Written by Alma McCarty & KGW:

SALEM, Oregon — In the final week of Oregon’s legislative short session, lawmakers in Salem discussed regulating data centers — specifically, placing a one-year moratorium on certain tax breaks.

Governor Tina Kotek has been looking to expand the state’s enterprise zone program, which is intended to grow Oregon companies and attract new ones. Businesses that locate or expand within designated zones can qualify for property tax exemptions on new investments if they meet eligibility requirements.

However, some advocates argue that extending incentives to data centers may not be sustainable long term.

“Data centers have been around for a while,” said Kelly Campbell, policy director for Columbia Riverkeeper. “Data centers are getting bigger and bigger. Some of these new AI hyperscale data centers are exponentially bigger than those tiny ones. They’re really just using a lot of energy, a lot of water.”

However, some advocates argue that extending incentives to data centers may not be sustainable long term.

“Data centers have been around for a while,” said Kelly Campbell, policy director for Columbia Riverkeeper. “Data centers are getting bigger and bigger. Some of these new AI hyperscale data centers are exponentially bigger than those tiny ones. They’re really just using a lot of energy, a lot of water.”

Last week, Columbia Riverkeeper released a report examining data centers operating or planned along the Columbia River in Oregon and Washington.

“I think the question becomes, do we want to stick to our climate goals of getting to 100% renewable? Or do we want to have these big, mega data centers owned by big tech companies — some of the wealthiest corporations in the world — getting to use whatever energy they want? We would say, no, that’s not OK,” Campbell said.

On Monday, lawmakers amended an economic incentives bill to block new data centers from qualifying for certain tax breaks for one year.

“I think this moratorium is a pretty short pause to give the advisory council time and space to do their work,” said Rep. Nancy Nathanson, D-Eugene, during a subcommittee meeting Monday morning.

The Data Center Advisory Committee, convened by Kotek, held its first meeting Friday. The group’s goal is to develop policy recommendations addressing the rapid growth of data centers.

“There are some businesses that will need them, but freestanding data centers, the way we’ve been growing in the state, is not sustainable,” the Governor told reporters during a press conference last week. 

On Monday, her office sent KGW a statement regarding the moratorium:

“The moratorium will address immediate concerns and also allow for the Governor’s Data Center Advisory Committee to develop recommendations to strategically pursue economic development opportunities while ensuring utility costs, infrastructure investments, and environmental impacts remain sustainable and equitable for all residents.”

Supporters of data center growth, particularly in rural communities, also spoke during work sessions.

“This moratorium will have a disparate impact on communities east of the Cascades — communities like Prineville, Hermiston and Redmond that have leveraged enterprise zones and data centers to bring hundreds of living-wage jobs to their communities,” said Alexandra Ring, a lobbyist for the League of Oregon Cities.

“While data centers may be seen as a nuisance or inconvenient in Washington County, they are not in Crook County. They are not in Morrow County, in Umatilla County,” said Sen. Mark McLane, who represents several Eastern Oregon counties, including Baker, Crook, Grant and Harney.

Even if the House and Senate ultimately approve the moratorium, it would apply only to new data centers — not those that already receive tax breaks or projects currently underway.