Ohio lawmakers fail to reach agreement on data center regulations
Ohio lawmakers failed to reach an agreement on new data center regulations, including sales tax breaks and environmental requirements, before their summer recess. House Bill 646, which aimed to reduce tax exemptions and mandate water conservation practices, did not pass due to insufficient votes. Debates continue on the state's approach to data center tax policy and their environmental impacts.
Ohio lawmakers adjourned for their summer recess without reaching a compromise on new regulations for data centers, particularly regarding sales tax exemptions and environmental standards. Substitute House Bill 646, which sought to establish new rules for tech hubs, failed to secure enough votes in both the House and the Senate.
A key point of contention was a provision to reduce sales tax breaks for new data center projects from 100% to 50%. House Speaker Matt Huffman (R-Lima) noted a popular sentiment that such exemptions should not be granted to multi-billion dollar corporations, especially since many are already establishing a presence in Ohio. However, State Sen. Kent Smith (D-Euclid) highlighted that a significant portion of the market, including existing contracts with companies like Meta, Google, and Amazon from the Kasich administration, would not be affected by this change. The state provided almost $1.57 billion in sales-tax exemptions last year, far exceeding initial estimates.
Environmental concerns also featured prominently in the proposed legislation. The bill included requirements for data centers to use closed-loop water systems or adopt “best practices for water conservation and efficiency,” and to report any anomalies in their water quality monitoring. Another provision, supported by both sides, aimed to create a specific electric rate class for data centers to ensure they cover the full cost of generation, transmission, and distribution. Despite the recess, Speaker Huffman indicated that the House plans to return on June 24 to continue efforts towards a compromise.