AN ACT relating to data centers.
SB 319 creates a new Kentucky statutory section governing large data centers, defined as facilities primarily used for electronic information services with an electrical load exceeding 50 megawatts. The new requirements apply only to data centers built on land that had been taxed as agricultural land within the prior 10 years, signaling a focus on conversion of farmland to industrial-scale technology use.
The bill requires owners of covered data centers to submit a decommissioning plan before operations begin. That plan must address removal of facilities and foundations, restoration of the land to a condition substantially similar to its preconstruction state, and financial assurance through a bond or similar security. The bond amount must be set by an independent licensed engineer and approved by the cabinet, with notice and cure procedures if the security lapses or the facility stops operating.
SB 319 also amends Kentucky’s data center incentive framework in KRS 154.20-229. It expands and clarifies the contents of memoranda of agreement for qualified data center projects, including capital investment disclosures, documentation requirements, deadlines for meeting minimum investment thresholds, tax exemption administration, transfer and assignment rules, recordkeeping, and information-sharing between the authority and the department. It also sets different agreement terms depending on project size, including a longer term for projects with at least $450 million in capital investment.
For agreements executed after the bill’s effective date, the measure adds expectations that companies engage with local officials on energy efficiency and water conservation practices. These include upgrading HVAC and airflow systems, using reclaimed or recycled water where possible, harvesting rainwater, and supporting watershed restoration. Overall, the bill would increase regulatory oversight and environmental planning requirements for large data centers while preserving and structuring tax incentive eligibility.
The general sentiment reflected by the bill text is supportive of data center development but with stronger safeguards for land restoration, local oversight, and resource conservation. No committee testimony or votes are available, so there is no recorded public debate in the provided materials. The main point of potential contention is the added compliance burden on developers, especially owners converting former agricultural land and those subject to decommissioning bonds, water-use expectations, and tighter incentive enforcement. Another likely issue is the balance between attracting large technology investments and protecting farmland, water resources, and state tax revenue.
The bill would create a new regulatory section for certain large data centers located on former agricultural land and would amend KRS 154.20-229 to impose additional terms on memoranda of agreement for qualified data center projects. It would affect data center owners, eligible companies seeking state incentives, the Kentucky Cabinet, the Kentucky Economic Development Finance Authority or similar authority, and the Department of Revenue through new decommissioning, bonding, reporting, and enforcement requirements. It also would shape the administration of sales and use tax exemptions tied to qualified data center projects and add environmental and local-government engagement conditions to future agreements.
Based on the bill text alone, the measure appears generally favorable toward data center investment and incentive use, but with a clear emphasis on accountability and environmental stewardship. Because no committee transcripts or votes are provided, there is no recorded floor or committee sentiment to assess. The structure of the bill suggests a policy compromise: encourage large-scale technology development while requiring restoration planning, financial security, and conservation practices.
The most likely areas of contention are the bill’s added obligations on developers and the scope of state oversight. Data center operators may object to the decommissioning bond, land-restoration requirements, and the requirement to engage with local officials on energy and water practices, especially for projects on former farmland. Supporters are likely to favor these provisions as necessary protections for agricultural land, water resources, and public accountability. Another possible point of debate is the incentive structure itself, including the length of tax agreement terms and the conditions under which sales and use tax exemptions can be retained, transferred, or revoked.