Northern Virginia Counties Consider Data Center Moratoriums, Face Legal Challenges
Loudoun and Prince William Counties in Northern Virginia are considering new restrictions on data center development, including a moratorium and changes to existing project protections. A guest column argues these measures are legally problematic, would increase taxpayer costs through litigation, and are based on exaggerated environmental concerns. The author warns of higher taxes and reduced economic opportunities if the counties proceed with these restrictions.
Northern Virginia's prominent record in data center development, contributing $9.1 billion annually to Virginia's economy and supporting 74,000 jobs, is facing new threats from local government actions. The Loudoun County Board of Supervisors is currently deliberating a moratorium on new data center applications and considering the removal of protections for 17 projects already in the development pipeline. Similarly, Prince William County has proposed shrinking its overlay district, which has historically allowed data centers, with other Virginia localities also contemplating outright bans.
Ross Marchand, an attorney and executive director of the Taxpayers Protection Alliance, argues that these proposed restrictions are legally unsound. Loudoun's own county attorney reportedly advised in July that a moratorium is illegal under Virginia's Dillon Rule, citing a precedent from Fairfax County in 1975 where a similar freeze was struck down. Marchand warns that if the county loses in court, taxpayers would bear the burden of both legal fees and the eventual construction costs, a situation Loudoun County has thus far avoided.
While supervisors claim the restrictions are necessary due to unconstrained data center growth, Marchand contends that the numbers do not support these concerns. He highlights that data centers are projected to use only 1.4% of Virginia's total water consumption by 2025, a figure that is reportedly decreasing. Regarding electricity, a 2024 review by the General Assembly's Joint Legislative Audit and Review Commission found that data centers pay their fair share of energy costs, largely due to Virginia's large-load pricing mechanisms, such as the GS-5 tariff, which require significant energy users to cover most of their contracted transmission and distribution demand. Dominion Energy data suggests that residential customers in Northern Virginia pay less for transmission costs because data centers absorb a disproportionate share of grid infrastructure expenses.
Furthermore, the article points out the significant tax implications, noting that without data centers, counties in Northern Virginia would face substantial property tax increases. For example, Loudoun County's real estate tax rate would nearly double. Marchand urges Loudoun County supervisors to reject the moratorium and maintain existing grandfathering resolutions, and for Prince William's board to ensure fair treatment for projects already filed under current rules, emphasizing that new standards should be implemented through lawful zoning and planning processes rather than disrupting existing commitments.