Some Kentucky counties and cities are hitting pause on data centers

This article was originally published by Kentucky Lantern.

Daviess County Judge-Executive Charlie Castlen said he hadn’t heard of the term “hyperscale” before. That is until news broke that an enormous, hyperscale data center was being planned at the site of an idled aluminum mill in Hancock County next door. 

“There’s much to learn,” Castlen told the Lantern in a recent phone interview. “People are very passionate about these, saying they don’t need to be in our community.” 

Residents’ passionate opposition to data centers in his county led the local government to enact in late May a moratorium preventing data center construction for the next 12 months. That opposition includes ongoing speculation by residents and a county commissioner over local land deals connected to a company that works on “energy and data center infrastructure” investments. 

Daviess County, home to more than 100,000 people and the Western Kentucky city of Owensboro, is one of a growing number of cities and counties across Kentucky considering such moratoriums – essentially a temporary ban – or implementing other zoning regulations on data center construction. Moratoriums have been criticized as anti-business by the data industry as technology companies pour billions of dollars into building the centers. 

Dan Diorio, a vice president of state policy for the industry group Data Center Coalition, in an emailed statement said local data center moratoriums “send a signal that the area is closed for business, both for data centers and for other significant economic development projects.” 

The local moratorium trend follows an outcry by Kentuckians in some communities where there’s speculation, or an active proposal, of a large data center moving into a community. These residents have strong concerns about hyperscale data centers and their potential noise pollution, significant water usage and huge amounts of electricity consumption. 

There are also transparency concerns. In Boyd County, locals packed a convention center to lambast local officials for signing non-disclosure agreements, or NDAs, with a data center developer that wants to build a massive operation in an industrial park. 

Owensboro resident Bryan Smeathers, 69, who attended the Daviess County meeting where the moratorium was adopted, opposes large data centers entirely. He argued a one-year moratorium wouldn’t be long enough to determine the health and environmental impacts of such operations. 

“There’s nothing positive for the community or the future, except the tax revenue from the property tax,” Smeathers said. 

Kentucky has had a number of smaller data centers that power various online services including digital cloud storage, but with the surge of artificial intelligence investment, enormous data centers termed as “hyperscale” that can consume the electricity equivalent of entire power plants have been proliferating across the country. Kentucky electric utilities have reported as many as 30 data centers are looking at locating in the state. 

Castlen told the Lantern the moratorium will allow time to research concerns residents have about the impacts of such operations, but he doesn’t believe the county can prevent data centers from moving in.

“I think we can set rules in place to protect our citizens and to protect our community, but I don’t think you can outright ban a business,” Castlen said. “Our charge is to do our homework.”

Local Governments Step In

The GOP-controlled Kentucky Legislature during this year’s session failed to pass any laws that regulate environmental or financial impacts of hyperscale data centers coming into the state. 

One Republican-sponsored bill that would have required utilities to ensure the costs of infrastructure to serve large data center customers aren’t borne by other ratepayers died on the final day of the session. Multiple utilities argue their own regulations and rates are already protective of electricity ratepayers.

Republican state senators last week said they would be researching what kinds of data center-specific regulations are needed. Lawmakers wouldn’t be able to pass a law until the legislature reconvenes for its regular session next year, unless Democratic Gov. Andy Beshear calls for a special session. 

In the meantime, local governments large and small have been trying to advance their own data center regulations and moratoriums after hearing constituent concerns. 

The city council in Cave City, Kentucky, a community of about 2,400 that’s located near Mammoth Cave National Park, passed a one-year moratorium last month after local leaders said they were approached by a data center developer. The West Kentucky city of Murray is advancing zoning regulations for data centers even though there have been no data center proposals there. 

Republican Allen County Judge-Executive Dennis Harper, who represents a community of about 21,000 along the Tennessee border, told the Lantern his government recently passed a 24-month moratorium on data center construction after seeing the “headaches” leaders in nearby Simpson County were having with a hyperscale data center proposal there. 

“We felt like this would hopefully protect us until we get everything in line to see where we want them, if one decides to locate here,” Harper said. “I would hate for something like that to locate next to me. It changes my lifestyle, a lot of noise pollution.” 

But in Kentucky’s largest city of Louisville, a planning and zoning committee on June 2 voted to table a six-month moratorium proposed by city council member Jenniffer Chappell, who said at the meeting she was “not willing to let Louisville be a guinea pig for these data centers.” 

Andrew Owen, the chair of that committee, said in that June meeting he viewed the moratorium as an “absolute last resort” and argued the committee could hold back the use of the moratorium until they needed it.

The Louisville Planning Commission in March approved a 1.6 million-square-foot data center in West Louisville despite local backlash. 

The Bowling Green city council also recently voted down a data center moratorium; the mayor argued the city shouldn’t close off potential economic opportunities. In Kentucky’s second-largest city of Lexington, the local government is considering a zoning ordinance to address data centers after a data center developer bought a $29 million site in the city. 

Playing Catch Up

Randy Strobo, a Louisville attorney whose focus is on environmental and energy issues, told the Lantern moratoriums buy local governments more time to “catch up” with a “huge, new intensive land use” that are hyperscale data centers. Strobo said data center developers don’t like such moratoriums because it puts projects on hold. 

He said both the state and local governments have “dropped the ball” by not being transparent with the public as they were learning more about these data center developments.

“That’s reflected in people panicking now in a way and demanding that their local governments take action now because we’re so far behind,” Strobo said. “We should have been talking about this a couple years ago and not only today.”

Chuck Charles, the mayor of the Boyd County city of Ashland, has seen the local pushback against a proposed hyperscale data center in the county and has tried to stay neutral on the topic. His city passed a six-month moratorium on data center applications earlier this year to study the issue more.

But he does wonder about what the data center influx could mean for his region, a place that saw industrial plants and jobs such as AK Steel eventually leave.

“It’s gone and left all the aftermath here for us to take care of,” Charles said. “Will it be the same thing with data centers? I don’t know.” 

Correction: This story previously misstated that Ashland was the Boyd County seat.