Gov. Josh Shapiro signs order requiring AI data centers to pay their own power costs

Pennsylvania Gov. Josh Shapiro has sharply tightened the rules for AI data center development, signing an executive order that gives local communities more control and requires developers to shoulder the infrastructure costs of their projects.

The order removes data centers from the state’s fast-track permitting program and bars state offices and agencies under Shapiro’s jurisdiction from signing nondisclosure agreements with data center developers.

The shift is notable because Shapiro had previously promoted Pennsylvania as a major destination for AI infrastructure. Still, rising local opposition has pushed his administration toward a more restrictive approach.

Shapiro reverses course on data centers

Shapiro’s new position marks a clear break from the tone he used earlier in the data center boom. Last year, he promoted two large Amazon-backed developments in Pennsylvania and argued that the state could play a leading role in expanding artificial intelligence infrastructure.

Earlier this year, he also described data centers and AI as among the fastest-growing parts of the economy and linked their development to competition with China.

On Tuesday, however, his message focused on limiting speculative projects and protecting communities from developers he accused of acting aggressively toward residents and local officials.

Local communities get the first say

The executive order gives municipalities a stronger role before the state permits them to move forward.

Developers seeking permits must secure required local approvals. They must also enter legally enforceable commitments to follow Shapiro’s Responsible Infrastructure Development guidelines, which were introduced earlier this year.

Those standards cover energy costs, local hiring, transparency, community engagement, and water conservation. State support will now depend not only on technical permitting requirements, but also on whether projects meet the governor’s broader conditions and obtain local backing.

Developers must pay their own power costs

One of the most consequential requirements concerns electricity. Data center developers must pay the full cost of the new generation, transmission, distribution, and other infrastructure needed to power their projects. The goal is to prevent those expenses from being shifted to Pennsylvania households and businesses.

That requirement addresses one of the central complaints surrounding the national data center boom. Large facilities can require enormous amounts of electricity, and opponents have worried that rapid growth could increase pressure on the grid and raise costs for ordinary customers.

Fast-track permits are off the table for data centers

Shapiro is also removing data center projects from Pennsylvania’s fast-track permitting program. Projects already seeking that treatment will lose it, and future data center proposals will not be eligible.

The decision changes the state’s previous approach of using accelerated permitting to encourage large infrastructure investment.

The order also bars state offices and agencies under Shapiro’s jurisdiction from signing nondisclosure agreements with data center developers. Shapiro said communities need greater transparency about developments that could affect local land use, utilities, and the environment.

Speculative projects trigger the crackdown

Shapiro said the change was driven in part by the volume of proposals across Pennsylvania. After the state announced 2 major projects last year, he said an unacceptable number of speculative developments began to surface.

Many, he argued, were being advanced without enough regard for the communities where developers wanted to build.

The governor said more than 100 data center proposals were under discussion in Pennsylvania, while only 5 had received the permits needed to begin operating, and many were unlikely to be built.

That gap between viable developments and speculative plans became a central part of his case for tougher rules.

Voter concerns reshape the strategy

Public opposition has grown as residents have raised concerns about electricity costs, water use, environmental effects, and changes to the character of their communities.

Shapiro said conversations with Pennsylvanians had changed his own view of the issue. He repeatedly credited residents for influencing his approach and said developers would no longer be allowed to force projects through over strong local objections.

He also pointed to specific local proposals that had drawn community resistance, including one involving local baseball fields, as examples of why he believed stronger guardrails were needed.

The backlash spreads beyond Pennsylvania

Pennsylvania is not alone in reconsidering the pace of data center growth. New York Gov. Kathy Hochul imposed a one-year ban on large new data centers last month. Texas Gov. Greg Abbott also paused approvals for new data centers seeking connection to the state grid while regulators audit proposed projects.

The issue is becoming more prominent in election campaigns as Democratic and Republican candidates debate whether to support moratoriums, strengthen local control, or continue incentives intended to attract development.

The political shift reflects growing tension between the economic promises attached to AI infrastructure and concerns about its local costs.

AI still needs massive infrastructure

Data centers remain central to the expansion of artificial intelligence because they provide the computing capacity needed to train and operate advanced systems.

President Donald Trump’s administration has promoted continued data center construction as part of its economic agenda. It has also backed a Ratepayer Protection Pledge, under which participating developers agree to fund additional power generation and infrastructure required by their projects.

Industry advocates say data centers can create jobs, expand local tax revenue, and bring other financial benefits to host communities. They also argue that developers can invest responsibly by paying their fair share of power costs, using water efficiently, and engaging more openly with communities.

The industry faces a trust problem

Data Center Coalition executive Dan Diorio said one challenge is the speed at which the industry has expanded.

He acknowledged that opposition has developed quickly as well and said the industry now needs to provide facts while demonstrating how projects can make long-term investments in communities.

That argument highlights the challenge developers now face in Pennsylvania. Winning state support will require more than promising growth or tax revenue. Projects will have to satisfy stricter standards while also showing that local communities accept the development.

Pennsylvania keeps the door open

Despite the tougher language, the order does not amount to a statewide ban on data centers. Projects can still move forward if they secure local approval and meet standards covering power costs, workforce commitments, transparency, and environmental protection.

That leaves Pennsylvania open to AI infrastructure investment, but on substantially different terms from the approach Shapiro promoted earlier.

His new position is that enforceable obligations and stronger local control must accompany growth. For developers, access to Pennsylvania will now depend on proving that a project can pay its own way and win support from the community where it plans to build.

TL;DR

• Shapiro signed an executive order tightening Pennsylvania’s rules for AI data centers.
• Developers must secure local approval and make legally binding commitments to state standards.
• Projects must cover the full cost of the power infrastructure they require.
• Data centers are no longer eligible for Pennsylvania’s fast-track permitting program.
• State offices and agencies under Shapiro’s jurisdiction are barred from signing nondisclosure agreements with data center developers.
• The order marks a sharp shift from Shapiro’s earlier effort to encourage data center investment in Pennsylvania.
• Data center development can continue, but projects must now meet stricter financial, environmental, and community requirements.

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This article was made with AI assistance and human editing.