AN ACT relating to data centers.

UNOFFICIAL COPY 26 RS BR 1447
Page 1 of 5
XXXX 3/1/2026 11:09 AM Jacketed
AN ACT relating to data centers. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF SUBCHAPTER 10 OF KRS CHAPTER 3
224 IS CREATED TO READ AS FOLLOWS: 4
(1) As used in this section, "data center" means a centralized facility that: 5
(a) Is used primarily or exclusively for electronic information services, 6
including but not l imited to the management, storage, processing, and 7
dissemination of electronic data and information through the use of 8
computer systems, servers, networking equipment, and related components; 9
(b) Has electrical load that is either fixed, portable, or distr ibutable, including 10
but not limited to structures that are not affixed to the ground or are easily 11
removed from a location; and 12
(c) Has, along with all loads of affiliated companies and companies with 13
common ownership, an actual or expected monthly peak electric load 14
requirement of greater than fifty (50) megawatts. 15
(2) The requirements of this section shall only apply to a data center that is located 16
on land that was valued and taxed as agricultural land under KRS 132.450 at any 17
time in the ten (10) years preceding the commencement of the construction of the 18
data center. 19
(3) Prior to commencing the operation of a data center, its owner s shall file with the 20
cabinet, in the form and manner as the cabinet may require, a decommissioning 21
plan that describes how the data center will be decommissioned and dismantled at 22
the end of its useful life, which shall include, at a minimum: 23
(a) Removal of all above -ground facilities and any underground components 24
and foundations of above-ground facilities to a depth that the cabinet deems 25
necessary for the land to be returned to agricultural purposes; 26
(b) Returning the land to a substantially similar sta te as it was prior to the 27
UNOFFICIAL COPY 26 RS BR 1447
Page 2 of 5
XXXX 3/1/2026 11:09 AM Jacketed
commencement of construction; and 1
(c) Securing a bond or other similar security for the project to assure financial 2
performance of the decommissioning obligation, provided that: 3
1. The amount of the proposed bond or similar securi ty shall be 4
determined by an independent, licensed engineer who has no financial 5
interest in either the data center or any parcel of land upon which the 6
data center is located. The proposed amount of the bond or similar 7
security shall be the net present va lue of the total estimated cost of 8
completing the decommissioning plan, less the current net salvage 9
value of the data center's components; 10
2. The bond or other similar security is provided by an insurance 11
company or surety that is approved by the cabinet, and it names the 12
cabinet as the primary beneficiary; and 13
3, The bond or other similar security provides that at least thirty (30) 14
days prior to its cancellation or lapse, the surety shall notify the data 15
center owner and the cabinet of the impending cance llation or lapse. 16
The notice shall specify the reason for the cancellation or lapse and 17
provide the data center owner the opportunity to cure the cancellation 18
or lapse prior to it becoming effective. If the data center owner fails to 19
cure the cancellation or lapse within fifteen (15) days of receiving the 20
notice, or if the data center ceases to operate for thirty (30) or more 21
days, the cabinet may make a demand on the bond and initiate and 22
complete the decommissioning plan. 23
Section 2. KRS 154.20-229 is amended to read as follows: 24
The authority, with preliminary approval of an eligible company, may execute a 25
memorandum of agreement with the eligible company. The terms and conditions of the 26
memorandum of agreement shall be n egotiated between the authority and the company. 27
UNOFFICIAL COPY 26 RS BR 1447
Page 3 of 5
XXXX 3/1/2026 11:09 AM Jacketed
The terms of the memorandum of agreement shall include but not be limited to the 1
following provisions: 2
(1) The estimated capital investment for the qualified data center project; 3
(2) That the preliminarily a pproved company shall provide the authority with all 4
documentation requested in a manner acceptable to the authority and within the 5
timeframes required by the authority related to the minimum capital investment 6
requirement to be used in monitoring complian ce of the memorandum of 7
agreement; 8
(3) That failure of a preliminarily approved company to meet the minimum capital 9
investment on or before the fifth anniversary of the preliminary approval shall result 10
in cancellation of the memorandum of agreement with t he preliminarily approved 11
company; 12
(4) The term of the agreement, which shall not exceed: 13
(a) Fifteen (15) years for a qualified data center project of a project organizer; or 14
(b) 1. Fifty (50) years for a qualified data center project having a capital 15
investment of at least four hundred fifty million dollars ($450,000,000); 16
or 17
2. Twenty-five (25) years for any other qualified data center project; 18
(5) A provision requiring the preliminarily approved company to notify the authority 19
immediately if the eligibl e company sells or otherwise transfers or disposes of the 20
land on which a qualified data center project is located; 21
(6) Authorization for the department to issue a certificate of exemption to the 22
preliminarily approved company under KRS 139.499; 23
(7) A prov ision detailing the elimination of the sales and use tax exemption and the 24
notice of assessment by the department provided under KRS 139.499 that shall 25
occur if the preliminarily approved company fails to make the minimum capital 26
investment; 27
UNOFFICIAL COPY 26 RS BR 1447
Page 4 of 5
XXXX 3/1/2026 11:09 AM Jacketed
(8) (a) A statement that the memorandum of agreement may remain in effect, even if 1
there is a future transfer, sale, or disposition, directly or indirectly, of the 2
qualified data center project, upon the adoption of a resolution by the 3
authority to that effect. 4
(b) If continuation of the sales and use tax exemption is desired by the subsequent 5
owner: 6
1. The memorandum of agreement may be assigned to that owner under 7
paragraph (a) of this subsection provided the subsequent owner assumes 8
the prior owner's obligations under that agreement; or 9
2. The subsequent owner shall enter into a memorandum of agreement 10
with the authority for the remainder of the eligibility period. 11
(c) The authority shall notify the department regarding the events that transpire 12
under paragraphs (a) and (b) of this subsection; 13
(9) That the approved company shall make available to the authority all of its records 14
pertaining to the qualified data center project, including but not limited to records 15
relating to eligible costs and any other records pertaining to the project that the 16
authority may require; 17
(10) (a) That the authority may share information with the department; and 18
(b) That the department may share information with the authority; 19
for the purposes of monitoring and enforcing the terms of the memorandum of 20
agreement; 21
(11) That, if the preliminarily approved company fails to comply with its obligations 22
under the memorandum of agreement by the fifth anniversary of the preliminary 23
approval, the authority shall: 24
(a) Suspend the memorandum of agreement; 25
(b) Terminate the in centives available to the preliminarily approved company 26
under the memorandum of agreement; 27
UNOFFICIAL COPY 26 RS BR 1447
Page 5 of 5
XXXX 3/1/2026 11:09 AM Jacketed
(c) Notify the department of the authority's actions; 1
(d) Instruct the department to proceed with the notice of assessment; and 2
(e) Pursue any other remedy set fort h in the memorandum of agreement or to 3
which it may be entitled by law;[ and] 4
(12) For any memorandum of agreement executed after the effective date of this Act, 5
provisions requiring the preliminarily approved company to engage with local 6
officials and members of local government bodies with jurisdiction over the data 7
center to: 8
(a) Regularly review and adopt practices to improve the energy efficiency of 9
their data centers, including through upgrading and consolidating 10
technology, managing data center airfl ow, and adjusting and improving 11
heating, ventilation, and air conditioning systems; and 12
(b) Take actions to conserve, reuse, and replace water, including but not limited 13
to the following: 14
1. Using water efficient fixtures and practices; 15
2. Treating, infiltrating, and harvesting rainwater; 16
3. Recycling water before discharging; 17
4. Partnering with local water utilities to use discharged water for 18
irrigation and other water conservation purposes; 19
5. Using reclaimed water if possible for data center operations; and 20
6. Supporting water restoration in local watersheds; and 21
(13) Any other provisions not inconsistent with this subchapter and determined to be 22
necessary or appropriate by the parties to the memorandum of agreement. 23