Pennsylvania is still on the fast track to becoming a data center hub, and state legislators are actively seeking ways to regulate this rapidly expanding industry. Earlier this year, government and private sector leaders announced a $110 billion investment in artificial intelligence, energy, and data centers across the Commonwealth. Additional announcements have occurred, suggesting even further planned investment in the Commonwealth. Pennsylvania’s abundant land and water resources, diverse energy mix – including nuclear, natural gas, and renewables – and robust educational infrastructure make it an attractive location for data center construction and operation.
As the pace of data center development accelerates, Pennsylvanians have raised concerns about rising utility costs, grid reliability, and environmental impacts. In response, lawmakers have proposed legislation – much of which is still in early stages – that reflects a clear commitment to tackling key challenges: expediting permitting through preapproved sites, requiring local pre-application meetings, protecting residential and small business ratepayers from cost shifting, and establishing statewide standards for environmental and community impacts. Additional measures focus on water usage reporting, incentivizing energy efficiency, increasing transparency and accountability, ensuring emergency preparedness, and requiring prevailing wages for data center construction projects. New bills also seek to strengthen oversight of utility load forecasting and tie tax incentives to the use of renewable energy.
Pennsylvania legislative initiatives proposed in September and October 2025 include:
(1) Data Center Act (HB 1834). Sponsored by Pennsylvania Representative Matzie (D-16) and referred to committee on September 4, 2025. The bill calls for regulation of commercial data centers by the state’s Public Utility Commission (PUC) and for the PUC to promulgate temporary regulations addressing minimum contract terms and fees for data center developments, including annual fees to fund a new Low-Income Home Energy Assistance Program (LIHEAP) Enhancement Fund.
(2) Data Center Siting and Permitting Act (SB 991). Introduced by Pa. Senator Bartolotta (R-46) and referred to committee on September 5, 2025. The bill aims to establish a streamlined permitting process for data centers in Pennsylvania, under which the Department of Environmental Protection (DEP) selects “preapproved sites” and expedites the approval process. The bill requires DEP to select at least 15 preapproved sites suitable for data center construction, with at least five being decommissioned (or soon to be decommissioned) power generation facilities. In addition, the bill creates an accelerated two-phase permitting process. Phase 1 requires applicants to pay a $10,000 application fee; thereafter, DEP has three days to grant the applicant a notice to proceed and applicants may begin site preparation work. Phase 2 requires applicants to submit final design plans; once DEP grants the applicant final approval, full construction may begin. If the applicant’s proposed data center is located at a preapproved site, DEP must provide the applicant with all preliminary work related to permitting that DEP has previously conducted on the site.
(3) Load Forecast Accountability Act (HB 1924). Introduced by Pa. Representative Burgos (D-197) and referred to committee on October 6, 2025. A companion memorandum was circulated to the state senate on October 9, 2025. This bill would strengthen consumer protection and transparency by giving the PUC clear authority over utility load forecasting. It empowers the PUC to (1) review and validate forecasts submitted to PJM, (2) coordinate with PJM and state regulators to prevent duplicative counting of projects and contracts, and (3) access all necessary materials, including confidential agreements between interconnecting customers and utilities.
(4) Pennsylvania House of Representatives floats six-bill legislative package. On October 14, 2025, state representatives circulated memoranda proposing a legislative package aimed at regulating the responsible development of data centers, with a clear focus on environmental and community impacts of data center development and operation.
- Memorandum on Community Standards for Data Center Developments – Aims to establish consistent statewide standards for data center operation. The proposal would direct municipalities to adopt local ordinances that limit harmful impacts of data centers, including requirements for sound barriers, setback distances, building design standards, and equipment modifications.
- Memorandum on Water Usage Reporting Requirements for Data Centers – Would require data center projects with substantial water demands to notify the state before construction, enabling state agencies, local governments, and river basin commissions to evaluate potential impacts and ensure appropriate safeguards to protect water supplies.
- Memorandum on Incentivizing Energy Efficiency for Data Centers – Would require data centers seeking sales tax exemptions to obtain recognized energy efficiency certifications, such as LEED, Energy Star, Green Globes, or International Organization for Standardization (ISO), to ensure that only data centers meeting the highest efficiency standards can benefit from state tax incentives.
- Memorandum on Data Centers: Accountability and Transparency – Would require data center developers and end users to disclose the nature of their operations and report energy and water usage to the Department of Conservation and Natural Resources (DCNR). The DCNR would then use this information to prepare an impact report and make recommendations to the General Assembly on how to address any environmental concerns posed by data centers.
- Memorandum on Data Center Emergency Preparedness – Would require data centers to meet the National Fire Protection Association’s standards for energy storage facilities, update fire plans, and coordinate with local government and emergency response agencies.
- Memorandum on Data Centers and Prevailing Wage – Would require data center developers to pay the prevailing wage on all data center construction projects to remain eligible for state sales tax exemption.
(5) Memoranda on Protecting Residential Ratepayers from Data Center Cost Shifting and on Requiring Consideration of the Public Interest in PUC Proceedings. On October 6, 2025, Pa. Representative Otten (D-155) circulated two memoranda proposing legislation to safeguard residential and small business ratepayers from data center-driven costs and to ensure the PUC explicitly considers the public interest in its proceedings. The first piece of legislation would create a separate rate class for hyperscale data centers, require these facilities to bear the full cost of the infrastructure upgrades they necessitate, mandate utility tariffs to prevent hidden subsidies or cross-class cost shifting, require annual reporting to the PUC on data center related infrastructure costs, usage, and system impacts, and establish protections to ensure data centers – not residential customers – are responsible for stranded costs if a facility reduces load or ceases operations. This memorandum aligns with prior memoranda circulated by Otten and Pa. Senator Muth (D-44) in July 2025, which did not result in the introduction of a bill. The second legislative initiative would establish a framework directing the PUC to weigh utility rates alongside reliability, affordability, resilience, equitable treatment of consumers, economic impacts, and energy efficiency to advance the public interest.
(6) Tax incentive for green data centers. On September 22, 2025, Pa. Senator Kearney (D-26) circulated a memorandum proposing legislation to amend the Computer Data Center Sales and Use Tax Exemption Program. Under the proposal, data centers would be eligible for the tax exemption only if they procure 100% of their electricity from Tier 1 alternative energy sources and make specified investments in energy efficiency by 2030.
(7) Data center pre-application meeting. On September 2, 2025, Pa. Senators Brown (R-40) and Argall (R-29) circulated a memorandum to the Pennsylvania Senate setting forth legislation that would require a local pre-application meeting as a part of any data center development proposal submitted to a Pennsylvania municipal planning board. The meeting (1) must be held 30 days prior to the submission of a formal development application and (2) should be attended by zoning, planning, and elected officials, as well as third party engineers and solicitors. Data center applicants would be required to share all “will-serve” letters from water, sewer, electric, and fiber infrastructure organizations.
While some of these initiatives aim to streamline development and provide clear regulatory frameworks, data center developers should anticipate continued resistance. The evolving legislative landscape underscores Pennsylvania’s dual commitment to fostering economic growth and addressing the concerns of its residents as the data center industry continues to expand.
Client Alert 2025-265
