Data Center Developer Leans On Kentucky Law Meant To Promote Housing Development

A data center operator in Kentucky hopes to block a legal challenge from area homeowners using a new law designed to fast-track housing developments, highlighting the unintended consequences of housing policy shifts. 

The conflict stems from a 200-acre data center campus that developer TenKey LandCo is planning to build in Simpson County, KY, which is in the southwestern part of the state on the Tennessee border.

In March, the city of Franklin Planning and Zoning Commission approved a preliminary development plan for TenKey's planned large-scale data storage and service facility.

The Franklin Citizens for Responsible Development then filed a complaint in the Simpson Circuit Court, arguing that the Planning and Zoning Commission “acted arbitrarily, capriciously, and without substantial evidence” when it approved TenKey’s plan, despite the “threats to the health, safety, and welfare of nearby residents and businesses.”

In response, TenKey argued that the group that filed the lawsuit “does not comply with the strict requirements” that Kentucky's HB 321 now requires and should therefore be dismissed. 

House Bill 321 was introduced in the state Legislature by state Rep. DJ Johnson, a Republican, in early 2025. It requires mandatory training for local planning and zoning officials. The bill passed easily with support from the Republican-controlled state Legislature and was signed into law by Democratic Gov. Andy Beshear last year. 

But the House bill also included a last-minute amendment to Kentucky Revised Statute 100.347, a local law that outlines the rules around citizens appealing planning and zoning decisions. 

The new language limits appeals to people with properties that are similarly zoned, stating that “Any person or entity claiming to be injured or aggrieved by any final action of the board of adjustment and that owns real property within the same zone where the property that is the subject of the final action is located shall appeal from the action to the Circuit Court of the county in which the property that is the subject of the action of the board of adjustment lies.”

Because the data center is zoned as I-2, heavy industrial, TenKey argues in its rebuttal, only similarly zoned businesses should be able to weigh in. The property of the group challenging the data center is zoned as B-1, neighborhood business.

Essentially, TenKey says that because the business owners are not zoned in the same category, they have no legal right to appeal the zoning board's decision.

But the citizens' group argues that, even without sharing a zoning designation, a data center in the area will affect their businesses and well-being.

The zoning ruling "arbitrarily and unreasonably restricts access to judicial review based on zoning classification rather than actual injury, proximity, impact, and therefore creates an irrational classification that permits some similarly situated aggrieved person to seek review while denying it to others," the lawsuit says.

If the statute remains in place, it could have far-reaching implications for Kentucky homeowners living near data center zones, preventing them from weighing in on data center decisions.

In an August Facebook post, the citizens' group wrote: “A property can be annexed into a city. The city then has zoning authority over that property. A major development can be approved. But if the people directly affected don’t meet the new requirements for standing ... who gets to challenge that decision in court?”

The group's lawsuit asks the court to void the commission's approval of the data center and to declare KRS 100.347 unconstitutional.

The case is currently moving through Simpson County Circuit Court, with another hearing expected in October.

The Simpson County lawsuit is part of a fresh wave of lawsuits and actions that local communities are bringing against data centers.

Data centers are increasingly becoming a political hot-button issue ahead of the midterms, with both parties grappling with how to balance economic development with the concerns of residents near planned new data centers.

A recent Gallup poll found that 70% of Americans oppose building data centers in their local communities, citing economic, environmental, and resource allocation concerns, and a lack of transparency around their development.

Meanwhile, President Donald Trump posted to Truth Social on Monday in support of data center growth. "The only reason that communities throughout the U.S.A. should not want Data Centers is if they want to end up being backwards and poor,” he wrote.