Pennsylvania Governor Josh Shapiro Is Cracking Down on Data Centers: Here’s What His New Rules Mean
Pennsylvania has apparently decided that becoming the next giant playground for artificial intelligence comes with a few conditions. Governor Josh Shapiro has signed an executive order putting some of the toughest restrictions in the country on new data center development, effectively making developers prove their projects are worth the enormous demands they place on local communities, power grids and water supplies.
And while headlines may describe this as Shapiro “banning” data centers, that is not technically what happened. Pennsylvania has not imposed a blanket statewide ban on data centers. Instead, Shapiro has created a regulatory system so demanding that some proposed projects could find it extremely difficult, if not impossible, to move forward without meeting the state’s requirements.
The executive order, signed August 18, 2026, immediately removes data centers from Pennsylvania’s Fast Track permitting program and requires developers to meet the governor’s Responsible Infrastructure Development, or GRID, standards. The order also prevents state agencies under Shapiro’s authority from entering into nondisclosure agreements with data center developers.
In other words, the days of a technology company showing up with a massive warehouse full of computers, promising jobs and economic development, and expecting government officials to simply roll out the red carpet are getting considerably more complicated.
Shapiro Says Pennsylvania Won’t Pay the Bill for Big Tech
The biggest issue is electricity.
Modern AI data centers can consume extraordinary amounts of power. Pennsylvania happens to be an attractive location because of its natural-gas resources, existing electrical infrastructure and proximity to major population centers on the East Coast. That combination has made the state a prime target for companies racing to build the infrastructure necessary to power artificial intelligence.
Shapiro’s position is that Pennsylvania residents shouldn’t be forced to subsidize those facilities through higher electric bills.
Under the GRID standards, developers must provide an energy plan demonstrating that their projects will not impose additional costs on Pennsylvania households and businesses. Developers must build, bring online or purchase the additional electricity capacity required by their facilities and pay the full cost of that capacity.
That includes costs associated with interconnection, transmission, distribution, network upgrades, ancillary services and dedicated facilities resulting from the data center’s electricity demand.
That’s a pretty important distinction.
The argument isn’t that Pennsylvania doesn’t want AI. The argument is that if Amazon, Microsoft, Google or another enormous technology company wants to build a gigantic electricity-consuming machine complex, Pennsylvania taxpayers and ordinary homeowners shouldn’t be stuck paying to upgrade the infrastructure required to keep those computers humming.
Data Centers Will Have to Bring More Clean Power
The GRID requirements also establish increasingly stringent clean-energy requirements. Projects must obtain incremental electricity capacity, with an increasing share coming from dispatchable clean firm energy resources located within Pennsylvania. The requirement rises to as much as 32% by 2035.
The governor’s office specifically points to resources including solar, advanced nuclear and battery storage. That creates another hurdle for developers because the electricity requirements aren’t simply about finding an available connection to the grid. Companies are being told they need to help provide the additional generation and infrastructure their projects require.
Local Communities Get Much More Power
Perhaps the biggest political change is what happens at the local level.
Developers seeking GRID certification must submit a community outreach plan explaining how they will communicate with residents and local governments. They must hold public meetings and engage municipal officials early enough for residents to have meaningful input into major project decisions.
The governor has gone even further. Shapiro said that if the local community does not approve a project, the state will not approve it either. That is a significant change for communities suddenly finding themselves staring at proposals for enormous industrial facilities containing thousands upon thousands of servers.
And developers will have to disclose considerably more information about their projects, including the identity of the data center’s end users, the size of the buildings, campus acreage, anticipated peak electricity demand, estimated annual water consumption and water source, the percentage of electricity coming from non-emitting resources, and expected energy and water efficiency.
Apparently the new philosophy is that if you’re going to build a giant computer factory in someone’s backyard, those people should probably know who is actually using it.
No More Hiding Behind NDAs
Another major component of Shapiro’s order is transparency. State agencies under his authority are prohibited from signing nondisclosure agreements with data center developers.
That is significant because data center projects can involve enormous corporate investments, land purchases, power contracts and negotiations with local governments. Shapiro has argued that communities should not be kept in the dark while major projects are being planned around them.
The governor has been particularly critical of what he calls speculative projects that developers promote before having firm commitments from customers, financing or permits.
Developers Must Provide Community Benefits
The requirements aren’t limited to electricity. Companies seeking GRID certification must submit a community benefit plan explaining how their project will contribute to the surrounding area beyond existing legal obligations.
To qualify under the standards, a project must commit to at least $250 million in cumulative new investment, create at least 200 prevailing-wage construction jobs, and create at least 50 jobs paying at least 125% of Pennsylvania’s average statewide wage by the fourth anniversary of certification. After that fourth anniversary, the project must pay at least $1.5 million to employees at the site.
Developers also have to provide hiring and workforce-training plans designed to encourage local employment, including registered apprenticeships and skilled construction labor. Community benefit agreements can address everything from traffic and noise to lighting, air quality, emergency management, aesthetics and financial contributions to local priorities.
So the state isn’t simply saying, “Bring us your data centers.”
It’s saying, “Bring us your data centers, bring your own electricity, create jobs, spend a mountain of money, talk to the neighbors and don’t wreck the place.”
Water Is Another Major Concern
Electricity isn’t the only resource attracting attention. Large data centers can require substantial amounts of water for cooling, depending on their design.
Pennsylvania’s GRID standards require developers to submit sustainability plans showing how they will use advanced technology to limit water and energy consumption. Projects can use recognized certifications such as LEED for Data Centers, EPA Energy Star, Green Globes or ISO standards for data centers.
Projects in particularly sensitive watersheds also face additional requirements involving monitoring and mitigating impacts to land, water and biological resources. The state is also demanding measures to minimize local air pollution, including zero-emission energy storage where possible and strict emissions standards for backup generators.
Pennsylvania Had Been Courting These Projects
This is where the story gets particularly interesting. Pennsylvania isn’t some state that suddenly discovered data centers exist and decided they are terrible.
The Shapiro administration had previously promoted Pennsylvania as an attractive destination for major technology investment. In June 2025, Shapiro announced a $20 billion investment from Amazon to develop AI innovation campuses in Pennsylvania, with the administration saying the project would create approximately 1,250 permanent high-paying technology jobs.
Pennsylvania’s natural-gas resources and existing power infrastructure have made it particularly attractive to companies building AI infrastructure. Now Shapiro is essentially saying that economic development cannot come at any price.
That represents a major political shift as opposition to data centers spreads across the country.
More Than 100 Data Center Proposals Are Floating Around
The scale of the potential boom helps explain why Pennsylvania is acting now. Shapiro has said that more than 100 data center proposals are being discussed in Pennsylvania, but only about five projects currently have the necessary permits. Many of the remaining proposals are speculative, according to the governor.
That distinction matters. A company expressing interest in building a $4 billion data center is not the same thing as having a shovel-ready project with financing, permits, power arrangements and a confirmed customer. Shapiro argues that speculative proposals have nevertheless been creating anxiety and disruption in communities across the state.
The Tax Break Issue
Pennsylvania already has a sales-tax exemption for qualifying computer data center equipment. The exemption was established under Act 25 of 2021.
The Shapiro administration has been pushing to tie that tax benefit to GRID certification. Under the proposed approach, developers would have to meet the GRID requirements to receive the tax break. The state estimates that the existing exemption could cost Pennsylvania more than $517 million annually by fiscal year 2030-31 if nothing changes.
Shapiro wants that money, or at least the economic value associated with it, directed toward public priorities including education, infrastructure, environmental protection, public safety and workforce development. That gives the administration another enormous bargaining chip. If a company wants the government’s financial help, it has to play by the government’s rules.
Shapiro’s Order Came After the Legislature Failed to Act
There is also a political story underneath all of this. Shapiro had proposed the GRID standards months before signing the executive order. Legislation designed to establish the standards passed the Pennsylvania House but stalled in the state Senate.
With lawmakers unable to reach an agreement, Shapiro used executive authority to impose the requirements administratively. Bloomberg Law reported that Shapiro described the action as necessary because the legislature had failed to approve his proposal.
Shapiro has described the new restrictions as among the strictest data center rules in the country. He has also taken a very aggressive tone toward developers, saying Pennsylvania will not be bullied by companies or their lawyers.
Pennsylvania Joins a Growing National Backlash
The Pennsylvania crackdown isn’t happening in isolation. New York imposed a one-year moratorium on large new data centers in July. Texas Governor Greg Abbott has also taken action to slow approvals while the state examines the impact of enormous new electricity demands on the grid.
The political shift is striking because data centers were once widely marketed as symbols of economic development and America’s technological future. Now they are becoming a political liability in communities that worry about power bills, water usage, noise, land use and whether the promised economic benefits will actually reach ordinary residents.
A recent Reuters/Ipsos poll found that only about one-third of Americans approved of the current pace of data center construction, while just 14% supported having a data center built in their own community. That last number probably explains a great deal of what is happening.
Americans love technology right up until somebody wants to build a 500,000-square-foot server warehouse three miles from their house.
So Is Pennsylvania Actually Banning Data Centers?
Not exactly. Shapiro has not banned data centers statewide.
What he has done is create a regulatory framework that makes new projects substantially more difficult unless developers satisfy strict requirements involving electricity, clean energy, water conservation, environmental protection, transparency, local approval, jobs and community benefits.
The executive order is effective immediately and removes data centers from the state’s Fast Track permitting system.
Projects that refuse to meet the GRID requirements face a much more difficult path through the permitting process. The administration says DEP will not begin reviewing permit applications for developers that reject the GRID requirements until required local approvals have been obtained and the relevant permits have gone through the normal compliance process.
So while calling it a “ban” makes for a much better headline, the more accurate description is a de facto crackdown that could stop projects that don’t meet Pennsylvania’s new standards. And frankly, that distinction matters.
The Bigger Question: Who Pays for the AI Boom?
Pennsylvania’s fight over data centers is really part of a much larger argument about artificial intelligence.
Tech companies are spending hundreds of billions of dollars trying to build the computing infrastructure necessary for the next generation of AI. The companies see enormous economic opportunity.
Communities see giant buildings, massive electricity consumption, water requirements, transmission upgrades, backup generators and the possibility that ordinary utility customers could eventually help foot the bill.
Shapiro’s answer is that the companies creating the demand should pay for the infrastructure required to satisfy that demand. Whether that policy ultimately protects Pennsylvania consumers or causes technology companies to take their money elsewhere remains to be seen.
But one thing is becoming increasingly clear: the era of giving AI data centers an automatic welcome mat is ending. Pennsylvania wants the investment. Shapiro just wants the companies bringing the computers to prove that Pennsylvania residents aren’t going to get stuck paying for them.
And in a country where everyone wants the economic benefits of artificial intelligence but apparently nobody wants the giant humming building next door, that may be the most politically sensible compromise available.
