Virginia Governor Nixes Data Center Reform Bill, At Least For Now

After a wave of legislation was proposed to regulate data centers, Virginia Gov. Glenn Youngkin has delayed and possibly killed the one data center bill that made it to his desk.

Youngkin rejected legislation passed by the commonwealth’s General Assembly earlier this year that would have required data center developers to perform site studies and disclose a range of environmental impacts to local authorities before projects could be approved, InsideNoVa reported. 

Rather than signing the bill into law, Youngkin put the legislation on hold indefinitely, sending it back to lawmakers with a recommendation that it not go into effect unless it is reenacted by next year’s General Assembly. That will come after his term in office ends, as Virginia has an election in November and doesn't allow governors to run for multiple terms. 

The bill, HB1601, had passed both chambers of the General Assembly with bipartisan support, leaving its supporters hopeful that the governor would implement the law. Josh Thomas, a delegate representing Prince William County who introduced the bill, called the governor’s decision “disappointing.” 

“Since taking office, I’ve made it a priority to establish common-sense guardrails on the data center industry,” Thomas said, according to InsideNoVa. “HB1601 was carefully crafted with bipartisan input to ensure transparency, to protect our communities, and give local governments the tools they need to make informed decisions.”

Thomas’s bill reflected concerns over data centers’ impact on environmental resources and quality of life that have emerged in data center hotbeds throughout Virginia but nowhere more than in Prince William County. Data centers have become a key electoral issue in the county following a wave of opposition to a data center development area, known as the Prince William Digital Gateway, that would open up close to 2,000 acres of development near the Manassas battlefield. 

HB1601 mandated that developers planning data centers with 100 megawatts of capacity or more conduct site assessments and noise impact studies for any school or home within 500 feet before a local government is able to grant land use changes, rezoning or special use permits. The bill also allowed local governments to require additional site assessments to evaluate the impact of the data center project on historic sites, parks, forests, farmland or water resources before approving any entitlements.

The legislation was one of more than a dozen data center-focused bills filed during the most recent General Assembly session that ended Feb. 22. The wave of proposals followed the December publication of the highly anticipated Joint Legislative Audit and Review Committee report that provided a detailed analysis of both the data center industry’s economic impact in Virginia and the adverse energy and environmental impacts that have come with the industry’s growth. 

The report was commissioned by Virginia's legislature a year ago after an earlier wave of legislation sought to reign in data center development. Its broad intent was to provide a common set of facts and data to frame legislators’ decisions regarding data centers, and most of the previously proposed data center legislation was tabled to allow lawmakers to consider JLARC’s findings.

Other bills that didn't advance to the governor’s desk during the session included efforts to ensure that residential electricity customers don’t pay higher rates due to infrastructure projects to provide power to data centers, and to shift the cost of grid infrastructure improvements to data center firms. Those bills stem from the JLARC report, which found that data centers’ electricity needs could raise residential rates in Virginia by as much as $37 per month by 2040.

Another bill, HB 2578, would have tied eligibility for Virginia’s data center sales and use tax exemption — a critical element in attracting data center development to the commonwealth — to a facility’s compliance with strict efficiency and clean energy standards. Meanwhile, HB2035 would require that data center operators file quarterly reports detailing their water and energy use.