Virginia Budget Proposals Fail to Address Data Center Threats

House and Senate lawmakers have introduced new competing proposals for Virginia’s biennial budget that starts on July 1—both of which unfortunately fall short when it comes to reining in the impacts of the data center industry and delivering the results Virginians deserve.

House lawmakers’ latest offer does not include any environmental standards for data centers, and maintains a state sales and use tax break that cost Virginia about $1.9 billion last year alone. Instead, it would establish a commission to consider reforms, with a report due back to lawmakers in the fall. It remains to be seen what reforms a commission might ultimately recommend, but what we do know is that this path would lead to further delay and uncertainty.

The Senate proposal, meanwhile, includes an “impact” fee for data centers that use diesel or gas-powered backup generators. It also does not include any reforms to the sales and use tax and exemption and does not sufficiently address many data center impacts including air pollution, climate, and adverse health effects related to the data center industry’s thirst for more fossil fuel generation.

Data centers are already affecting Virginians in many ways—driving up electricity bills, saddling communities with noise and harmful air pollution from diesel generators, and using significant quantities of public water resources. Without proper regulations, data centers pose significant risks to Virginia communities, the health of the Chesapeake Bay, and the Commonwealth’s air and waterways.

Virginia—predominantly Northern Virginia—is the data center capital of the world. This growth has shown no signs of slowing down, with new data centers popping up all over the state. Dominion, for example, expects that 51% of its electricity will be sold to data centers by 2035. In other words, most of the electricity from Virginia’s largest utility would not go to residential households, small businesses, churches, or schools—it would go to a single energy-hungry industry. It is time for lawmakers to rein in the escalating energy use and water consumption of these data centers.

The Chesapeake Bay Foundation (CBF), the Southern Environmental Law Center (SELC), and Appalachian Voices are calling for Virginia legislators to implement legislation—whether through the budget process or potentially a special session—that establishes reasonable safeguards on data centers now. Specifically, data centers should:

• Power their facilities with clean energy on their own dime;
• Be prohibited from building dirty power sources on-site that burden Virginia communities with harmful air pollution;
• Cut harmful impacts of backup diesel generators by maintaining at least two hours of non-polluting backup power at all times; and
• Fully offset their water consumption in water-scarce areas by using recycled water for cooling.

Chesapeake Bay Foundation Virginia Policy Manager Jay Ford issued the following statement:

“Virginia’s data center boom is moving faster than the law. This year, lawmakers must enact strong regulations for data centers that protect our air and water. Unless Virginia acts now, we’ll pay for the rapid expansion of data centers in the Commonwealth with our drinking water, clean air, and thriving waterways.”

Southern Environmental Law Center Senior Attorney Nate Benforado issued the following statement:

“Data centers continue to flock to our state, and it is hurting everyday Virginians. But this unfortunate dynamic is also an opportunity. Virginia can stand up and demand this industry be better neighbors and citizens.”

Appalachian Voices Director of State Energy Policy Peter Anderson issued the following statement:

“So far, the General Assembly has allowed the unconstrained development of polluting data centers in the Commonwealth, and this simply cannot continue. If our decisionmakers demand that the wealthiest industry in the world achieve sensible public health and environmental standards, the industry will do it.”