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National and state political leaders are rushing to regulate and incentivize the rapidly growing data center industry fueled by artificial intelligence.
Data centers — sometimes nondescript buildings located in former manufacturing areas — are popping up across the state. And lawmakers are pushing for incentives and accelerated permitting to make the commonwealth more attractive to data center developers.
State Rep. Stephenie Scialabba (R., Butler), chair of the state’s Artificial Intelligence Opportunity Task Force, said Pennsylvania needs to “act in the next year or two” to attract the companies or risk losing them to other states.
“I frankly don't think that we are moving quickly enough,” she said. “I think that there's initiative there and there's interest. I believe, though, that we're going to need to really keep pushing. If we let up on the gas, even for a minute, we're going to lose.”
>>READ MORE: The unknown costs of Amazon’s $20B promise to build 2 data centers in Pennsylvania
The promise and possibility of animating regions with a new industry is part of an AI and energy summit Tuesday at Carnegie Mellon University, where President Donald Trump and U.S. Sen. Dave McCormick announced $90 billion in AI, energy, and data center investments.
Data centers have been around for years, but artificial intelligence is driving demand for more centers across the country.
Pennsylvania has all the makings of a future data center hub, proponents say, with available land, natural energy resources, and universities such as Carnegie Mellon to attract and develop the needed workforce.
It’s also a cause that Democrats and Republicans have come together to support. Democratic Gov. Josh Shapiro and McCormick, a Republican, joined to announce a $20 billion investment from Amazon to build two data centers in Bucks and Luzerne counties.
Legislators and data center proponents warn that, without speeding up permitting and lowering development costs, Pennsylvania could miss the metaphorical gold rush of billions in investments that states like Virginia have capitalized on.
“Their states were getting sites ready four or five years ago,” said Joanna Doven, executive director of the AI Strike Team, a group aiming to bring the artificial intelligence industry to Southwestern Pennsylvania. “There is some speeding up that needs to be done. And I do see that speeding up happening."
Southwestern Pennsylvania in particular is flush with former industrial sites where data centers could be built, said Rich Fitzgerald, Southwestern Pennsylvania Commission executive director and former Allegheny County executive.
And bipartisan support will play a key role in whether data center developers choose to build in Pennsylvania, he said.
“Companies that locate and build and invest in a community or in a state, they don't want to get in the middle of a political fight where one side is against it and one side is for it," Fitzgerald said.
There’s also a bipartisan interest in incentivizing and accelerating the development of data centers.
Pennsylvania incentivized the Amazon investment, spending $10 million on workforce development and charging no sales tax on purchases of some operating equipment.
But some caution that data centers use a significant amount of electricity and water and could raise electric bills for households.
A 2024 Department of Energy report found that data centers consumed about 4.4% of U.S. electricity in 2023 and could account for as much as 12% by 2028.
State Sen. Nick Miller (D., Lehigh), co-chair of the Senate Communications and Technology Committee, said data centers and their energy demand are a “priority issue” for the committee.
“Data centers present a dual challenge: they can drive major economic development, but they also create significant energy demands that, if not managed properly, could increase costs for consumers and strain our grid,” he said in an email statement.
State Sen. Jay Costa (D., Allegheny) pointed to Shapiro’s Lightning Plan — a proposal to, among other things, fund new projects through legislation, create a board to speed up approvals, and lower household energy bills — as an example of how elected officials are grappling with Pennsylvania’s energy future.
It’s an issue the state will need to address, with or without new data centers, Fitzgerald said.
“Improving the electrical infrastructure is something we need to do, again, irrespective of the data center opportunities,” he said. “You add to it with the data center opportunities and some of the predictions of how much of an increase you're going to have to provide in megawatts over time [and it] is just something that's going to have to happen.”
For many legislators, making permitting quicker for data centers appears to be the biggest legislative priority. Multiple bills to do just that have or will be introduced in the coming weeks.
State Sen. Greg Rothman (R., Cumberland) introduced legislation with co-sponsor Sen. Tracy Pennycuick (R., Berks that would speed up some permitting and limit how municipalities could regulate data center development.
“That's what investors want. They want to be able to deploy their capital and build what they want to build and start getting a return on their investment. Time is money,” Rothman said.
It’s one of several pieces of current and upcoming legislation aimed at improving conditions for data center development.
State Rep. Eric Nelson (R., Westmoreland) said he plans to introduce a bill creating an expedited permitting process in the coming weeks with co-sponsors Rep. Kyle Mullins (D., Lackawanna) and Rep. Jamie Barton (R., Berks).
Nelson’s bill would allow data center companies to pay an additional fee to go through an accelerated permitting process that requires a commitment to meeting environmental standards. It also requires site visits from the state Department of Environmental Protection to ensure compliance.
“We're not looking to bypass or minimize any environmental standards or thresholds that Pennsylvania already has,” Nelson said. "We're shifting from paperwork and tabletop reviews, which sometimes takes several years, to performance-based environmental standards focused on the field and what's really happening on the job site.”
The bill would also suspend permits during lawsuits that challenge data center projects so the permits don’t expire during legal proceedings.
State Rep. Jason Ortitay (R., Allegheny) introduced a bill that would create a Keystone Artificial Intelligence Authority to streamline permitting for data centers and other AI industry developments alongside co-sponsors Rep. Bud Cook (R., Greene) and Rep. Jeff Olsommer (R., Pike).
Permitting reform, particularly if it concerns the DEP, has historically been a partisan issue with little to no collaboration across party lines, but conversations around data center permitting have broken from that trend, Ortitay said.
“I genuinely think if Gov. Shapiro leads on this by example, then I think we'll be able to get everybody, both Republicans and Democrats, on the same page, to agree to something that is productive and helpful in this space,” he said. “But if he doesn't lead and he leaves it to the Legislature to figure out, then I have zero hope that we'll be able to work on it.”
Scialabba said she plans to introduce an AI legislative package with state Reps. Robert Leadbeter (R., Columbia) and Joe D’Orsie (R., York) to incentivize AI development and create an Artificial Intelligence Consortium to examine regulatory barriers.
But crafting legislation — regulation or incentive — hits the roadblock of a divided legislature.
Passing data center legislation without widespread political support is a challenge, Nelson said.
“One of the keys to success in Harrisburg is we have to coordinate across both chambers and the governor’s office, so communication is almost a prime driver for success,” he said.
Costa, who is on the advisory committee for the AI Strike Team, urges patience while legislators weigh regulations.
“I think we have sufficient things in place right now that I think would protect consumers and residents, but at the same time, we need to be nimble in terms of how we manage this going forward,” he said.
He said he couldn’t point to specific regulations to protect consumers but that agencies such as the DEP and the Public Utility Commission have protections in place.
And some of the changes might happen within state agencies, not in the legislature.
“At the legislative level, we don't move very quickly, and that's unfortunate, but I think in the administrative level or executive level through the agencies, there's opportunities,” he said.
The state PUC held a hearing in April to discuss large-load electric customers like data centers and is now reviewing testimony from industry executives and public comments, said press secretary Nils Hagen-Frederiksen. The hearing generated dozens of comments, though it is not clear what the PUC might recommend or change in the Public Utility Code, if anything.
Abigail Hakas is a reporter for Next Generation Newsroom, part of the Center for Media Innovation at Point Park University. Reach her at abigail.hakas@pointpark.edu.