Pennsylvania’s Data Center Executive Order Ties Compliance With State's GRID Requirements to Streamlined Development

Background and Context

Governor Shapiro signed Executive Order 2026-05 on August 18, 2026, transforming Pennsylvania’s voluntary standards for data center development into mandatory conditions that affect permitting, tax incentives, and development timelines.

The Governor’s Responsible Infrastructure Development (GRID) Requirements, released on May 27, 2026, were initially a voluntary framework administered through the Pennsylvania Department of Community and Economic Development for data center facilities with an anticipated peak electrical demand of 25 MW or greater. In exchange for benefits such as expedited permitting and the Computer Data Center Equipment tax exemption, GRID imposes obligations across four pillars:

• Energy: Requiring developers to fund incremental capacity and source increasing percentages of electricity from non-emitting sources;
• Transparency: Mandating community outreach, public meetings, and project footprint disclosures;
• Workforce: Requiring minimum investment thresholds, job creation commitments, and prevailing wage construction jobs; and
• Environmental Protection: Requiring sustainability plans and emission controls for backup power.

Key Features of Pennsylvania Executive Order 2026-05

• Removal From Fast Track: Removes all data center projects from the PA Permit Fast Track Program and permits only GRID-certified projects to rejoin.
• Consent Order: Directs the Pennsylvania Department of Environmental Protection (PADEP) to develop a template consent order and agreement to be entered into by project entities that requires projects to comply with GRID.
• Requires Local Permits First: Even if a developer signs a consent order, the EO directs PADEP not to issue any permits until a developer: (1) obtains local zoning and subdivision and land development approval, and (2) demonstrates compliance with a local comprehensive plan. PADEP permits that could be delayed by this would include air quality permits, stormwater discharge permits, erosion and sediment control permits, and wetlands permits.
• Delays Permits for Projects With No Consent Order: If a developer does not sign a consent order:
  • Directs PADEP not to process any permit applications until a developer: (1) obtains local zoning and subdivision and land development approval, and (2) demonstrates compliance with a local comprehensive plan.
  • Directs PADEP not to review permits on a rolling basis (construction on early phases cannot begin while later permits are pending).
  • Directs PADEP to exclude the project from the Permit Decision Guarantee programs.
• Sales and Use Tax Exemption: Directs the Pennsylvania Department of Revenue (PADOR) to condition the Computer Data Center Equipment sales and use tax exemption on GRID certification. Because project owners must obtain certification for the project before tenants can obtain the exemption, this presumably affects not just developers themselves, but also tenants who are relying on the sales and use tax exemption.
• NDA Prohibition: State agencies may not enter nondisclosure agreements related to data center projects.
• Public Permitting Map: PADEP must create and maintain a publicly accessible map with permitting information for all data center projects known to PADEP and PADOR.
• Annual reporting: Existing data centers must submit annual energy and water consumption reports to PADEP beginning July 1, 2027.

Growing Trend: New York and Other State Executive Orders on Data Centers

Pennsylvania’s Executive Order arrives amid a wave of gubernatorial action targeting data center development.

• New York: In Executive Order No. 62, issued on July 14, 2026, Governor Kathy Hochul directed the Department of Environmental Conservation to hold in abeyance all applications for discretionary permits for data center construction or expansion not determined complete before the order’s effective date. The moratorium applies to facilities consuming or capable of consuming 50 MW or more and will remain in effect until a comprehensive environmental study is complete. The order does not specify a deadline by which the study must be completed.
• Nebraska: In Executive Order No. 26-17, issued on July 20, 2026, Governor Jim Pillen directed the Department of Water, Environment, and Energy to establish a Data Center Task Force to analyze the impacts of data centers on water and the environment. The order also directs the Department to provide recommendations to the legislature by 2027 to ensure data center projects do not degrade natural resources and to develop common sense county zoning guidelines.
• Louisiana: In Executive Order No. 26-058, issued on June 25, 2026, Governor Jeff Landry directed Louisiana Economic Development to develop a “Ratepayer and Community Protection Framework” conditioning the data center sales and use tax exemption on compliance with the framework, under which companies must submit “detailed attestations” of their intended compliance with the framework’s requirements.
• Texas: In a directive issued on August 3, 2026, Governor Greg Abbott ordered the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to conduct a comprehensive verification and audit of all data centers advancing through ERCOT’s interconnection process before any data center project moves forward. Any project that fails to comply with PUCT and ERCOT disclosure requirements will be denied connection to the Texas grid.

For data center developers with projects in the planning stage, the permitting and incentive landscape has changed, and prior assumptions about project feasibility, timeline, and cost structure require reassessment. For projects that are operational or under construction, there may still be implications. For example, now that permit processing, tax exemptions, and expedited review in Pennsylvania are conditioned on GRID compliance, developers with active or planned projects in the Commonwealth should engage counsel to help determine the effects on pending permit applications, financing assumptions, and project development timelines.

Ballard Spahr attorneys are positioned to assist clients with these challenges. The firm’s attorneys in the Environment and Natural Resources Group and Real Estate Development and Property Rights practice groups can provide guidance on environmental permitting, zoning, land development, and community engagement. The Data Centers initiative also brings cross-practice coordination to find solutions to the unique challenges data center project stakeholders face. Whether seeking to satisfy overlapping state and municipal requirements or positioning for the strongest possible legal defense against challenges to executive action that may exceed constitutional authority, Ballard Spahr’s multidisciplinary platform uniquely positions the firm to guide clients through this rapidly evolving regulatory landscape.

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