During the inaugural Pennsylvania Energy and Innovation Summit at Carnegie Mellon University, President Donald Trump, U.S. Senator David McCormick, and Governor Josh Shapiro, along with private-sector leaders, announced a $90 billion investment in AI, energy, and data centers in Pennsylvania. The summit followed Governor Shapiro’s announcement of a $20 billion data center investment in the state.
Pennsylvania is on the fast track to becoming a data center hub. It has land and water resources, a diverse and abundant mix of nuclear, natural gas, and renewable energy sources, as well as universities, community colleges, and technical schools to train and develop a skilled workforce to support the construction and operation of this emerging industry.
However, Pennsylvania’s existing local and state permitting processes are not designed to facilitate large, complex, multi-structure developments delivered in phases, which may cause problems for this significant emerging industry.
Pennsylvania is responding to the growing investment in data center projects by proposing several pieces of legislation to assist in streamlining the development of data centers and energy infrastructure. Notable proposals include: (1) streamlining and expediting the approval and permitting processes for data center projects; (2) creating regulatory sandbox programs to coordinate data center developments; (3) establishing a Certificate of Reliable Energy Supply, available to major energy facilities, that, if granted, would supersede local zoning restrictions; (4) setting parameters around local ordinances to ensure data centers face the same zoning rules as other industrial uses; and (5) creating a dedicated rate class for high-load data centers to address concerns about shifting incremental energy and grid upgrade costs.
The proposed legislation to facilitate data center development includes:
(1) Governor Shapiro’s Lightning Plan – The proposed the “Lightning Plan,” a comprehensive proposal designed to finance new energy projects through legislation, establish a board to accelerate approval processes, and reduce household energy costs. The plan consists of six bills focused on modernizing Pennsylvania’s energy system by implementing a carbon cap-and-invest program, increasing clean energy goals, streamlining project approvals, providing infrastructure tax incentives, supporting rural and low-income communities, and enhancing energy efficiency rebates.
The Lightning Plan would support the development of data centers by: (1) streamlining permitting through a centralized, state-level authority to expedite siting and permitting decisions,(HB 502); and (2) providing a tax of up to $100 million annually per project for investments in reliable energy generation – potentially attracting data center developers who wish to pursue co-location with power plants or deploy their own power generation (HB 500).
- The Pennsylvania Reliable Energy Siting and Electric Transition (RESET) Board (HB 502). Proposes the RESET Board, which would serve as the sole state entity responsible for approving siting applications for major energy projects. Projects approved by the RESET Board would receive a Certificate of Reliable Energy Supply, which would supersede local zoning restrictions and streamline the permitting process.
- Improvements to the EDGE Tax Credit (HB 500). Would add tax incentive credits for investments in energy infrastructure, including up to $100 million annually for new power plant facilities over three years.
(2) Senate Bill 939 – Introduced on July 14, 2025, this bill proposes establishing the Commonwealth Opportunity Zone (COZ), a statewide regulatory relief framework designed to incentivize the development of high-impact data centers in Pennsylvania. It would create a fast-track permitting process for data centers to ensure coordinated timelines for permitting and approvals across relevant agencies, standardize local ordinance parameters so data centers face the same zoning rules as other industrial uses, and create an Artificial Intelligence, Data Center and Emerging Technology Regulatory Sandbox Program to facilitate collaboration between industry and state agencies and eliminate outdated or unnecessary rules.
(3) House Bill 1625 – This proposal would create the Keystone Artificial Intelligence Authority, tasked with promoting the development of target industries, such as data center development, through streamlined permitting, strategic investment, and administrative efficiency. The authority would develop and administer a permit navigator program to assist applicants in coordinating and expediting all state-level permitting processes.
Two additional legislative initiatives have been announced but not yet introduced:
(1) Accelerated data center permitting proposal – This proposal seeks to ensure timely permits for developers who meet or exceed federal standards. It would direct the Pennsylvania Department of Environmental Protection to issue approved earthwork, stormwater, and air permits to developers who commit to improved environmental outcomes by meeting or exceeding design standards. The accelerated process would enable the simultaneous pursuit of additional permits and approvals, such as Highway Occupancy Permits, Environmental Justice Permits, land use approvals, and other complex requirements that can significantly delay project approval. If a lawsuit is filed challenging any aspect of a data center project, the associated permit timelines would be suspended during the legal dispute to prevent permits from expiring due to litigation. The measure aims to eliminate delay tactics that can deter investment.
(2) Ratepayer Protection Act – On July 25, 2025, Pennsylvania State Senator Katie Muth circulated a memorandum promising to introduce legislation to protect residents and small businesses from subsidizing energy costs driven by large data center operations. The proposed legislation would establish a dedicated rate class for high-load data centers and require them, not residents or small businesses, to fully cover the cost of their infrastructure buildout and operations.
The Trump administration supports the expansion of data centers and on July 23, 2025, it introduced its own Federal AI Action Plan to support data center development in Pennsylvania and nationwide. The action plan coincides with three executive orders on AI and outlines policy goals to accelerate AI innovation, build AI infrastructure in the U.S., and take a leadership role in international AI diplomacy.
The executive order titled “Accelerating Federal Permitting of Data Center Infrastructure” outlines a plan to facilitate the rapid and efficient buildout of data center infrastructure by easing federal regulatory burdens. It states that the Trump administration will use federally owned land and resources to expedite data center development and provide financial support to projects involving data centers and the necessary energy infrastructure.
The Commonwealth appears to be welcoming data center development. While the proposed legislation may help streamline the permitting process and establish clear parameters for local zoning, data center developers should still anticipate resistance. Organized local groups are already working to update zoning ordinances to regulate and potentially impede data center development.
Client Alert 2025-205
