Ohio Senate advances legislation to regulate data centers, critics say bill doesn't go far enough
Ohio lawmakers are advancing Substitute House Bill 646, a comprehensive bill to regulate the state's growing data center industry, addressing tax cuts, electric rates, and water standards. Critics argue the legislation doesn't go far enough to curb tax breaks for major tech companies or to address local impacts, with residents advocating for a statewide moratorium.
The Ohio Senate is advancing Substitute House Bill 646, marking the state's first wide-ranging legislation to regulate the rapidly expanding data center industry. The bill, which passed the Senate Energy Committee and was informally moved by the full Senate, aims to address concerns regarding tax breaks, electric rates, and water usage.
Senator Brian Chavez (R-Marietta), chair of the Senate Energy Committee, acknowledged that this is an initial step and more legislation will follow. The proposal seeks to halve the state's 100% sales tax exemption and limit property tax breaks to 50% for new data center developments. However, Zach Schiller, research director for Policy Matters Ohio, criticizes the measure for not impacting existing tax breaks for major tech companies like Amazon, Meta, and Google, which he claims have received billions in exemptions. This follows Governor Mike DeWine's order in May to pause all new tax exemptions after state and local tax exemptions exceeded $2 billion last year.
The legislation also includes new rules designed to protect electric ratepayers by requiring utility companies to create a separate rate class and tariffs for data center customers, preventing infrastructure costs from being shifted to general consumers. Furthermore, it proposes statewide standards for data center water use, encompassing conservation, quality, and reporting. However, Molly Bryden, also with Policy Matters Ohio, notes the bill does not address impacts on local wastewater treatment, water utility rates, or indirect water use.
Opposition to the bill comes from various fronts. The Ohio Manufacturers Association opposes the industry-specific regulations, warning it sets a dangerous precedent. Residents in Adams County, including Nikki Gerber of Manchester, are actively seeking a statewide moratorium on new data center developments, particularly in unzoned rural areas, until more stringent regulations are established. Gerber is part of Conserve Ohio, a grassroots committee attempting to get a ballot amendment to ban large-scale data centers, though they remain significantly short of the required signatures.