LOUISVILLE, Ky. (WDRB) — Gov. Andy Beshear announced an executive order Thursday to restrict the impact of data centers on Kentucky communities.
The aim is to protect the environment and keep energy bills from skyrocketing. The order, Beshear said, will "establish a framework" to make sure companies looking to build in Kentucky are "investing responsibly, operating transparently and working in partnership with people and communities."
"They will be held to the same high standards we demand of any potential partner, and they must prove that their investment will deliver lasting benefits to Kentucky's working families," Beshear said. "To be clear, this order doesn't say 'yes' to any data center. That is up to the local community. But it does say 'no' to any center not meeting these requirements."
The order requires project developers to submit an energy plan to the state's Energy and Environment Cabinet that shows how the company won't raise electric bills by demonstrating how they can "meet its energy needs without imposing any additional costs."
Beshear is also ordering the Kentucky Public Service Commission to prevent utilities from increasing rates to recover costs caused by the development or operations of a data center, instructing them to "deny any application that would do so."Â
Additionally, the order would require the Energy and Environment Cabinet to deny a permit application where a data center would have a negative impact on air quality, water use, water quality, water supply, federal jurisdictional wetlands or natural resources. Developers would also be required to demonstrate that they are complying with environmental laws.
Energy and Environment Cabinet Secretary John Lyons said his office works with the Public Service Commission and has tools to evaluate infrastructure and electricity generation. That data is then used as the cabinet looks forward to making decisions about protecting ratepayers.
Lyons said data centers, like any other industrial site, have to meet air and water quality standards.
Under the order, data centers would also be required to pay their share of state, local and school taxes, but wouldn't change any laws currently on the books. Last year, the Kentucky General Assembly expanded a sales tax exemption for data centers, but the state hasn't awarded any of those exemptions yet.
The order also requires developers to engage, "with transparency," in public discussions with community leaders and residents.
"These discussions should focus on the proposed location, impact, job opportunities and more. And these leaders must be willing to talk through and answer all questions from the community with a level of transparency," Beshear said. "These are significant projects, families have a right to know who the developer is that's trying to join their community, what they'll contribute to the community and that they are willing to have a meaningful dialogue with those that ask questions."
The governor stressed that decisions about opening and operating data centers will be left up to local communities.Â
"Local leaders and residents know their communities best, I trust their judgement when it comes to significant projects like these," Beshear said. "With this order, they will start any discussion in a better place."
Lyons said more than 30 communities have already voted to stop or slow the construction of data centers through local ordinances and moratoriums.
"We read articles every day about data centers. About the concerns that everybody has, and as I go around the state speaking to different individuals, I hear their concerns as well," Lyons said Thursday. "We've even started tracking the local ordinances and moratoriums, now numbering over 30."
Beshear said he would be "actively monitoring any and all data center projects moving forward."
Angie Hatton, chair of the state's Public Service Commission, suggested Kentucky learn from other states as it looks toward increasing interest from data centers coming into the state.
'It's important that Kentucky learn lessons from other states that maybe have not implemented data centers in the most effective way, to protect ratepayers," Hatton said. "I'm grateful that we have guidance like this that will provide a framework that allows us, if we allow data centers to develop in our state, that they're done in a thoughtful and deliberate way and in a way that allows us to protect Kentucky families and ratepayers of every class across the state."
This story may be updated.
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