Ohio's General Assembly Punts on Data Centers For Now

Vol. IV. No. 21 - Ohio's Lawmakers Leave Columbus on a Summer Break with No Action on Data Centers

Photo by İsmail Enes Ayhan on Unsplash

It’s not a matter of if, but when the Ohio General Assembly will finally put guardrails around the explosion of data centers across the state. Many were hoping this week could be that week, but those hopes will have to live for later this summer.

Over the past few weeks, a special joint Select Committee on Data Centers — three State Senators and three State Representatives — has been taking testimony from residents, utilities, data‑center operators, state agencies, local officials and, yes, lobbyists, to sort out what regulations should apply to these projects.

House Bill 646 is the vehicle they’ve latched onto. It started as a fairly technical bill to establish a study group, but has now become the placeholder for the legislature’s first attempt at a statewide framework for data centers. The committee reported changes that would, among other things, require large new data centers (over 250 megawatts) to secure their own power supply or long‑term purchase power arrangements instead of leaning on regular ratepayers, and it would bar utilities from pushing those direct costs onto other customers. There are also provisions to cap how much sales tax and property tax can be exempted, require water‑use reporting, and clarify that non‑disclosure agreements cannot override Ohio’s public records law.

There was an expectation that something would pass before lawmakers left Columbus for a summer break, but HB 646 never made it to thebSenate floor. The holdup was not over water use or environmental standards; it was over money — specifically, how far the state should go in continuing sales and use tax exemptions for big operators such as Amazon and Meta. During the hearings, it came to light that the Kasich administration had already granted 40‑year sales and use tax exemptions to major data‑center projects, and those agreements are essentially locked in. That makes it harder for the current General Assembly to “fix” the past, even if it wants to.

So as lawmakers left town this week, they did so without acting on data centers at all. The Select Committee will keep meeting and studying the issue through the summer, but communities will see continued activity on the ground while Columbus continues to talk.

In some ways, it feels like the legislature is late to its own party. Data centers have been proposed or built in Ohio for at least the last five years, but the real boom has come in the last 12–18 months, often landing in rural or under‑resourced communities that have limited leverage and even less information when these projects first appear. This has energized some communities to either welcome data centers with open arms or enact moratoriums to keep them out, at least, temporarily. Residents themselves have organized efforts to put a Data Center referendum on the November 2026 ballot.

Even with the new amendments, HB 646 is a relatively modest bill. It would reduce the maximum sales‑tax exemption on qualifying data‑center equipment from 100 percent down to 50 percent for new agreements, limit local property‑tax exemptions for data centers to 50 percent of improved value, and exclude data centers from “megaproject” status, which means they could no longer access the most generous long‑term state tax credits. It adds some consumer protections by requiring that all direct electric‑service costs for data centers be paid by the operators themselves, not by other customers. It nods to environmental concerns by requiring measurement and reporting of consumptive water use, implementation of “best industry practices” for water conservation, and new wastewater monitoring and reporting, with the Ohio Department of Natural Resources and Ohio EPA given rule‑writing authority.

There are also transparency and accountability pieces that, frankly, should have been in law years ago. HB 646 would codify that non‑disclosure agreements cannot be used to swallow the Public Records Act, and it would require data center owners to submit regular reports on water use and wastewater quality, with ODNR and OEPA sending annual summaries to the legislature. Political subdivisions offering tax incentives would have to obtain security — such as a surety bond or cash — to back up the promises made by data‑center developers, and the Department of Development would be required to post guidance for local governments considering property‑tax incentives for these projects.

For residents who hoped the legislature might slam the brakes on data centers altogether, HB 646 is not that bill. For those who wanted a sweeping, one‑size‑fits‑all statewide regime that decides where data centers can and cannot go, it’s not that either. What HB 646 tells us instead is where the General Assembly’s priorities really lie. The most ambitious and detailed sections of the bill are about how much tax incentive is too much and how to keep other electric customers from subsidizing these projects.

The environmental issues — water, wastewater, and energy consumption — are addressed through reporting requirements and future rulemaking, not direct limits on siting or scale. That means many of the hard decisions about whether a particular data center makes sense will still be made at the city, village, and township level.

In other words: Columbus may eventually set some baseline rules, but the real fights will still happen in council chambers, township halls, and county commission meetings. Local officials will be under pressure to approve complex tax‑incentive packages under tight timelines, and residents will still feel behind the curve as these projects move from rumor to reality. If you care about how much water a facility uses, how it affects electric reliability, or whether the jobs match the incentives, you will not be able to outsource that concern to the Ohio General Assembly. You will have to watch — and engage — the decisions being made in your own backyard.

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