Virginia Doesn’t Have Statewide Data Center Regulations. Localities Are Making Their Own Rules

Virginia is home to over a third of the data centers worldwide. These energy hungry facilities have brought business to the commonwealth, but communities are seeing the impact of the electricity and water usage hit their utility bills. Now, many localities are debating how to balance the opportunities and challenges data centers present, and grappling with how to regulate them.

York County supervisors created new standards for data centers to follow in a June 17 meeting.

“It protects the community from having massive amounts of power drawn off the grid and then all of us facing huge energy bills,” York County Supervisor Douglas Holroyd said. York County’s new regulations are an example of the stopgap solutions counties are finding for themselves, absent statewide regulations.

Lawmakers debated House Bill 1601 by Del. Josh Thomas, D-Prince William, in this year’s legislative session, which would have set up statewide rules mandating data centers assess how they would impact water, forests, agriculture, parks, and historic sites before their zoning or special use permits earned approval. Gov. Glenn Youngkin vetoed the measure, stating that it infringed on localities’ autonomy. .

“This bill limits local discretion and creates unnecessary red tape. While well-intentioned, the legislation imposes a one-size-fits-all approach on communities that are best positioned to make their own decisions. Data centers represent an immense opportunity for localities around the Commonwealth, especially those that don’t already have them,” Youngkin said in his veto message.

York County’s ordinance is for future proposals of data centers. The applications now must include letters from energy and water companies stating whether or not they can handle the needs of the facility when running at full capacity. If they do not have the infrastructure in place to meet the full needs of the data center, the board of supervisors could reject a proposal.

The ordinance also calls for a sound study. Members of the community spoke at the meeting about the sound of facility lights and generators potentially being disruptive to surrounding neighborhoods and natural areas. Similar to ordinances for solar farms, data centers in York County will have to be set back from other properties, vegetative buffers, and have sound limits. The county also put in place a five-year period where companies have to revisit the energy usage of the data center and report to the board.

Many of the counties with the majority of the state’s data centers have enacted ordinances to ensure community voices are heard and proper analysis of the construction and energy use of the projects are considered.

Loudoun County, which has one of the highest concentrations of data centers, recently removed the by-right zoning rule. This means that future data centers must go through the board to get approval.

At local government meetings across the state, supervisors have  emphasized that they do not want to block data centers from coming, but want to have more of a say in how the process unfolds.

On Thursday night, Chesapeake City Council rejected a rezoning proposal for a data center, following environmental and residential disruption concerns from residents.

Last fall, Fairfax County passed an ordinance tightening up their rules for all future projects that include setbacks from other properties, distances from Metro stations, size limitations and facade appearances.

Not all counties and city councils have been able to agree on how to manage the growing data center industry. In May, Henrico County tabled their data center regulations amid on-going community debate. They were later reintroduced in a June 10 meeting and passed. It requires data centers to be 500 feet away from residential areas, substation screenings, and vegetative buffers.

“I am very concerned about slowing down data centers. The question in my mind is what is the best way to do it,” Henrico Supervisor Misty Roundtree said at the time.

Roundtree acknowledged the concerns of some data center companies who would not be grandfathered into the old rules and allowed to bypass new regulations, who said it is not fair that previous projects did not have as many restrictions and hoops to jump through. However, the new ordinance makes the rules retroactive to projects currently in the works.

In 2023, the Joint Legislative Audit and Review Commission did a study of the economic impacts of data centers on the state. They found the industry contributes 74,000 jobs, $5.5 billion in labor income, and $9.1 billion in gross domestic product to Virginia’s economy annually.

Most of these economic benefits came from the construction phase rather than data centers’ ongoing operations.

The report also highlighted the challenges the state faces with building enough energy infrastructure  to meet the demands of the data centers, even without the added requirements of the Virginia Clean Economy Act, which seeks to decarbonize Virginia’s electricity sources by 2050.

by Shannon Heckt, Virginia Mercury