will be passed onto consumers.

The executive order directs PADEP to develop a template Consent Order and Agreement that will ensure compliance with the GRID standards. PADEP will not review any permit applications for data centers if the applicant has not entered into a Consent Order and Agreement with PADEP incorporating the GRID standards unless and until certain conditions are met.

Reliability, Curtailment and Ratepayer Cost

To address concerns about reliability impacts on the electric system caused by data centers, the Special Counsel will engage with the Pennsylvania Public Utility Commission (PUC) to advocate for the rapid development of rules, procedures, and orders that would, among other things, require utilities to curtail data centers during emergency events. Curtailment is a critical issue for data centers, and we should expect to hear more as any rules, procedures or orders addressing this issue are proposed.

To limit the imposition of costs onto Pennsylvania consumers, the Executive Order directs the Special Counsel to engage with the PUC to advocate for the rapid development of rules, procedures, and orders that would allow for the timely approval of utility tariffs on data centers.

PUC Chairman Steven DeFrank weighed in, stating that Pennsylvania is at a “pivotal moment for our energy system.” He stated that growth should pay for growth and that the reliability and affordability of electricity that Pennsylvanians depend on every day must be protected.

What This Means for Developers and Operators

We encourage clients involved in the development, investment or operation of data centers in Pennsylvania to evaluate how the Executive Order may affect their project. We will monitor updates related to the Executive Order including PADEP’s development of the template Consent Order and Agreement.

For information, please contact Karen Davis at kdavis@foxrothschild.com, or Karen Kemerait at KKemerait@foxrothschild.com, or another member of the firm's Infrastructure & Development Practice Group.

This information is intended to inform firm clients and friends about legal developments, including the decisions of courts and administrative bodies. Nothing in this alert should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this alert without seeking the advice of legal counsel. Views expressed are those of the authors and not necessarily this law firm or its clients.