Freshly drafted regulations of the data center industry have been introduced, and within 48 hours, they might clear the Ohio General Assembly.
, which establishes a Data Center Study Commission, got a makeover in the Senate Energy Committee on Tuesday morning.
Under the new substitute bill, the existing 100% sales tax break for data centers would decrease to between 50% and 75%. Facilities could secure the higher rate by locating projects on brownfields or generating electricity from outside sources.
鈥淲e鈥檙e trying to balance the need for incentivizing data centers to be here in Ohio, to continue to invest in Ohio,鈥� Sen. Brian Chavez (R-Marietta) told reporters Tuesday.
But the new rate would only affect future projects. Most existing contracts between the state and these data centers stretch years, and sometimes decades, into the future.
Amazon, Meta and Google are benefitting for any facility they build statewide through at least 2055, 2056 and 2058, according to contract documents obtained by the Statehouse News Bureau. Those agreements were reached in the mid-2010s, under former Gov. John Kasich鈥檚 administration, said Sen. Kent Smith (D-Euclid).
鈥�76% of the market is not affected, because of these deals those three signed in the Kasich administration,鈥� Smith told reporters Tuesday.
House Speaker Matt Huffman (R-Lima) took issue with the length of those multi-decade contracts Tuesday, but said future legislatures will likely need to address them.
鈥淲hen you lower and eliminate taxes, you get more activity, and that's clearly true in this case,鈥� Huffman told reporters. 鈥淭he question is: Was all of that appropriate for these particular taxpayers?鈥�
Tax abatements, locally, are limited to 50% under HB 646.
The Public Utilities Commission (PUCO) of Ohio would have to establish a data center rate class, something PJM is encouraging states to do. And the new substitute bill mentions non-disclosure agreements, but does not further regulate them, among other measures.
鈥淲e鈥檙e making crystal clear that NDAs are subject to the current law,鈥� Chavez said.
HB 646 will hear some testimony before it gets a vote. Hearings are scheduled for Tuesday at 6 p.m. and Wednesday at 9 a.m.