SALEM, Ohio — Ohio and Pennsylvania lawmakers are scrambling to get ahead of a data center boom, driven by the rapid development of artificial intelligence, before it’s too late to control them.
While both states are home to traditional data centers already, hyperscale data centers — which support artificial intelligence — are much larger and more resource-intensive, requiring more energy and millions of gallons of water to cool down data servers.
These increased demands have led to widespread concerns about higher electricity and water utility costs, farmland access and noise impacts on nearby residents and wildlife.
But how to go about regulating these data centers is widely debated. Ohio lawmakers, with support from the Ohio Farm Bureau, want to pump the brakes on data center development.
In Pennsylvania, some legislators are following the governor’s lead, who has been pushing for more data center and energy development in the state.
Ohio Data Center Study Commission
Ohio has the fifth-most data centers in the U.S., with well over 100, according to the Ohio Consumers’ Counsel, although some estimates put it closer to 200. This number is only going to increase; 77 more data centers are planned for the state by 2030.
That’s why the Ohio House passed a bill on March 18 to establish the Ohio Data Center Study Commission to examine how the rapid rise in data centers is impacting local communities.
House Bill 646, introduced by state Rep. Gary Click, R-Vickery, and Kellie Deeter, R-Norwalk, would create a data center study commission within the Ohio Department of Development, with members appointed by the governor, speaker of the house and president of the senate.
The commission will submit a report of its findings and legislative recommendations to the governor and Ohio General Assembly six months after the bill’s signed into law.
Click said he introduced the legislation after hearing the concerns from his constituents in Ohio’s 88th district, covering Sandusky and portions of Seneca counties.
“The entire Buckeye State is experiencing angst over unresolved questions surrounding the rapid rise of data centers, and they deserve to have their voices heard,” Click said in a statement.
The Ohio Farm Bureau testified in support of the bill, saying that while data centers may provide some benefits, without “robust regulatory framework and long-term planning,” there could be repercussions.
The organization is particularly concerned about farmland preservation; the state has lost 1 million acres of farmland over the past 20 years.
“As a state and country, we must recognize that farmland is a strategic resource and a vital part of our nation’s security. And once farmland is lost, it is likely gone forever as a productive agricultural resource,” said Evan Callicoat, director of state policy at the Ohio Farm Bureau, at a hearing for the bill.
House Bill 646 advanced to the Ohio Senate for consideration. Meanwhile, lawmakers are currently working on modifying another law that has led to the high prevalence of data centers in the state.
Tax incentives
Ohio is appealing to data center developers due to its plentiful access to water sources, electric grid and flat, expansive acreage.
Developers are also drawn in by sales and use tax incentives created over a decade ago to attract new businesses to the state. But this tax exemption, which applies to the purchase of computer data center equipment, is costing the state millions of dollars in revenue.
In 2018, the state lost out on $27.2 million due to this tax exemption, according to the State of Ohio Executive Budget Tax Expenditure Report. The most recent report estimates that $141.8 million in tax revenue will be lost.
Many Ohio lawmakers feel it is no longer necessary. The Ohio General Assembly tried to eliminate this tax exemption through House Bill 96 in June, but Ohio Gov. Mike DeWine vetoed this elimination in the state budget.
DeWine said that this tax structure will continue to be an asset in attracting new businesses.
“The state must stay at the forefront of prospering fields such as technology and artificial intelligence. The availability of this tax exemption is important as Ohio competes with other states for technology jobs and capital investment,” said DeWine, in the veto statement.
Ohio lawmakers have already discussed plans to override this veto. The Ohio Farm Bureau has also vocalized its support for eliminating this tax exclusion.
“This veto protects an uneven playing field that benefits data centers, not farmers and not rural communities,” said Adam Sharp, executive vice president of the Ohio Farm Bureau, in a statement.
“Overriding this veto would ensure that if these types of facilities continue to locate in Ohio, they will provide the maximum benefit to Ohio taxpayers.”
Pennsylvania data center efforts
Pennsylvania lawmakers, on the other hand, are grappling with how to encourage economic development while balancing the needs of communities.
The state is already home to more than 50 of these facilities, with 56 more hyperscale data centers either proposed or under construction, according to Data Center Proposal Tracker.
Many Pennsylvania lawmakers, including Democratic Gov. Josh Shapiro, have expressed support for these facilities but emphasized the need for strict regulations. That’s why, in his 2026-2027 budget address, Shapiro announced the Governor’s Responsible Infrastructure Development standards, or GRID.
This regulatory framework would require developers to bring their own power generation or pay for the full cost of energy they need from the grid, commit to strict water use and electricity reporting standards, engage with the public, hire and train local workers and practice water conservation.
Some of these standards are outlined in the House Bill 2150, introduced by Rep. Kyle Mullins, D-Lackawanna County.
The bill directs the Pennsylvania Department of Environmental Protection to publish an annual report on energy and water consumption of data centers, as well as identify environmental impacts from these facilities and recommend how they should be addressed.
Data centers that fail to report this information to the state regulatory agency would be fined $10,000 a day. House Bill 2150 was passed out of the House Energy Committee on March 2 in a 14-to-12 vote and is now in the full House for deliberation.
Meanwhile, the Pennsylvania House is considering two other bills that would change local governments’ role in data center projects.
Other proposed bills’
State leaders are working to pass legislation that would create a model zoning ordinance for local governments in House Bill 2151.
The bill directs the Governor’s Center for Local Government Services, part of the Pennsylvania Department of Community and Economic Development, to develop and publish a model zoning ordinance that includes zoning, dimensional standards, landscape buffers and various water use and electricity requirements.
“House Bill 2151 gives municipalities an optional tool they can use to ensure data centers are responsibly sited and operated while protecting residents’ quality of life,” said state Rep. Kyle Donahue, D-Lackawanna County, who sponsored the bill.
Another bill, House Bill 502, introduced by Rep. Mandy Steele, D-Allegheny County, would fast-track energy projects in the state that would power data centers by creating RESET, the Reliable Energy Siting and Electric Transition Board.
The seven-member board, supported by Shapiro, would be made up of secretaries of three state agencies (Pennsylvania Department of Environmental Protection, Pennsylvania Department of Community and Economic Development and the Pennsylvania Department of Labor and Indusry); the chairperson of the Pennsylvania Public Utilities Commission; representatives of business and building trades and the chair of the state’s environmental justice advisory board.
The bill allows projects denied by a local government to apply to the RESET board for approval. If the board approves the project, local governments cannot impede or prevent the project from happening via local ordinance or regulations.
According to state Sen. John Kane, D-Delaware and Chester counties, who co-sponsored the bill, applying to the RESET board for expediting permitting is optional, and energy projects could continue applying through local governments.
The Pennsylvania Chamber of Business and Industry, which will be represented on the board, says the bill would lead to fewer delays in energy projects and encourage more economic development.
But environmental groups say RESET would take away local governments and residents’ say in what goes on in their community.
“We know our communities like nobody else does, and to take that voice away, to strip municipalities of their authority is criminal, in my view,” said Karen Feridun, co-founder of the Better Path Coalition, a statewide grassroots environmental group.
She adds that, unlike local elected officials, RESET board members would have no incentive to listen to community concerns. House Bill 502 is currently being evaluated by the House Energy Committee.
(Liz Partsch can be reached at epartsch@farmanddairy.com or 330-337-3419.)
