Kentucky Data Center Development: A Policy Guide

Nate Simon, founder of Simon Law, PLLC, and a construction lawyer, has published an op-ed offering a "plain-English guide" to data centers for Kentucky residents and policymakers. Simon advocates for the construction of data centers in Kentucky but emphasizes the need for a robust statewide framework to protect Kentuckians and ensure fair terms, drawing parallels to past infrastructure developments like railroads and interstates.

The article addresses common concerns, stating that while data centers can increase electric bills, utility companies LG&E and KU have proposed a tariff requiring 15-year contracts and payments for at least 80 percent of projected usage. Simon also clarifies that new builds use less water than often claimed, primarily employing closed-loop cooling systems. He notes that data centers create fewer permanent jobs than traditional factories but offer significant property tax revenue for local schools.

Simon criticizes the lack of transparency in some local negotiations, citing reports from Wisconsin and Michigan where officials signed non-disclosure agreements. He praises Microsoft for dropping NDAs with local governments and urges Kentucky to adopt a rule requiring public disclosure of company, load, cooling design, and incentive requests before any vote. He proposes that Kentucky treat data center development as an infrastructure decision, suggesting a state framework with PSC-approved contracts ensuring developers pay for associated infrastructure, banning NDAs for public officials, requiring decommissioning bonds, and mandating written community benefit commitments.

Simon warns against a statewide moratorium like the one enacted in New York, arguing that it would deter investment without solving underlying issues. He concludes that Kentucky communities will benefit most by setting clear conditions for data center development in writing, rather than outright rejection or uncritical approval.