Pennsylvania Tightens Permitting Rules for Large Data Centers
Highlights
- Developers of large data centers (those with peak demand exceeding 25 megawatts) must execute a Consent Order and Agreement with the Pennsylvania Department of Environmental Protection (DEP) incorporating the GRID Requirements or be subject to additional requirements — and potential delays — in obtaining state environmental permits.
- Data center developers that decline to execute a consent order and agreement will be required to demonstrate compliance with local comprehensive plans, obtain all local approvals, and secure required water authorizations before DEP will begin reviewing permit applications, and permits will not be issued on a rolling basis.
- To protect consumers from increased energy costs, the Governor's Special Counsel for Energy Affordability is directed to advocate before the Pennsylvania Public Utility Commission for the adoption of rules to ensure that data centers bear the costs of the increased energy consumption and to ensure that data center energy use is curtailed before consumers during emergency events.
- The executive order also requires increased transparency in the industry by banning the use of non-disclosure agreements by state agencies in connection with data center projects and requiring annual disclosure of energy and water consumption by data centers beginning July 1, 2027.
On Aug. 18, Pennsylvania Gov. Josh Shapiro signed Executive Order 2026-05, entitled "Protecting Pennsylvania Consumers from Data Center Impacts." The executive order establishes a regulatory framework governing the development and operation of data centers within the Commonwealth, building on the GRID Requirements the administration first announced in February 2026. The executive order, in conjunction with the GRID Requirements, seeks to align data center development with local interests, protect consumers from bearing the burden of the increased energy and water demand, guarantee investment and quality employment within the Commonwealth, and increase transparency in the industry.
The executive order creates a two-track permitting system for data center projects with peak demand exceeding 25 megawatts. Under the first track, developers must agree to comply with the GRID Requirements, participate in a pre-application meeting, and execute a project-specific consent order and agreement incorporating the GRID Requirements. In exchange, these developers will receive a streamlined review with permits being reviewed immediately and issued on a rolling basis, subject to demonstration of consistency with local comprehensive plans and receipt of all local or municipal approvals.
Alternatively, developers that decline to execute a consent order and agreement will not have their permits reviewed by DEP until the developer demonstrates local plan consistency, obtains all required local approvals, and secures all required water withdrawal and discharge authorizations.
Additionally, such DEP permits will not be issued on a rolling basis. Developers that do not agree to comply with the GRID Requirements will also be excluded from the PA Permit Fast Track Program, the Payback Program, the Permit Decision Guarantee Program and the Computer Data Center Sales and Use Tax Exemption Program.
The GRID Requirements to be included in any consent order and agreement require developers to:
- Secure energy supply sufficient to serve the facility's full peak demand
- Procure an increasing percentage of energy from clean energy sources located within Pennsylvania (starting at 10% and reaching 32% by 2035)
- Pay 100% of all energy grid-related costs caused by their project
- Implement water-recycling and closed-loop cooling technologies where feasible
- Comply with strict limits on backup generators
- Submit annual public reports to DEP and the Department of Revenue detailing energy and water consumption metrics
- Submit to DEP audit rights, with non-compliance triggering automatic civil penalties and potential permit revocation.
For data centers in designated Environmental Justice Areas, heightened pollution-mitigation measures and enhanced monitoring apply.
The executive order also directs the Governor's Special Counsel for Energy Affordability to advocate before the Pennsylvania Public Utility Commission for the adoption of rules that would require data centers’ energy use to be curtailed before other customers during pre-emergency or emergency grid events, unless the data center has secured incremental electric capacity for its full demand. The Special Counsel is also directed to seek reforms ensuring that data center customers bear all costs of PJM Interconnection’s reliability backstop auction.
The executive order imposes disclosure and transparency requirements on the data center industry. Under the executive order, Commonwealth agencies are prohibited from entering into non-disclosure agreements in connection with data center projects, and DEP must create a publicly accessible map with current permitting information for all proposed data center projects.
Additionally, operating data centers will be required to submit annual reports by July 1 of each year, beginning July 1, 2027, detailing, inter alia, energy and water consumption, energy and water efficiency measures, clean energy generation, waste heat recovery efforts, and projected energy and water demand for the following year.
The executive order takes effect immediately and applies to all permit or authorization applications submitted after its effective date.
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