Recent legislative and local actions affecting data center development in Virginia

After a number of data center-related bills were filed at the outset of its 2024 session, the Virginia General Assembly directed its Joint Legislative Audit and Review Committee (JLARC) to study the effects of data center development on land use, power supply/usage, and the environment. JLARC issued its report in December 2024, after which state legislators submitted over 40 bills to be reviewed during the 2025 General Assembly session.

Of those 40-plus bills, only four ended up being passed by the House of Delegates and State Senate. Of those four, three made it out of the conference committee to go to Governor Glenn Youngkin for consideration and signature:

• HB1601 (Josh Thomas) and SB1449 (Adam Ebbin): These companion bills require localities, when reviewing and deciding on zoning entitlement applications for a “high energy use facility” (HEUF, ie, a data center), to study and consider the effects of the proposed HEUF on ground water, agricultural resources, and nearby schools and residential neighborhoods. The approved bill also includes language opposed by the data center industry that requires electric utilities to notify the local jurisdiction if a proposed HEUF will require a new substation or be served by an existing one, as well as the anticipated transmission voltage that the HEUF will require.


• HB2084 (Irene Shin): Delegate Shin’s bill has changed significantly since its initial filing, which identified data centers specifically and would have required the State Corporation Commission (SCC) and Virginia Department of Energy (DOE) to study and determine whether other rate payers were subsidizing the cost to power data centers. Instead, as amended and approved, the legislation directs the SCC and DOE to study whether its current rate classifications are “reasonable,” with no mention of data centers.

The state budget also included a provision relating to data centers, specifically the exemption from the sales and use tax that is in effect until 2035. As approved, the budget includes a directive to the Joint Subcommittee on Tax Policy to study and report back on the data center sales/use tax exemption, which specifically includes “(i) reviewing Virginia's status as a leader for data center development and tax preferences; (ii) competitive advantages provided by existing and future exemptions; (iii) approaches taken in other states to provide stability and continuity for the impacted firms; (iv) investigating methods to attract data center investment to non-urbanized areas of the Commonwealth; (v) reviewing the recommendations and options in the 2024 JLARC study on Data Centers in Virginia; and (vi) reviewing the estimated direct and indirect economic benefits of data center investment in the Commonwealth.”

Locally, in Northern Virginia, the largest jurisdictions have also been active in regulating data center development. These actions include the following:

• Loudoun County, home to “Data Center Alley” in Ashburn, is considering a Zoning Ordinance Amendment to require a special exception for data centers in the last three remaining districts in which they currently are permitted by right, thus ending by-right data center development in the largest concentration of data centers in the world. The Loudoun County Board of Supervisors is scheduled to vote on this amendment on March 18, 2025.


• In September 2024, the Fairfax County Board of Supervisors approved a Zoning Ordinance Amendment that added a number of new restrictions and criteria that data center development must meet in order to be approved by right in the county’s industrial zoning districts.


• The Prince William Board of County Supervisors is currently considering a major amendment to the boundaries of their Data Center Opportunity Zone Overlay District. The recommendations by the county’s consultant would reduce the size of the Data Center Opportunity Zone Overlay District by more than 1,500 acres if approved.

We encourage our clients who own, operate, or invest in data centers to stay informed about these recent developments and consider their potential impact. Our DLA Piper Data Center team is here to help you navigate these changes and advise your operations so that they remain compliant and competitive. Please contact the authors for more information.