Virginia lawmakers pass 15 data center bills on tax, energy and siting

The Virginia legislature sent 15 data center bills to Governor Abigail Spanberger after adjourning on March 14. Lawmakers considered 61 measures on the topic during the session. The remaining 46 bills carry over to 2027 because the session marked the first year of a two year term. The bills address tax policy, energy consumption, water use and siting requirements for the facilities. The sales and use tax exemption remains the central unresolved issue and is being negotiated as part of the state budget. The Senate seeks to end the exemption entirely while the House would condition it on environmental compliance. One measure directs the primary electric provider to petition regulators for rates that recover costs of new generating capacity. Large customers with 25 megawatts or more of demand must pay those costs under the legislation. Exceptions apply for certain manufacturing and warehousing operations that meet employment thresholds. Another bill requires two electric providers to create voluntary demand flexibility programs for high demand customers by 2029. Costs of incentives under those programs cannot shift to other ratepayers. Lawmakers also advanced water reporting requirements for utilities serving data centers. Proposed industrial projects must submit annual consumption estimates to inform local rezoning decisions. A siting measure creates a permit process for facilities using 100 megawatts or more. Developers must evaluate sound impacts on homes and schools within 500 feet and assess effects on water, agriculture and historic resources.