Ohio General Assembly members propose sweeping bill to regulate data center development • Ohio Capital Journal

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Commentary

Last week, a group of legislators in the Ohio House of Representatives introduced a far-reaching bill to regulate data center development across the state of Ohio.

In the face of concerns about the environmental, aesthetic, and public finance ramifications of Ohio’s rapid growth in data center development, Ohio House Bill 983 introduces a range of interventions designed to insert the public into data center development decisions.

The bill will require voter approval for every new construction or expansion of a data center with peak electric load over one megawatt for every municipality and township within five miles of the project.

Permits issued without voter approval would be considered void.

It would also impose new air emission and water discharge standards on a range of substances including PFAS, glycols, metals, and other organic compounds. These standards would apply to existing data centers after eighteen months.

Owners of data centers would also be held financially responsible for water supply and water pressure impacts associated with their centers.

On the fiscal side, the legislation would ban local governments from offering property tax incentives for data centers and power plants associated with them. It would also require public disclosure of all data center agreements associated with development and supply.

This legislation would significantly slow down the development of data centers in Ohio, if not stop it altogether.

The voter approval requirement in particular could lead to dozens of required communitywide votes across the country to authorize data center developments.

This would have a substantial impact on Ohio’s economy.

Developers are set to invest $40 billion in data centers across the state of Ohio over the next four years. While this legislation would prevent some wasteful incentive spending, it would also likely cost the state economy tens of billions of dollars in investment.

One of the major concerns people have with data center development in Ohio is strain on public utilities, particularly electricity and water.

If data center development drives up demand for each of these, it could drive prices for electricity and water up for local residents.

This could fall more heavily on low-income residents because they spend more of their income on utilities than high-income residents. This bill’s proposed interventions could mitigate some of these cost concerns.

There are other spillover effects people worry about with data center developments.

Will incentives leave less money available for schools? Will data centers lead to wastewater, air emissions, and noise pollution?

These are concerns that could be bluntly dealt with through bans on incentives and community votes, which are likely to torpedo most projects.

Overall, though, it seems like this bill is a hammer for an issue that likely needs a scalpel.

Communitywide votes to authorize new developments would likely be tantamount to a total ban of data center development across the state. This could slow Ohio’s economy to the tune of tens of billions of dollars over the next few years.

Making sure that Ohio’s electricity and water systems keep up with new development could probably be achieved with less economic pain than a de facto permanent ban on development would create.

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Author Info

Rob Moore

Rob Moore is the principal for Scioto Analysis, a public policy analysis firm based in Columbus. Moore has worked as an analyst in the public and nonprofit sectors and has analyzed diverse issue areas such as economic development, environment, education, and public health. He holds a Master of Public Policy from the University of California Berkeley’s Goldman School of Public Policy and a Bachelor of Arts in Philosophy from Denison University.

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