What’s the State of Data Center Legislation in Ohio?
Ohio's General Assembly is considering several pieces of legislation, primarily House Bill 646, to regulate data centers in the state. Key provisions include requirements for large data centers to offset electricity consumption, mandate water usage reporting, and limit property and sales tax breaks. The legislation is currently in recess and awaits further consideration in November.
The Ohio General Assembly is actively considering House Bill 646 (H.B. 646) as the primary legislative vehicle to impose new regulations on data centers within the state. The current version of H.B. 646, introduced by Representatives Click and Deeter, focuses on several key areas including electricity use, water consumption, nondisclosure agreements, and tax incentives.
Regarding electricity, the bill requires data centers with a monthly maximum demand of 250 megawatts or greater to supply their own electricity to offset grid consumption. It also mandates that data center operators cover all direct costs for retail electric services and establishes a separate electric rate class for these facilities. On water usage, H.B. 646 would require owners or utilities serving data centers to measure and report consumptive water use, implement best practices for conservation, and submit annual and quarterly reports to the Ohio Department of Natural Resources (ODNR) and Ohio Environmental Protection Agency (OEPA), respectively. Both agencies would then report annually to the legislature.
The legislation also addresses transparency and financial incentives. H.B. 646 would make nondisclosure agreements involving data centers subject to public records requests, allowing greater citizen access. Furthermore, it seeks to limit property tax exemptions by requiring local governments to obtain security from developers and excludes data centers from megaproject tax incentives. Notably, it proposes reducing the statewide 100% sales tax break for data centers, which Governor DeWine paused in May, to 50%. This proposed reduction has reportedly caused a delay in the bill's passage, which remains in the Senate Energy Committee until lawmakers reconvene in November.
Several other bills related to data centers are also being tracked. House Bill 695 would prohibit local elected officials from entering into nondisclosure agreements related to their official duties. House Bill 706 aims to prevent infrastructure and grid upgrade costs from being shifted to existing Ohio ratepayers by requiring long-term service agreements with utilities and financial assurance. House Bill 784 proposes monthly and annual water consumption reports for data centers, mirroring some aspects of H.B. 646. Senate Bill 381 would require interconnection approval from the Public Utilities Commission of Ohio for data centers exceeding 25,000 kilowatt-hours in monthly demand.