Public opinion shifts toward data center regulation

Public and political sentiment in Virginia has rapidly turned against data centers, which were once considered economic drivers but are now seen as villains due to their impact on utility costs and the environment. This shift has led to significant legislative debate and action within the Virginia General Assembly. While a proposed elimination of a sales tax exemption for data centers was ultimately rejected, the state enacted a new electricity consumption tax of $0.011 per kilowatt-hour, effective July 1.

Concerns about rising utility rates are intensified by a proposed $66.8 billion merger between Dominion Energy and Florida's NextEra Energy, with Governor Abigail Spanberger taking the unprecedented step of formally intervening in the State Corporation Commission's review. Senator Glen Sturtevant has called for a statewide moratorium on data center approvals, citing tax breaks and increased electric bills for families.

In response to growing negative sentiment, several Virginia localities are considering or have implemented restrictions. Virginia Beach is moving to prohibit large-scale data centers, Chesapeake approved an eight-month pause on applications, and Loudoun County is mulling a temporary moratorium. However, the legal authority for localities to impose such moratoriums under Virginia's Dillon Rule is being debated. Environmental concerns are also rising, with a Department of Environmental Quality report indicating that groundwater supplies in the Coastal Plain aquifer system have virtually no capacity for major new data center withdrawals, prompting calls for a special legislative session. Furthermore, legal challenges are ongoing, including a nuisance lawsuit against Amazon Data Services Inc. in Louisa County and a significant Court of Appeals ruling voiding a data center rezoning in Prince William County, which has been appealed to the state's Supreme Court.