Pennsylvania Gov. Josh Shapiro signed an executive order which he says will place the strictest guardrails in the nation on data centers.

Shapiro signed the order after speaking during a press conference in Harrisburg, Pennsylvania, on Tuesday, Aug. 18.

“We will not be bullied by these developers,” Shapiro said before signing the order. “We will not be bulldozed by the lawyers for these big tech companies. That will not happen here in the commonwealth.”

Data centers are facilities used to house computer systems and serve as infrastructure for storing and processing information. They also support the global financial system, cloud services, machine learning and artificial intelligence (AI).

Rising electricity costs and a strain on electric grids fueled by the growth of the AI industry have led to significant backlash to proposed data centers from communities across the country, including towns and neighborhoods in New Jersey and Pennsylvania. Other critics of data centers have expressed concerns about their environmental impact as well as AI’s potential threat to millions of jobs.

In May of this year, Shapiro released the Governor’s Responsible Infrastructure Development (GRID) Standards, which officials said established clear guardrails and accountability measures for data center development in Pennsylvania.

The guardrails included the following requirements, which Shapiro explained in further detail during Tuesday’s press conference:

Protecting Energy Affordability

“First, developers must bring their own power and pay for all of the costs associated with that electricity,” Shapiro said on Tuesday. “They will not be permitted to saddle homeowners and businesses with the added costs of their development. And they must get an increasingly significant portion of that power from clean energy sources like solar, advanced nuclear and battery storage.”

Promoting transparency, community engagement, supporting workforce and economic development

“Second, they must respect our local communities by being transparent with the community. By hiring locally and by hiring a robust community benefits agreement,” Shapiro said. “And, importantly, they must earn local legal approval before they work with us. Let me put that succinctly, If the local community doesn’t approve a project, the state won’t approve it either.”

Strengthening environmental protection

“And third, developers must meet the constitutional obligation under Article 1, Section 27, which guarantees each and every Pennsylvanian the right to clean air and to pure water,” Shapiro said. “That is fundamental to our commonwealth, and they must commit to the highest standards of environmental protection.”

Penalties for failing to comply

Under the order, data center developers must present their plans to Pennsylvania Department of Environmental Protection (DEP) Secretary Jessica Shirley. They will also be required to sign a legally binding consent order to comply with the GRID standards and will face strict penalties if they fail to comply, according to Shapiro.

“If a developer refuses to comply with those requirements, they will have no pathway of getting the necessary approvals to build a data center in Pennsylvania,” Shapiro said. “And they will be disqualified from receiving the existing exemption on sales tax on data center equipment that was put in place two years prior to me being elected as your governor.”

Stacy Garrity responds

State Treasurer and Republican nominee for Governor Stacy Garrity — who will face off against Shapiro in the upcoming Pennsylvania election — released a statement responding to Shapiro’s executive order.

“Josh Shapiro is trying to gaslight the people of Pennsylvania into not believing what they’ve seen with their own eyes for the past 13 months. Last summer, Josh Shapiro was the biggest data center cheerleader in the nation, and he reaped in more than $5 million in campaign donations from out-of-state data center interests in the process,” she wrote. “Now that public opinion has turned against him and his donors, Josh Shapiro is playing CYA, and Pennsylvania voters aren’t buying it. Josh Shapiro lit the fuse on the chaos we are seeing in community-after-community across the Commonwealth because he was more concerned with his political ambitions than fighting for Pennsylvania communities. As Governor, I will never abandon the hardworking Pennsylvania families who rightly expect their Governor to fight for them, not out of state donors to a political campaign.”

New Jersey’s plan

New Jersey Gov. Mikie Sherrill also unveiled a four-part plan in May to place guardrails on data centers after declaring a state of emergency on utility costs during her inauguration in January.

Sherrill’s plan included establishing a set of rules that data centers “pay their own way,” remain transparent with the public, invest back into the communities where they were built and create jobs in both initial construction and long-term operations that workers can “raise a family on.”