Pennsylvania Governor Josh Shapiro signed an executive order on August 14 that restricts data center construction, bans non-disclosure agreements (NDAs) in developer negotiations with public officials, and mandates new disclosure requirements for utility rate deals and land acquisitions. The order uses the term “predatory practices” to describe aggressive land grabs and subsidized energy contracts that have characterized the state’s data center boom.
The move is a direct response to investigative reporting by Spotlight PA, which found developers had pushed public officials to sign NDAs that concealed tax breaks, energy subsidies, and environmental waivers. Those agreements kept municipalities in the dark. They also locked in contracts unfavorable to local governments.
Shapiro’s order does not ban data centers outright. It changes the terms of engagement. Developers must now disclose financial incentives publicly. They must submit utility rate agreements for state review. And they cannot demand confidentiality from officials.
The order’s language is pointed. “Predatory data center developers” is the phrase Shapiro’s office used in the official press release. That is not neutral regulatory language. It is a warning shot.
Pennsylvania is not acting in isolation. The Wall Street Journal reported in July that at least nine states have imposed similar restrictions on data center construction since 2023. Grid strain, water usage, and local opposition are the common triggers. Virginia, Georgia, and Oregon have all tightened rules. Pennsylvania is now the most recent—and possibly the most aggressive—entrant.
The NDA Problem: Why Secrecy Was the Norm
Spotlight PA’s investigation, published in August 2026, documented a pattern: developers from major tech firms approached county and municipal officials with draft NDAs as a first step. The agreements prohibited officials from disclosing proposed tax abatements, energy rates, or land purchase prices. In one case, a developer sought to bar a county commissioner from discussing a 20-year, 40% property tax abatement.
Officials signed. They said they had no choice. The developers threatened to take projects elsewhere.
That secrecy had a price. Municipalities in Pennsylvania’s Luzerne and Beaver counties approved infrastructure upgrades—new substations, water lines, road expansions—funded by taxpayer bonds. The data centers paid reduced utility rates for 15 to 25 years. The net effect: residents subsidized corporate energy consumption.
Shapiro’s executive order ends that practice. NDAs are now void. Officials must disclose all proposed incentives within 10 days of receiving an offer.
The Taxpayer Mechanics: Where the Money Goes
The financial structure of data center deals follows a consistent pattern. Here is how the burden shifts:
| Component | Typical Deal Structure | Who Pays |
|---|---|---|
| Property tax abatement | 30–50% reduction for 10–20 years | Local schools, emergency services |
| Utility rate deal | Fixed below-market rate for 15+ years | Residential and small business ratepayers |
| Infrastructure upgrades | Substations, transmission lines, roads | Municipal bonds, taxpayer-backed |
| Water usage | Cooling systems consume 3–5 million gallons/day | Local water districts, rate hikes |
A 2025 analysis by the Pennsylvania Utility Commission projected that a single 300-megawatt data center, if granted a 20-year rate freeze, would shift approximately $180 million in energy costs onto other ratepayers over the contract’s life. That is $180 million for one facility. Pennsylvania has 14 such facilities in various stages of development.
Shapiro’s order requires the Public Utility Commission to review all rate agreements before approval. It also mandates a public comment period. Those provisions change the math. Developers can no longer rely on quiet, backroom utility negotiations.
AI Ambitions Meet Grid Reality
The order lands at a moment of escalating demand. AI models require massive computational power. Each new generation of models—from GPT-4 to successors—demands exponentially more electricity. Data centers are the physical infrastructure of that demand.
A single AI training cluster can draw 100–150 megawatts. That is enough to power 75,000 homes. Pennsylvania’s grid, already strained by decommissioning coal plants and delayed transmission upgrades, cannot absorb that load without significant investment.
Big Tech knows this. Companies like Microsoft, Amazon, and Google have invested heavily in Pennsylvania’s data center corridor along the I-81/I-78 axis. They chose the state for its low electricity costs and access to East Coast markets.
Shapiro’s order changes that calculus. Developers now face public scrutiny, mandatory disclosure, and potential regulatory delay. Some may relocate to states with friendlier rules. Texas and Ohio have signaled openness. Others may invest in on-site power generation—solar, wind, or natural gas—which raises project costs by 20–40%.
The result: AI development in Pennsylvania will slow. That is the intended effect.
A National Pattern: States as Regulators
The federal government has not acted on data center policy. Congress has debated grid modernization and AI infrastructure bills, but no comprehensive legislation has passed. States are filling the void.
Virginia, home to the world’s largest concentration of data centers, imposed new water usage limits in 2024. Georgia’s legislature capped property tax abatements for data centers at 10 years. Oregon banned new facilities in certain agricultural zones.
Pennsylvania’s executive order is more comprehensive than any of these. It combines construction limits, disclosure requirements, and utility oversight in a single document.
That makes Pennsylvania a bellwether. If the order survives legal challenge—and several developer groups have hinted at lawsuits—other states may adopt similar frameworks. The era of blanket corporate handouts could be ending.
What Comes Next
Legal challenges are likely. Developers argue that the order oversteps executive authority and violates interstate commerce protections. The Pennsylvania General Assembly may attempt to override it with legislation.
Shapiro’s office is prepared. The executive order cites specific statutory authorities, including the Public Utility Code and the state’s Environmental Rights Amendment. Legal experts suggest the order has a strong foundation.
For taxpayers, the order is a transparency win. For AI proponents, it is a speed bump. The truth is more nuanced: the order does not ban data centers. It makes them pay their way.
That is a reasonable position. It is also a risky one. If developers leave, Pennsylvania loses jobs and tax revenue. If they stay, the state’s grid faces strain without guaranteed compensation.
Shapiro has placed a bet: that transparency will attract responsible developers and deter predatory ones. The next 18 months will show whether that bet pays off.
💡 Frequently Asked Questions (FAQ)
- Q: What does Pennsylvania’s new executive order on data centers actually do?
- A: The order, signed by Governor Josh Shapiro, restricts data center construction by banning non-disclosure agreements in developer negotiations with public officials, mandating public disclosure of financial incentives and utility rate deals, and requiring state review of such agreements. It also targets what it calls ‘predatory practices’ like land grabs and subsidized energy contracts.
- Q: How could this executive order affect Big Tech’s AI ambitions?
- A: AI development relies heavily on massive data centers. This order increases transparency and regulatory scrutiny, potentially slowing project timelines and raising costs for developers. It may deter investment in Pennsylvania, forcing tech companies to seek less regulated states or adjust their expansion plans, thereby impacting the pace of AI infrastructure growth.
- Q: What does the crackdown mean for every American taxpayer?
- A: Taxpayers often shoulder hidden costs of data center deals through subsidized energy rates, tax breaks, and grid upgrades. By mandating disclosure and banning NDAs, the order aims to expose these costs, potentially preventing unfavorable contracts that shift financial burdens onto residents. It also sets a precedent that could lead to more accountable use of public resources in other states.
- Q: Is Pennsylvania acting alone in this data center crackdown?
- A: No. According to The Wall Street Journal, at least nine states have imposed similar restrictions on data center construction since 2023, driven by concerns over grid strain, water usage, and local opposition. Pennsylvania is part of a broader trend toward greater regulatory oversight of the data center industry.
Extended Reading
Spotlight PA’s full investigation into data center NDAs: Data center developers are pushing Pa. government officials to sign NDAs
Wall Street Journal’s report on state-level restrictions: Pennsylvania Becomes Latest State to Restrict Data-Center Construction
NBC News coverage of Shapiro’s executive order: Gov. Josh Shapiro issues a new executive order on data centers in Pennsylvania