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PRINTER'S NO. 1765
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1344
Session of
2026
INTRODUCED BY COLEMAN AND GEBHARD, JUNE 4, 2026
REFERRED TO FINANCE, JUNE 4, 2026
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," repealing provisions relating to computer data
center equipment incentive program; in general provisions,
providing for transfer of tax from certain sale of computer
data equipment; and establishing a restricted account in the
Motor License Fund.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Article XXIX-D of the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971, is
repealed:
[ARTICLE XXIX-D
COMPUTER DATA CENTER
EQUIPMENT INCENTIVE PROGRAM
SUBARTICLE A
PRELIMINARY PROVISIONS
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Section 2901-D. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Blockchain." A distributed ledger technology in which the
data is:
(1) shared across a network that creates a digital
ledger of verified transactions or information among network
participants; and
(2) typically linked using cryptography to maintain the
integrity of the digital ledger and execute other functions,
including the transfer of ownership or value.
"Computer data center." All or part of a facility that may
be composed of one or more businesses, owners or tenants, that
is or will be predominantly used to house working servers or
similar data storage systems and that may have uninterruptible
energy supply or generator backup power, or both, cooling
systems, towers and other temperature control infrastructure.
"Computer data center equipment." Equipment that is used to
outfit, operate or benefit a computer data center and component
parts, installations, refreshments, replacements and upgrades to
the equipment, whether any of the equipment is affixed to or
incorporated into real property, including:
(1) All equipment necessary for the transformation,
generation, distribution or management of electricity that is
required to operate computer servers or similar data storage
equipment, including generators, uninterruptible energy
supplies, conduit, gaseous fuel piping, cabling, duct banks,
switches, switchboards, batteries and testing equipment.
(2) All equipment necessary to cool and maintain a
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controlled environment for the operation of the computer
servers or data storage systems and other components of the
computer data center, including mechanical equipment,
refrigerant piping, gaseous fuel piping, adiabatic and free
cooling systems, cooling towers, water softeners, air
handling units, indoor direct exchange units, fans, ducting
and filters.
(3) All water conservation systems, including facilities
or mechanisms that are designed to collect, conserve and
reuse water.
(4) All software, including, but not limited to,
enabling software and licensing agreements, computer servers
or similar data storage equipment, chassis, networking
equipment, switches, racks, cabling, trays and conduits.
(5) All monitoring equipment and security systems.
(6) Modular data centers and preassembled components of
any item described in this definition, including components
used in the manufacturing of modular data centers.
(7) Other tangible personal property that is essential
to the operations of a computer data center.
"Department." The Department of Revenue of the Commonwealth.
"Facility." One or more parcels of land in this Commonwealth
and any structures and personal property contained on the land.
"New investment." Construction, expansion or build out of
data center space at either a new or an existing computer data
center on or after January 1, 2014, and the purchase and
installation of computer data center equipment, except for items
described under paragraph (4) of the definition of "computer
data center equipment."
"Owner or operator." Includes a single entity, multiple
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entities or affiliated entities.
"Proof of work crypto-asset mining." The process of
performing computations to add a valid block of data to a
blockchain, excluding computations required to validate
individual transactions, typically in exchange for a reward or
fee.
"Qualification period." Except as provided under sections
2931-D(d), 2935-D(b) and 2937-D(c), as follows:
(1) With respect to the owner or operator of a computer
data center certified under this article, a period of time
beginning on the date of certification of the computer data
center and expiring at the end of the fifteenth full calendar
year following the calendar year in which the owner or
operator filed an application for certification.
(2) With respect to a qualified tenant of the owner or
operator of a computer data center certified under this
article, a period of time beginning on the date that the
qualified tenant enters into an agreement concerning the use
or occupancy of the computer data center and expiring at the
earlier of the expiration of the term of the agreement or the
end of the 10th full calendar year following the calendar
year in which the qualified tenant enters into the agreement.
"Qualified tenant." An entity that contracts with the owner
or operator of a computer data center that is certified pursuant
to this article to use or occupy part of the computer data
center for at least 100 kilowatts per month for two or more
years.
"Tax exemption." The tax exemption provided under Subarticle
C.
"Tax refund." The tax refund provided for under Subarticle
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B.
"Telecommunications provider." A provider of
telecommunications services as defined in 61 Pa. Code § 60.20
(relating to telecommunications service).
"Tenant." An entity that contracts with the owner or
operator of a computer data center to use or occupy part of the
computer data center.
SUBARTICLE B
SALES AND USE TAX REFUND PROGRAM
Section 2911-D. Sales and use tax refund.
(a) Application.--Beginning July 1, 2017, an owner or
operator or qualified tenant of a computer data center certified
under this article may apply for a tax refund of taxes paid
under Article II upon the sale at retail or use of computer data
center equipment for installation in a computer data center,
purchased by:
(1) An owner or operator of a computer data center
certified under this article.
(2) A qualified tenant certified under this article.
(b) Applicability.--Taxes paid under Article II during the
qualification period shall be eligible for a refund under this
article.
(c) Exclusions.--The following do not qualify for a tax
refund:
(1) Computer data center equipment used by the computer
data center to:
(i) generate electricity for resale purposes to a
power utility, except for sales incidental to the primary
sale to computer data centers and which qualify under
subparagraph (ii); or
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(ii) generate, provide or sell more than 5% of its
electricity outside of the computer data center.
(2) (Reserved).
Section 2912-D. Application for certification.
To be considered for a certification, an owner or operator of
a computer data center shall submit to the department an
application on a form prescribed by the department that includes
the following:
(1) The owner's or operator's name, address and
telephone number.
(2) The address of the site where the facility is or
will be located, including, if applicable, information
sufficient to identify the specific portion or portions of
the facility comprising the computer data center.
(3) If the computer data center is to qualify under
section 2915-D(1), the following information:
(i) The anticipated investment associated with the
computer data center for which the certification is being
sought.
(ii) An affirmation, signed by an authorized
executive representing the owner or operator, that the
computer data center is expected to satisfy the
certification requirements prescribed in section 2915-
D(1).
(4) If the computer data center is to qualify under
section 2915-D(2), an affirmation, signed by an authorized
executive representing the owner or operator, that the
computer data center has satisfied, or will satisfy, the
certification requirements prescribed in section 2915-D(2).
(5) The department shall begin accepting applications no
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later than 90 days after the effective date of this section.
Section 2913-D. Review of application.
(a) General rule.--Within 60 days after receiving a complete
and correct application, the department shall review the
application and either issue a written certification that the
computer data center qualifies for the certification or provide
written reasons for its denial.
(b) Deemed approval.--Failure of the department to approve
or deny an application within 60 days after the date the owner
or operator of a computer data center submits the application to
the department constitutes certification of the computer data
center, and the department shall issue written certification to
the owner or operator within 14 days. The department may not
certify any computer data center after December 31, 2021.
Section 2914-D. Separation of facilities.
(a) Separate certification.--An owner or operator of a
computer data center may separate a facility into one or more
computer data centers, which may each receive a separate
certification, if each computer data center individually meets
the requirements prescribed in section 2915-D.
(b) Limitation.--A portion of a facility or an article of
computer data equipment shall not be deemed to be a part of more
than one computer data center.
(c) Aggregation.--An owner or operator may aggregate one or
more parcels, buildings or condominiums in a facility into a
single computer data center if, in the aggregate, the parcels,
buildings and condominiums meet the requirements of this
article.
Section 2915-D. Eligibility requirements.
A computer data center must meet one of the following
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requirements, after taking into account the combined investments
made and annual compensation paid by the owner or operator of
the computer data center or the qualified tenant:
(1) On or before the fourth anniversary of
certification, the computer data center creates a minimum
investment of:
(i) At least $25,000,000 of new investment if the
computer data center is located in a county with a
population of 250,000 or fewer individuals; or
(ii) At least $50,000,000 of new investment if the
computer data center is located in a county with a
population of more than 250,000 individuals.
(2) One or more taxpayers operating or occupying a
computer data center, in the aggregate, pay annual
compensation of at least $1,000,000 to employees at the
certified computer data center site for each year of the
certification after the fourth anniversary of certification.
Section 2916-D. Notification.
(a) Requirements satisfied.--On or before the fourth
anniversary of the certification of a computer data center, the
owner or operator of a computer data center shall notify the
department in writing whether the computer data center for which
the certification is requested has satisfied the requirements
prescribed in section 2915-D.
(b) Records.--Until a computer data center satisfies the
requirements prescribed in section 2915-D, the owner, operator
and qualified tenants shall maintain detailed records of all
investments created by the computer data center, including costs
of buildings and computer data center equipment, and all tax
refunds directly received by the owner, operator or qualified
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tenant.
Section 2917-D. Revocation of certification.
(a) Revocation.--If the department determines that the
requirements of section 2915-D have not been satisfied, the
department may revoke the certification of a computer data
center.
(b) Appeal.--The owner or operator of the computer data
center may appeal the revocation. Appeals filed under this
section shall be governed by Article II.
(c) Recapture.--If certification is revoked pursuant to this
section, the qualification period of any owner, operator or
qualified tenant of the computer data center expires, and the
department may recapture from the owner, operator or qualified
tenant all or part of the tax refund provided directly to the
owner or operator or qualified tenant. The department may give
special consideration or allow a temporary exemption from
recapture of the tax refund if there is extraordinary hardship
due to factors beyond the control of the owner or operator or
qualified tenant.
Section 2918-D. Guidelines.
The department shall publish guidelines and prescribe forms
and procedures as necessary for the purposes of this article.
Section 2919-D. Confidential information.
Proprietary business information contained in the application
form described in section 2912-D and the written notice
described in section 2916-D, as well as information concerning
the identity of a qualified tenant, are confidential and may not
be disclosed to the public. The department may disclose the name
of a computer data center that has been certified under this
article.
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Section 2920-D. List of tenants.
An owner or operator of a computer data center shall provide,
to the extent permissible under Federal law, the department with
a list of qualified tenants, including the commencement and
expiration dates of each qualified tenant's agreement to use or
occupy part of the computer data center. The list shall be
provided to the department annually, upon request by the
department.
Section 2921-D. Sale or transfer.
Except as provided in section 2917-D, a computer data center
retains its certification regardless of a transfer, sale or
other disposition, directly or indirectly, of the computer data
center.
Section 2922-D. Application.
(a) General rule.--An owner, operator or qualified tenant
may apply for a tax refund under this article on or before July
30, 2017, and each July 30 thereafter.
(b) Notification.--No later than September 30, 2017, and
each September 30 thereafter, the department shall notify each
applicant of the amount of tax refund approved by the
department.
Section 2923-D. Limitations.
(a) Total.--The total amount of State tax refunds approved
by the department under this article shall not exceed $7,000,000
in any fiscal year.
(b) Allocation.--If the total amount of tax refunds approved
for all applicants exceeds the limitation on the amount of tax
refunds in subsection (a) in a fiscal year, the tax refund to be
received by each applicant shall be determined as follows:
(1) Divide:
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(i) the tax refund approved for the applicant; by
(ii) the total of all tax refunds approved for all
applicants.
(2) Multiply:
(i) the amount under subsection (a); by
(ii) the quotient under paragraph (1).
(3) The algebraic form of the calculation under this
subsection is:
Taxpayer's tax refund = amount allocated for those
tax refunds X (tax refund approved for the
applicant/total of all tax refunds approved for all
applicants).
Section 2924-D. Applicability.
Notwithstanding any other provision of this article, the
department may not issue a tax refund under this subarticle for
the tax imposed upon the sale at retail or use of computer data
center equipment purchased after December 31, 2021.
SUBARTICLE C
SALES AND USE TAX EXEMPTION PROGRAM
Section 2931-D. Sales and use tax exemption.
(a) Sales and use tax.--Beginning January 1, 2022, the tax
imposed under Article II shall not be imposed upon the sale at
retail or use of computer data center equipment purchased for
installation in a certified computer data center, if purchased
by any of the following:
(1) An owner or operator of a computer data center
certified under this subarticle.
(2) A qualified tenant of a computer data center
certified under this subarticle.
(b) Applicability.--A tax exemption approved under this
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subarticle shall apply during the qualification period as
provided under section 2942-D.
(c) Exclusions.--The following shall not qualify for a tax
exemption:
(1) A telecommunications provider's computer data center
that does not have retail or wholesale customers being billed
or paying for services and does provide a majority of
services for internal use or use by the telecommunications
provider's subsidiaries.
(2) Computer data center equipment used by the certified
computer data center for any of the following purposes:
(i) Generating electricity for resale purposes to a
power utility.
(ii) Generating, providing or selling more than 5%
of its electricity outside of the certified computer data
center.
(iii) Proof of work crypto-asset mining.
(3) Laptop computers, handheld devices and motor
vehicles for use both inside and outside the computer data
center.
(d) Definition.--As used in this section, the term
"qualification period" shall mean the following:
(1) With respect to the owner or operator of a computer
data center certified under this article, a period of time
beginning on the date of certification of the computer data
center and expiring at the end of the 25th full calendar year
following the calendar year in which the owner or operator
filed an application for certification.
(2) With respect to a qualified tenant of the owner or
operator of a computer data center certified under this
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article, a period of time beginning on the date that the
qualified tenant enters into an agreement concerning the use
or occupancy of the computer data center and expiring at the
earlier of the expiration of the term of the agreement or the
end of the 10th full calendar year following the calendar
year in which the qualified tenant enters into the agreement.
Section 2932-D. Application for certification.
(a) Application.--To be considered for a certification, an
owner or operator of a computer data center shall submit to the
department an application on a form prescribed by the department
that includes all of the following:
(1) The owner's or operator's name, address and
telephone number.
(2) The address of the site where the computer data
center is or will be located, including, if applicable,
information sufficient to identify the specific portion of a
facility comprising the computer data center.
(3) An affirmation, signed by an authorized executive
representing the owner or operator, that the computer data
center is expected to satisfy the certification requirements
prescribed under section 2935-D.
(b) Acceptance.--The department shall begin accepting
applications no later than 60 days after the effective date of
this section.
(c) Compliance in reporting.--An owner or operator or
qualified tenant eligible for a certification shall comply with
all reporting, filing and compliance requirements under this
act.
(d) Compliance in tax laws.--No owner or operator or
qualified tenant may receive a certification under this
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subarticle unless that owner or operator or qualified tenant is
in full compliance with all State tax laws.
Section 2933-D. Review of application.
(a) General rule.--Within 60 days after receiving a complete
and correct application, the department shall review the
application and either issue a written certification that the
computer data center qualifies for the certification or provide
written reasons for its denial.
(b) Deemed approval.--Failure of the department to approve
or deny an application that has been acknowledged as received by
the department within 60 days after the date the owner or
operator of a computer data center submits the application to
the department shall constitute certification of the computer
data center, and the department shall issue written
certification to the owner or operator within 14 days.
Section 2934-D. Separation of facilities.
(a) Separate certification.--An owner or operator of a
computer data center may separate a facility into one or more
computer data centers, which may each receive a separate
certification, if each computer data center individually meets
the requirements prescribed in section 2935-D.
(b) Limitation.--A portion of a facility or an article of
computer data equipment shall not be deemed to be a part of more
than one computer data center for certification under this
subarticle.
(c) Aggregation.--An owner or operator may aggregate one or
more parcels, buildings or condominiums in a facility into a
single computer data center for certification under this
subarticle if, in the aggregate, the parcels, buildings and
condominiums meet the requirements prescribed in section 2935-D.
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Section 2935-D. Eligibility requirements.
(a) General rule.--In order to be certified under this
subarticle, an owner or operator of a computer data center must
meet all of the following requirements:
(1) On or before the fourth anniversary of
certification, the combined investment, in the aggregate, of
the owner or operator or qualified tenant of the computer
data center must total a minimum of any of the following:
(i) At least $75,000,000 of new investment if the
computer data center is located in a county with a
population of 250,000 or fewer individuals and creates 25
new jobs.
(ii) At least $100,000,000 of new investment if the
computer data center is located in a county with a
population of more than 250,000 individuals and creates
45 new jobs.
(2) On or before the fourth anniversary of
certification, the owner or operator or qualified tenant of a
computer data center, in the aggregate, must pay annual
compensation of at least $1,000,000 to employees at the
certified computer data center site for each year of the
certification after the fourth anniversary of certification.
(b) Prior applications.--A computer data center that has met
the eligibility requirements as prescribed under section 2915-D
and has, prior to July 1, 2021, been certified under section
2913-D shall be deemed to meet the certification requirements of
this section. The certification shall not be revoked, except as
provided under section 2917-D, and shall remain in effect for
the remainder of the qualification period, as defined in section
2931-D(d).
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(c) Limitation.--The department may not certify any computer
data center under this subarticle after December 31, 2032.
(d) Definition.--As used in this section, the term "new
investment" means construction, expansion or build out of data
center space at either a new or an existing computer data center
on or after January 1, 2022, and the purchase and installation
of computer data center equipment, except for items described
under paragraph (4) of the definition of "computer data center
equipment" in section 2901-D.
Section 2936-D. Notification and records.
(a) Requirements satisfied.--On or before the fourth
anniversary of the certification of a computer data center, the
owner or operator of the computer data center shall notify the
department in writing whether the computer data center for which
the certification is requested has satisfied the requirements
prescribed under section 2935-D.
(b) Records.--The owner or operator or qualified tenant
shall:
(1) Maintain detailed records of all investments created
by the computer data center, including costs of buildings and
computer data center equipment and all tax exemptions
received by the owner or operator or qualified tenant.
(2) Maintain purchase journals for examination by the
department.
Section 2937-D. Revocation of certification.
(a) Revocation.--If the department determines that the
requirements of section 2935-D have not been satisfied, the
department may revoke the certification of a computer data
center.
(b) Appeal.--The owner or operator of the computer data
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center may appeal the revocation. Appeals filed under this
section shall be governed by Article II.
(c) Recapture.--If certification is revoked under this
section, the qualification period, as defined in section 2931-
D(d), of any owner or operator or qualified tenant of the
computer data center shall expire and the department may
recapture from the owner or operator or qualified tenant all or
part of the tax exemption received by the owner or operator or
qualified tenant under section 2942-D. The department may give
special consideration or allow a temporary exemption from
recapture of the tax exemption if there is extraordinary
hardship due to factors beyond the control of the owner or
operator or qualified tenant. The department may require the
owner or operator or qualified tenant to file appropriate
amended tax returns in order to reflect any recapture of the tax
exemption.
(d) Limitation on assessment.--Notwithstanding the
limitation on assessment and collection in section 258, the
department shall assess any tax determined not to be properly
exempted under this subarticle within five years from the date
an owner or operator or qualified tenant of a computer data
center purchases property exempt from a tax. A taxpayer may
consent to an extension of the period as set forth in section
261.
Section 2938-D. Guidelines.
The department shall publish guidelines and prescribe forms
and procedures as necessary for the purposes of this article.
Section 2939-D. Confidential information.
Proprietary business information contained in the application
form described under section 2932-D and the written notice
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described under section 2936-D, as well as information
concerning the identity of a qualified tenant, shall be
confidential and may not be disclosed to the public. The
department may disclose the name of a computer data center that
has been certified under this subarticle.
Section 2940-D. List of tenants.
An owner or operator of a certified computer data center
shall provide, to the extent permissible under Federal law, the
department with a list of qualified tenants, including the
commencement and expiration dates of each qualified tenant's
agreement to use or occupy part of the certified computer data
center. The list shall be provided to the department annually,
upon request by the department.
Section 2941-D. Sale or transfer.
Except as provided under section 2937-D, a computer data
center retains its certification regardless of a transfer, sale
or other disposition, directly or indirectly, of the computer
data center.
Section 2942-D. Certificate of exemption.
(a) General rule.--A qualified owner or operator or
qualified tenant of a computer data center certified under this
subarticle may submit for a sales and use tax certificate of
exemption in a manner prescribed by the department on or before
October 1, 2021, and renew each October 1 thereafter. The
following shall apply:
(1) The owner or operator or qualified tenant of a
certified computer data center eligible for a sales and use
tax certificate of exemption shall comply with all reporting,
filing and compliance requirements under this act.
(2) No owner or operator or qualified tenant may receive
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a sales and use tax certificate of exemption under this
subarticle unless that owner or operator or qualified tenant
is in full compliance with all State tax laws.
(b) Notification.--No later than 60 days after the
submission under subsection (a) for a sales and use tax
certificate of exemption, the department shall issue a sales and
use tax certificate of exemption to each applicant approved by
the department.
(c) Exempt purchases.--The owner or operator or qualified
tenant of a certified computer data center shall prepare and
deliver a properly executed sales and use tax certificate of
exemption to a vendor from which the owner or operator or
qualified tenant purchases exempt computer data center
equipment.]
Section 2. The act is amended by adding a section to read:
Section 3003.26. Transfer of Tax From Certain Sale of
Computer Data Equipment.--(a) A restricted account is
established within the Motor License Fund which shall be
administered as provided in this section.
(b) No later than September 30, 2027, and each September 30
thereafter, the Secretary of Revenue shall:
(1) Provide the Office of the Budget, the State Treasurer
and the General Assembly the total amount of tax collected,
during the prior fiscal year, under Article II on a sale at
retail or use of computer data center equipment for installation
in a computer data center, purchased by an owner or operator of
a computer data center or a tenant of a computer data center.
(2) Using the amount reported under paragraph (1), calculate
a corresponding reduction in the tax rate for the next fiscal
year of the oil company franchise tax for highway maintenance
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and construction tax imposed by 75 Pa.C.S. Ch. 90 (relating to
liquid fuels and fuels tax).
(3) Report the calculation under paragraph (2) to the
General Assembly.
(c) No later than ninety days after receipt of the amount
provided by the Department of Revenue under subsection (b)(1),
the State Treasurer shall transfer the amount from the General
Fund to the restricted account established in subsection (a).
The money in the restricted account may not be expended unless
notice is published as provided in subsection (d).
(d) The Secretary of the Commonwealth shall prepare a notice
of enactment of an act that reduces the tax rate of the oil
company franchise tax for highway maintenance and construction
tax by at least the reduction reported under subsection (b)(2)
and shall transmit the notice to the Legislative Reference
Bureau for publication in the next available issue of the
Pennsylvania Bulletin. The Secretary of the Commonwealth shall
transmit the notice no later than ten days after enactment of
the act.
(e) As used in this section, the following words and phrases
shall have the meanings given to them in this subsection unless
the context clearly indicates otherwise:
"Computer data center." All or part of a facility that may
be composed of one or more businesses, owners or tenants, that
is or will be predominantly used to house working servers or
similar data storage systems and that may have uninterruptible
energy supply or generator backup power, or both, cooling
systems, towers and other temperature control infrastructure.
"Computer data center equipment." Equipment that is used to
outfit, operate or benefit a computer data center and component
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parts, installations, refreshments, replacements and upgrades to
the equipment, whether any of the equipment is affixed to or
incorporated into real property, including:
(1) All equipment necessary for the transformation,
generation, distribution or management of electricity that is
required to operate computer servers or similar data storage
equipment, including generators, uninterruptible energy
supplies, conduit, gaseous fuel piping, cabling, duct banks,
switches, switchboards, batteries and testing equipment.
(2) All equipment necessary to cool and maintain a
controlled environment for the operation of the computer servers
or data storage systems and other components of the computer
data center, including mechanical equipment, refrigerant piping,
gaseous fuel piping, adiabatic and free cooling systems, cooling
towers, water softeners, air handling units, indoor direct
exchange units, fans, ducting and filters.
(3) All water conservation systems, including facilities or
mechanisms that are designed to collect, conserve and reuse
water.
(4) All software, including, but not limited to, enabling
software and licensing agreements, computer servers or similar
data storage equipment, chassis, networking equipment, switches,
racks, cabling, trays and conduits.
(5) All monitoring equipment and security systems.
(6) Modular data centers and preassembled components of any
item described in this definition, including components used in
the manufacturing of modular data centers.
(7) Other tangible personal property that is essential to
the operations of a computer data center.
Section 3. This act shall take effect in 60 days.
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