Data centers the focus of debate as Pennsylvania lawmakers consider new rules

Pennsylvania lawmakers are in the middle of budget season and are trying to push through legislation. Some of the bills they're prioritizing at the final hour are related to data centers.

On both sides of the aisle, there's agreement that data center development is happening fast, and the companies behind them need regulation. It's shown in three bills that passed out of committee to the full Pennsylvania House of Representatives on Wednesday, with the majority of the votes bipartisan.

The first bill taken up in the Finance Committee was introduced by Democratic Rep. Joe Webster of the 150th District.

"We need to right the ship and make sure development ongoing in Pennsylvania benefits Pennsylvanians," Webster said.

It would codify GRID standards introduced by Gov. Josh Shapiro into law and require developers seeking state tax benefits to meet strict GRID certification standards. Those standards include protecting energy affordability, increasing transparency, engaging local communities, supporting workforce development, and strengthening environmental protection. It would also replace the current exemption from paying sales tax with the certification.

"The bill has strict and enforceable restrictions on energy use. It has water and noise regulation. It provides an enforceable mechanism for community benefits and local jobs," Webster said.

The commonwealth does have a sales and use tax exemption for data centers, but Rep. Thomas Kutz, a Republican who represents the 87th District, proposed an amendment to remove that tax break. In the end, lawmakers voted to table it, along party lines.

"Bills of this magnitude should not be rushed through the process because the leader asked for them to be reported out onto the floor," Kutz said.

Things differed on the tax front in the Energy Committee, where Rep. Joseph Ciresi of the 146th District introduced a bill that would prevent government agencies from entering into nondisclosure agreements connected to data centers, something he said he's seen happen in the state.

"It benefits all of us throughout the commonwealth to know what's going in, how it's going on, the energy use that's going to be used," Ciresi said.

A Democratic-proposed amendment to add community protection eligibility requirements to the sales and use tax passed, with one "no" from Republican Rep. Eric Nelson of the 57th District in Westmoreland County, concerned that these developers will go elsewhere with more requirements placed on them.

"The more that we saber-rattle against them, our workers are going to lose the opportunity to build these facilities," Nelson said.

Then, in the Local Government Committee, lawmakers voted in favor of an act allowing local municipalities to pause data center applications for 180 days, so they can have time to draft ordinances at the same time.

At this time, it's unclear when these bills will be taken up by the full House.