A group of Virginia lawmakers outlined a series of proposed bills they hope could reform the growing data center industry.
The commonwealth has become a global capital for data centers, with at least 70% of the world’s internet traffic running through Northern Virginia alone.
The facilities warehouse thousands of computer servers that need massive amounts of energy to power and cool.
“If we fail to act, the unchecked growth of the data center industry will leave Virginia families, will leave their businesses, footing the bill,” Sen. Russet Perry (D-Loudoun County) said at a press conference Tuesday.
“The status quo is not sustainable. Virginia, however, is in the unique position to set a national example by adopting responsible policies that balance economic opportunity with resource stewardship and fairness for ratepayers.”
Perry and other members of the General Assembly are sponsoring legislation that tackle the issue in different ways.
They said all the legislation falls under four central “pillars of reform”: protecting families and businesses, enhancing transparency, responsibly managing resources and incentivizing efficiency.
Previous attempts to regulate data centers at the General Assembly have failed in recent years. This time, however, lawmakers are armed with a recent report from the Joint Legislative Audit and Review Commission that laid out growing challenges that the industry poses to Virginia.
The commission reported that data centers are driving an “unprecedented” growth in energy demand that will be extremely difficult to accommodate in the coming decades.
To do so, the authors said, Virginia would need to double the rate at which it’s currently creating solar facilities, expand wind power beyond what Dominion Energy is already building, construct a large natural gas plant roughly every one and a half years — and get nuclear power from small-scale reactors that have not yet proven commercially viable.
That’s all while also needing to import 150% more energy from outside Virginia and building more transmission capacity.
“Now that we have (the JLARC report), we have a duty to act, and the time for that is now,” Perry said.
One proposal comes from a Newport News delegate, Democrat Shelly Simonds. It would require facilities to submit quarterly reports on their water and energy usage, made public through a central state website.
She said at this week’s news conference that more and more constituents have come to her with questions about data centers’ energy use.
“That's really the crux of what we're trying to do here with these transparency bills,” Simonds said. “We just want the information so we know what it is we're doing and how we can plan for the future.”
Another proposal would require local governments to do site assessments before approving new data centers, specifically looking at any sound impacts on nearby residential areas and schools. (Data centers often produce a loud humming noise due to their massive cooling systems.)
Other bills dive into issues with energy resources.
Del. Josh Thomas (D-Prince William County) said there needs to be “an adult in the room” managing data centers from a high level.
He proposes requiring high-energy facilities like data centers to receive approval from the State Corporation Commission, considering factors like impacts to the overall electric grid and whether average customers would unduly bear the financial burden of electricity costs.
The SCC wouldn’t “usurp the power of a locality to ultimately make the decision of whether or not to site a data center in their locality, but what it does is allows the experts to weigh in on what this additional load will do to the grid,” Thomas said.
He pointed to charts showing the projected growth in energy demand, noting “it’s what keeps me up at night.”
Other proposed legislation includes tying Virginia’s generous data center tax credits to requirements on energy efficiency, and mandating that the facilities use increasing amounts of renewable energy.
Josh Levi, president of the industry group Data Center Coalition, said in a statement Tuesday that the recent JLARC study "fundamentally validates Virginia's leadership in attracting and nurturing the data center industry over the past 15 years."
He said the group "is in the process of reviewing legislative proposals, some of which reflect JLARC’s recommendations and findings. We look forward to engaging with legislators during the 2025 session to ensure continued responsible growth of this essential industry."
