Legislators, advocates on Virginia’s new data center tax and regulation scheme: ‘A good first step’
Virginia's House and Senate passed a budget including new regulations and taxes on the data center industry, projected to generate $1.2 billion in new revenue. The legislation, which includes environmental mandates and an energy consumption tax, received mixed reactions from legislators, industry, and environmental groups. Governor Abigail Spanberger took credit for the compromise, while some expressed concerns about its impact on businesses and ratepayers.
Virginia's General Assembly passed a conference budget that incorporates new data center regulations and taxes, projected to generate $1.2 billion in new revenue. This legislative package, which includes an energy consumption tax, advanced despite varied reactions from state lawmakers.
Democratic leaders, including Senate President Louise Lucas and Delegate Luke Torian, offered qualified support, viewing the outcome as a "good start" while expressing a desire for more stringent future measures. Governor Abigail Spanberger credited her administration with crafting the compromise, emphasizing its role in establishing a foundation for future discussions on the industry's environmental and community impacts.
Conversely, the Data Center Coalition criticized the scheme, asserting that it imposes "unnecessary new taxes" and "onerous new regulations" that will deter investment and job creation in the Commonwealth. Environmental organizations, such as the Chesapeake Bay Foundation, also voiced disappointment, suggesting the state failed to set robust standards despite the new revenue stream.
Key regulations within the budget assign tasks to the Virginia Department of Environmental Quality, including the collection of evaporation data from "cooling water scarcity areas," new demands on air and water permits, and the mandate for closed-loop cooling systems. The budget also addresses energy costs by establishing a rebate program for select Dominion Energy Virginia and Appalachian Power customers, funded by proceeds from the Regional Greenhouse Gas Initiative (RGGI) auction. The budget now awaits Governor Spanberger's signature or potential amendments.