Pittsburgh, PA and Washington, DC
Data Center Development Alert*
(*updated August 20, 2026)
(by Kate Cooper, Ben Clapp and Anna Jewart)
On August 18, 2026, Governor Josh Shapiro signed Executive Order 2026-05, “Protecting Pennsylvania Consumers from Data Center Impacts.” Much of the initial coverage described the order as blocking data center development. The text is more nuanced, and the most consequential point for developers is that it restructures how projects move through state permitting and makes the Governor’s Responsible Infrastructure Development (GRID) Requirements the price of keeping a project on schedule.
The order applies to any data center project with peak demand over 25 megawatts (a notably lower threshold than the 50 MW trigger in PJM’s pending large-load rules), and it applies to permit and authorization applications submitted after August 18 — which reaches further than it may first appear. The trigger is the application, not the project: a development that already holds some Department of Environmental Protection (DEP) permits will likely find its remaining applications subject to the new process, and land use approvals already in hand do not appear to exempt a project from the new regime. Existing sales tax exemption certificates are not disturbed.
The Two Tracks
The GRID Requirements, released in May, are the Administration’s standards for data center development in four areas: energy affordability (projects bring their own new power supply and bear their own infrastructure costs), transparency and community engagement, workforce and economic development, and environmental protection. Two choices are available to any developer seeking DEP permits for a covered project.
- Commit to the GRID Requirements, and DEP will review your permit applications on a rolling basis, in parallel with your local approval process. DEP holds only permit issuance until you document that the project has received all local approvals under the applicable “subdivision and zoning ordinance” as adopted pursuant to the Pennsylvania Municipalities Planning Code (MPC) or Home Rule authority, and is consistent with the local comprehensive plan.
- Decline, and DEP will not begin reviewing any application until local approvals under the MPC or Home Rule authority, and any required water withdrawal or wastewater discharge authorizations, are complete and documented — and will not issue any permit until every application for the project has been received and reviewed by DEP. Projects on this track are also excluded from the Commonwealth’s permit timeliness programs and are ineligible for the data center sales and use tax exemption going forward.
The practical effect for a committed project is that state and local processes may continue to run largely in parallel. For a project that opts out of GRID compliance, the timelines run in sequence (local first, then state). On a multi-year permitting schedule, that difference is measured in months to years, and every downstream date in a project’s documents such as construction milestones, tenant lease commencement, equipment delivery slots, and financing covenants is keyed to it.
The Commitment Is a Consent Order
The GRID commitment is not a pledge. Each committed developer must execute a project-specific Consent Order and Agreement with DEP, based on DEP’s template, incorporating the GRID Requirements as enforceable terms. Those terms then follow the project into its permits as conditions. A consent order is a familiar instrument in Pennsylvania environmental practice, ordinarily used to resolve violations, not to open a permitting file, and its terms (penalties, transferability on a sale of the project, termination) will matter as much as any permit condition. DEP’s template Consent Order and Agreement was released with the Governor’s announcement. It carries substantial obligations. including energy procurement commitments, stipulated penalties, appeal waivers, and flow-down requirements binding tenants and transferees, and it warrants careful review before any commitment is made.
Local Approvals Move to the Front
Under either track, no DEP permit issues until the project documents all “subdivision and zoning” approvals across every municipality the project touches, and consistency with the local comprehensive plan. The reference to “subdivision and zoning” approval likely means approvals granted under the municipal or county zoning ordinance, and land development or subdivision approvals granted under the municipal or county subdivision and land development ordinance. The order thus bounds what counts — the gating approvals are those adopted under the MPC or Home Rule authority, not every municipal permit — though the Home Rule reference is likely included to accommodate Philadelphia and Pittsburgh which are not governed by the MPC.
The comprehensive plan requirement deserves particular attention. Comprehensive plans are advisory planning documents in Pennsylvania land use practice. While considered a useful tool for guiding growth and development, the MPC provides that “no action by the governing body of a municipality shall be invalid nor shall the same be subject to challenge or appeal on the basis that such action is inconsistent with, or fails to comply with, the provision of a comprehensive plan.” 53 P.S. §10303(c). Despite this provision, the order appears to authorize DEP to consider consistency with these purposefully abstract recommendations on land utilization in its decision making. Many municipal comprehensive plans are updated infrequently, and few if any contemplate data center development — so a project that has cleared zoning and land development may still face a consistency fight at the DEP stage, a new pressure point that project opponents can be expected to test. Local strategy, always important, is now the critical path for state permitting.
Transparency
The order prohibits all agencies under the governor’s jurisdiction from entering into non-disclosure agreements in connection with data center projects, and directs DEP to publish a public map of all proposed projects with current permitting status. Together with the public large-load registry in PJM’s pending federal filings, the era of assembling projects quietly under code names is ending. Confidentiality provisions in development agreements, land options, and utility service agreements, many of which were drafted on the assumption that confidentiality was achievable, deserve a fresh read, and announcement timing is now a strategic decision.
Fast Track and the Tax Exemption
All data center projects have been removed from the PA Permit Fast Track Program, effective immediately, including projects already admitted, and data centers are no longer eligible for the program — the order’s most directly retroactive provision. Separately, the Department of Revenue is directed to condition new sales and use tax exemption applications on GRID compliance. The General Assembly considered legislation this session that would have conditioned the exemption by statute; it did not pass, and the order accomplishes a version of it through Revenue’s program guidelines. That approach may draw legal challenge, but unless and until it does, new applicants should assume the exemption runs through GRID.
What the Order Does Not Do
Contrary to some reporting, the order does not impose a moratorium, does not mandate a concluded community benefit agreement, and does not by its terms impose clean energy procurement percentages, though the template Consent Order does; committed projects must procure escalating percentages of their annual electricity consumption from defined “Clean Firm Energy” resources located in Pennsylvania (10% beginning 2027, rising to 32% by 2035) or make an alternative compliance payment. The order also directs the Governor’s Special Counsel for Energy Affordability to advocate before the Public Utility Commission for curtailment and cost-allocation rules targeting data centers — advocacy that will play out in PUC proceedings over the coming months, alongside PJM’s pending filings at FERC.
What to Do Now
- Re-run project schedules. Any timeline built on parallel state and local permitting should be tested against the new sequencing before a lender or counterparty does it first.
- Inventory remaining DEP filings. Because the order attaches to each new application, projects in active development should map which permits remain to be filed and make the track decision before the next submission, not at the end of the project.
- Make the track decision deliberately. The GRID commitment carries real obligations, but the cost of staying out is now concrete: sequential review, no processing clocks, no exemption.
- Review the template Consent Order carefully. Released with the Governor’s announcement, it defines what GRID compliance actually requires, including enforcement terms that reach into leases, financings, and sale agreements.
- Revisit confidentiality provisions in existing agreements against the NDA prohibition, the public map, and PJM’s registry.
- Front-load local strategy. Municipal approvals and comprehensive plan consistency now control the state clock.
For a discussion of the PJM developments this order builds on — the large-load registry, the reliability backstop auction, and curtailment-first service — see our August 14 article in the Pittsburgh Business Times, “One Year Later: How Pennsylvania’s Data Center Rules Are Rewriting Deal Terms.”
Babst Calland attorneys are tracking the most pressing issues related to data center development. For questions or more information on topics addressed in this Alert, please contact Kate Cooper at (412) 394-6588 or kcooper@babstcalland.com; Ben Clapp at (202) 853-3488 or bclapp@babstcalland.com; or Anna Skipper Jewart at (412) 253-8806 or ajewart@babstcalland.com.
