Kentucky Gov. Andy Beshear on Thursday signed an executive order directing state regulators to ensure data centers seeking to operate in the state do not impose undue costs on local ratepayers or harm the environment.
The order requires data center developers to submit energy and environmental impact plans to state agencies, including the Kentucky Energy and Environment Cabinet and the Kentucky Public Service Commission. These plans must demonstrate that proposed facilities will not negatively affect air and water quality, water supply, federally protected wetlands, or natural resources, according to a press release from the governor’s office.
Beshear framed the action as a safeguard for Kentucky families, stating in a press conference that economic gains "can never come at the cost of the health and safety of our families or the communities we call home." He emphasized that companies must prove they will "invest responsibly, operate transparently, and work in partnership with our people and our communities."
Key Requirements of the Executive Order
The order mandates that data center developers provide an initial energy plan outlining how they will mitigate risks to electric and water bills for residents and businesses. The Energy and Environment Cabinet will use this information to deny permits to any facility that could harm the environment or strain local resources. The Public Service Commission will review the plans to ensure they do not lead to unreasonable rate increases for utility customers.
Beshear described the framework as a way to ensure companies are "good neighbors," adding that any company seeking to operate in Kentucky must meet "the same high standards we demand of any potential partner."
Background and Rationale
Data centers, which power artificial intelligence infrastructure and cloud computing, require substantial energy and water to operate and cool their servers. Their rapid expansion has prompted concerns among policymakers and residents in several states about rising utility costs and environmental impacts. Kentucky’s move follows similar actions by other governors, including those in Virginia and Georgia, who have also sought to regulate the industry’s growth.
The executive order comes as Kentucky seeks to balance economic development with community protection, Beshear said. He noted that while the state welcomes job creation and investment, it must do so "without compromising the well-being of Kentuckians."
Next Steps
State agencies will begin implementing the order immediately, with the Energy and Environment Cabinet and Public Service Commission reviewing data center proposals under the new guidelines. Developers will be required to submit their initial energy and environmental plans before permits are considered. The governor’s office did not specify a timeline for when the first decisions would be made under the new framework.