Pennsylvania Gov. Josh Shapiro has unveiled a new set of standards governing large-scale data center development, becoming the latest state to respond to growing public concerns about the economic, environmental and infrastructure impacts of the rapidly expanding AI data center industry.
The Governor’s Responsible Infrastructure Development (GRID) Standards, announced May 27, establish conditions that developers must satisfy if they want access to state incentives, expedited permitting and tax benefits. According to an analysis by the Duane Morris Government Strategies blog, the standards represent one of the most comprehensive state-level frameworks yet proposed for balancing economic development goals with mounting demands for greater oversight of data center projects.
The move comes as opposition to large data center projects has become an increasingly salient political issue across the country. Communities have raised concerns about electricity consumption, water usage, environmental impacts and the costs imposed on local infrastructure. Pennsylvania has emerged as a particularly active battleground, with lawmakers advancing multiple legislative proposals and data center policy becoming an issue in the state’s gubernatorial race.
WHAT’S NEXT IN ANTITRUST AND TECHNOLOGY REGULATION™
Under the GRID framework, developers seeking state support must obtain certification through a process administered jointly by the Commonwealth’s Office of Transformation and Opportunity and the Department of Revenue. Certified projects would gain access to Pennsylvania’s Permit Fast Track Program, sales and use tax exemptions for computer equipment and certain preferential tax programs. Certification would not be permanent; developers would be required to submit compliance reports before operations begin and annual updates thereafter.
One of the most consequential elements of the standards addresses energy consumption. The framework requires developers to bear the full cost of any new electric generation capacity needed to support their projects rather than shifting costs onto existing utility customers.
The standards further require that new power capacity come from new or incremental generation resources located within the same PJM Locational Deliverability Area as the project. Facilities larger than 100,000 square feet must be designed to accommodate future solar installations.
Related: The FTC’s New Healthcare Taskforce Needs to Prioritize Health Data Acquisition and Use In Competition Oversight
The standards also seek to give local communities a voice in decisions about new projects. Developers would be required to identify end users of the facilities, conduct public meetings before major design decisions are finalized and disclose information about project size, anticipated water consumption and efficiency metrics.
Local governments would be entitled to early consultation, giving municipalities an opportunity to provide input before development plans are locked in.
Workforce and economic-development commitments are another major component of the framework. To qualify, developers must commit at least $250 million in investment, create at least 200 prevailing-wage construction jobs and establish at least 50 permanent positions paying at least 125% of Pennsylvania’s average wage within four years. Hiring plans must also describe how local workers will gain access to apprenticeship and construction opportunities.
The governor’s initiative arrives amid a crowded legislative field. Sen. Tracy Pennycuick, chair of the Senate Communications and Technology Committee, recently proposed legislation that would require large data centers to provide their own power, impose water-use restrictions and mandate additional public engagement requirements. Her package would also establish a Pennsylvania Data Center Advisory Committee and prohibit state and local governments from entering into nondisclosure agreements with developers.
Meanwhile, Sen. Jarrett Coleman and Rep. Jamie Walsh have introduced legislation that would repeal Pennsylvania’s existing data center equipment tax exemption and allow municipalities to impose temporary moratoriums on data center applications while local zoning rules are updated.
The Shapiro administration is now seeking to codify the GRID standards through legislation. Officials have proposed tying Pennsylvania’s existing data center sales and use tax exemption, projected to cost more than $517 million annually by fiscal year 2030-31, directly to GRID certification requirements.
