Ohio Senate advances data center regulation bill
Ohio lawmakers are advancing a heavily amended bill (House Bill 646) in the state Senate to regulate the data center industry. The bill aims to reduce sales tax exemptions, require large data centers to generate their own electricity, and mandate water use reporting and conservation practices. While an informal passage has occurred, the bill still awaits future consideration and has faced criticism from advocacy groups like Policy Matters Ohio for not going far enough.
The Ohio Senate is advancing a significantly amended version of House Bill 646, a piece of legislation aimed at regulating the state's data center industry. Originally a slim bill to create a study commission, the Senate's nearly 50-page revision addresses tax exemptions, water and energy usage, and the authority of local governments and state agencies.
The bill proposes to reduce the sales tax exemption for data centers from 100% to 50% and cap other property tax breaks. It also requires large data centers, those drawing over 250 megawatts, to generate or procure their own electricity, insulating other ratepayers from associated utility costs. Additionally, data center owners would be required to annually measure and report consumptive water use, implement conservation practices, and install wastewater quality monitoring systems, granting new rulemaking authority to the Ohio Department of Natural Resources and the Ohio EPA.
Washington County Commissioner Charlie Schilling testified, advocating for greater local government control over data center developments, and expressed satisfaction that lawmakers considered local input regarding tax exemptions. However, Policy Matters Ohio, a think tank that provided testimony, criticized the bill for not providing a comprehensive regulatory framework, noting it allows large tax loopholes to persist for some data centers, particularly those on brownfields or with existing exemptions (like Amazon, Google, and Meta). The group also raised concerns that incentivizing onsite power generation, often natural gas, could worsen air quality and that the water provisions fall short of a comprehensive framework, especially regarding wastewater treatment and PFAS chemicals.