- in United States
On Aug. 18, 2026, Pennsylvania Gov. Josh Shapiro signed Executive Order 2026-05 (EO 2026-05). The order directs state agencies — principally the Department of Environmental Protection (DEP), Department of Revenue (DOR), and Department of Community and Economic Development (DCED) — to condition certain permitting, tax, and incentive-related actions on compliance with the governor’s Responsible Infrastructure Development (GRID) Requirements. It applies to data center projects with peak demand exceeding 25 megawatts (MW). EO 2026-05 does not directly regulate private developers, but it changes how executive agencies exercise existing authority over permitting, tax exemptions, and state support programs.
Notably, the order does not impose a moratorium or pause on data center development, nor does it restrict the location of data center projects to specific areas of the Commonwealth.
What GRID Requires
GRID was introduced in February 2026 and published in May 2026 as a voluntary framework tied to fast track permitting and incentives. EO 2026-05 incorporates GRID into DEP’s permitting process for covered data center projects.
Energy Affordability. Developers must meet project demand through new or incremental generation located within the same PJM Locational Deliverability Area and maintain minimum clean-firm-energy percentages of 10% beginning in 2027, 14.5% beginning in 2030, and 32% beginning in 2035. Developers must bear all transmission, distribution, interconnection, and network-upgrade costs attributable to project load. Facilities exceeding 100,000 square feet must be solar-ready and comply with applicable PUC filing and reporting requirements.
Transparency and Community Engagement. Developers must disclose the permanent site occupant; report project footprint, electric demand, water use, wastewater discharges, and power and water efficiency metrics; and hold public meetings beyond those otherwise required by law.
Workforce and Economic Development. Developers must commit at least $250 million in new investment; create at least 200 prevailing-wage construction jobs; and, within four years, create at least 50 permanent jobs paying at least 125% of Pennsylvania’s average wage. Developers must also negotiate community benefit agreements addressing matters such as development phasing, traffic, noise, lighting, emergency management, local contributions, and reporting, subject to local waivers.
Environmental Protection. Developers must submit sustainability plans, obtain qualifying sustainability certifications, use zero-emission energy storage or compliant backup-generation systems, and, for projects in certain environmentally sensitive areas, engage conservation organizations to monitor and mitigate impacts.
What EO 2026-05 Changes
The executive order creates two permitting tracks.
Track 1: Developers Executing a Consent Order and Agreement (COA). Before filing permit applications, a developer must notify DEP, participate in a pre-application meeting, and execute a project-specific COA incorporating GRID requirements. COAs have historically resolved violations; under EO 2026-05, they must be executed prospectively, with noncompliance subject to penalties. After execution, DEP may conduct rolling reviews of permit applications but cannot issue final permits until required local approvals are obtained and the project is shown to be consistent with the applicable comprehensive plan. PAyback and Permit Decision Guarantee review periods do not begin until local-approval documentation is submitted.
Track 2: Developers Not Executing a COA. DEP will not begin permit review until local approvals and required water-withdrawal or wastewater discharge authorizations are secured. Applications will not receive rolling review, permits will not be issued until all necessary applications have been submitted and reviewed, and the project will be ineligible for the PAyback and Permit Decision Guarantee programs.
Additional Provisions
EO 2026-05 removes all data center projects from the PA Permit Fast Track Program, bars executive-agency nondisclosure agreements for data center projects, requires a public map of proposed projects, conditions sales-and-use tax exemptions for data center equipment on GRID compliance, and directs DEP to collect annual energy and water-use data from existing facilities. It also directs DCED to develop zoning and community-benefit-agreement guidance and requires DEP to evaluate additional environmental regulations and opportunities to expedite clean-energy and transmission projects. The order directs advocacy before the PUC regarding curtailment protocols and cost-allocation tariffs but does not bind the PUC.
Effects on Local Approvals
EO 2026-05 does not expand municipal zoning authority, but it makes local land-use approval a prerequisite to DEP permitting for covered data center projects. Local zoning and land-use approvals are therefore critical-path items for project development, and DCED has been directed to develop guidance for municipalities on zoning standards and community benefit agreements.
Practical Implications
Developers may wish to build local approvals into project schedules. Those seeking rolling review must execute a COA, which may carry potential enforcement consequences in the event of noncompliance. Financing, leasing, acquisition, and development documents may warrant review in light of the revised permitting sequence, associated delays, and GRID-driven cost-allocation obligations. Developers, lenders, landowners, and utilities should monitor future PUC proceedings on curtailment and cost-allocation requirements. The sales-and-use tax exemption under the Commonwealth’s Computer Data Center Equipment Program is conditioned on GRID compliance for applications filed after the order’s effective date.
Key Takeaways
- EO 2026-05 applies to data center projects with peak demand exceeding 25 MW and links GRID compliance to the more favorable DEP permitting pathway.
- Projects with a COA receive rolling review and retain eligibility for the PAyback and Permit Decision Guarantee programs; projects without a COA face more restrictive review and lose access to both programs.
- The COA is an enforcement instrument with penalty provisions that must be executed before construction.
- Local zoning and land-use approvals are a prerequisite to DEP permitting and a critical-path item for project timing.
- Data center projects are no longer eligible for the PA Permit Fast Track Program, and Commonwealth agencies are prohibited from entering nondisclosure agreements related to data center projects.
- The order advocates for, but does not require, future PUC action regarding load curtailment and cost-allocation tariffs.
- Developers, lenders, and landowners may wish to reassess permitting timelines, financing milestones, and site-control provisions considering the new sequencing requirements and COA framework.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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