Virginia Passes 15 Data Center Bills

On March 14, 2026, the Virginia General Assembly adjourned its 2026 session having passed just 15 of the 61 data center bills lawmakers filed, and without a two-year budget, after the chambers deadlocked over the commonwealth's roughly $1.6 billion-a-year data center sales and use tax exemption. The survivors went to Gov. Abigail Spanberger (D), in office since January 17, with an April 13, 2026 deadline to sign, amend, or veto each one. Because 2026 opened a two-year session, the remaining 46 bills carry over to 2027. The session regulated the industry's environmental and grid footprint at the state level and left the core fiscal question, the sales tax exemption, to the budget.

Northern Virginia alone has more than 200 data center facilities, and the state has over 9,000 backup generators and more than $80 billion in capital investment. This alert covers the April and May bill signings.

The new laws run on three dates: July 1, 2026, September 1, 2026, and January 1, 2027. The 2027 session then opens with 46 carryover bills, led by the SCC certificate concept, because bills tabled in 2026 return automatically in the second year of a two-year session.

What Passed: Permitting and Siting

New data center air permits must meet Tier 4-equivalent emission limits beginning July 1, 2026. House Bill 507 (Del. John McAuliff, D-Fauquier) prohibits the Department of Environmental Quality from issuing an air permit for any data center application submitted on or after July 1, 2026, unless the permitted emission limit for each engine-generator is at or below what a Tier 4-equivalent unit achieves. Most of the existing fleet runs on Tier 2 diesel. The original battery-storage mandate was stripped, but the emissions floor survived (House 61-34, Senate 25-15). Spanberger signed it April 8, 2026 (Chapter 397), effective July 1, 2026. Any Virginia project whose air permit application lands after the cutoff will need Tier 4-equivalent generation.

Projects drawing 100 MW or more will need a site assessment before rezoning. HB 153 (Del. Josh Thomas, D-Prince William), identical to SB 94 (Sen. Danica Roem, D-Manassas), requires rezoning, special exception, and special use permit applicants for a "high energy use facility," defined as 100 MW of demand, to assess the facility's sound profile on homes and schools within 500 feet. Localities may also require analysis of water, agricultural, park, historic, and forestland impacts. Expansions under 100 MW at approved sites are exempt, and local zoning authority is preserved. Both bills cleared conference on the final day of session (HB 153: House 93-2, Senate 29-10) and were signed April 13, 2026 (Chapters 567 and 568), effective July 1, 2026.

What Passed: Water and Energy Reporting

Data center water consumption becomes reportable data on January 1, 2027. SB 553 (Sen. Kannan Srinivasan, D-Loudoun), identical to HB 496 (Del. Elizabeth Guzman, D-Woodbridge), requires water suppliers that register withdrawal data with the State Water Control Board to report the total monthly volume of potable water, and separately, reclaimed water, delivered to data centers holding a DEQ air permit. Operators have long shielded water usage as a trade secret. Under the conference compromise, suppliers report aggregate volumes only. Both were signed April 13, 2026 (Chapters 896 and 623), effective January 1, 2027.

HB 323 orders a waste-heat study due September 1. HB 323 (Del. Rip Sullivan, D-Fairfax) directs the Virginia Department of Energy to convene a workgroup on transferring data center waste heat to nearby buildings, with a report due to the House Committee on Labor and Commerce and the Senate Committee on Commerce and Labor no later than September 1, 2026. The bill passed both chambers with a single dissenting vote and was signed April 13, 2026 (Chapter 591).

What Passed: Cost Allocation at the 25 MW Line

Virginia has drawn its dividing line between ordinary ratepayers and high-load customers at 25 MW of demand. SB 253 (Sen. L. Louise Lucas, D-Portsmouth) and HB 1393 (Del. Destiny LeVere Bolling, D-Henrico) authorize the SCC to assign the financing costs of distribution lines and substations built mainly for data centers to the high-load rate class, alongside weatherization extensions, and as passed, would have shifted PJM capacity auction costs onto them too. HB 1393 as passed made customers with 25 MW or more of demand bear the cost of new generating capacity. Manufacturers and warehousers (not data storage) employing at least 200 people regionally may make a one-time election to keep their default rate schedule. Lawmakers estimated $5.52 per month in residential savings. The 2024 JLARC study projects data-center-driven increases of $14 to $37 per month by 2040.

The governor's amendments softened the cost shift, and lawmakers took the deal. On April 13, Spanberger struck the PJM auction cost-shift, substituting an SCC proceeding on whether high-load customers pay "their fair share." At the April 22 reconvened session, lawmakers accepted that language and her deletion of the opt-out for facilities under construction by July 2026, rejecting her remaining amendments, including a 9.3% cap on Dominion's return on equity and a smaller undergrounding program. Spanberger signed both bills May 14, 2026 (Chapters 1124 and 1123), effective July 1, 2026. HB 284 (Del. Michael Feggans, D-Virginia Beach), identical to SB 371 (Sen. Jeremy McPike, D-Prince William), adds voluntary demand-flexibility programs at Dominion and Appalachian Power for 25 MW+ customers, with utility petitions due to the SCC by January 15, 2027 and cooperative programs by January 1, 2029, and with incentive costs walled off from other ratepayers. Spanberger signed both April 8, 2026 (Chapters 377 and 378). Exhibit 1 summarizes the enacted bills.

What Failed

The SCC certificate requirement for large new loads did not pass. HB 155 (Del. Josh Thomas) and SB 619 (Sen. Kannan Srinivasan) would have required SCC review of rate, grid-reliability, and Virginia Clean Economy Act impacts before a large new load could proceed: 25 MW in the House bill, and 90 MW in the Senate bill as it passed that chamber. SB 619 passed the Senate 23-16 with three Republican votes, but both bills died in the same House Labor and Commerce subcommittee, HB 155 on February 10 and SB 619 on March 3, each tabled 9-0. The House committee instead agreed to send the SCC a letter asking it to study a similar review program. Also parked for 2027: SB 339 (SCC high-load subsidy proceeding), SB 336 (SCC study of Tier 2 generator limits), and HB 1502 (standby-generator pollutant study).

The Sales Tax Exemption Moves to the Budget

The session's defining fight, the data center sales and use tax exemption, was left unresolved on adjournment. The Senate budget, championed by Lucas, would have ended the exemption from the 5.3% sales tax on server equipment and software early, recapturing roughly $1.6 billion annually by the Senate's estimate. The House kept the exemption but conditioned it on new environmental and energy standards. Speaker Don Scott (D-Portsmouth) and Spanberger argued repeal would break faith with existing contracts. The impasse forced an April 23 special session.

What the Cost Curve Looks Like

JLARC's 2024 projection remains the main benchmark for the cost-allocation debate. The study estimated that a typical Dominion residential customer could see generation- and transmission-related costs rise by $14 to $37 per month, in constant dollars, by 2040 if data center growth continues unconstrained. The $5.52 monthly savings sponsors attached to SB 253 and HB 1393 would offset roughly 15 to 40 percent of that range, so the SCC's "fair share" proceeding will decide whether the 25 MW line changes the trajectory. Exhibit 2 shows the JLARC range.

Key Dates Through January 2027

The next dates run from July through January. Exhibit 3 lists them along with the milestones already passed.

What to Do Now

If you are developing or operating a data center in Virginia, the new permitting and reporting rules reach projects in your pipeline. The SCC "fair share" proceeding and the 46 carryover bills will shape the next round. If you want a read on your projects before the 2027 session, reach out to our team.

References

1. Virginia Mercury, Data center bills dominated this year's General Assembly. Here's what passed. (Mar. 17, 2026).
2. MultiState, Virginia Lawmakers Pass 15 Data Center Bills as Tax Exemption Fight Looms (Mar. 30, 2026).
3. Virginia LIS, HB 507 (Chapter 397).
4. Virginia LIS, HB 153 (Chapter 567) and SB 94 (Chapter 568).
5. Virginia LIS, SB 553 (Chapter 896) and HB 496 (Chapter 623).
6. Virginia LIS, SB 253 (Chapter 1124) and HB 1393 (Chapter 1123).
7. Virginia LIS, HB 284 (Chapter 377), SB 371 (Chapter 378), and HB 323 (Chapter 591).
8. Virginia LIS, HB 155 and SB 619 (tabled); LegiScan, HB 155 and SB 619.
9. Virginia Mercury, Va. lawmakers OK governor's tweaks to major energy bills, reject health and labor bill amendments (Apr. 23, 2026).
10. Virginia Mercury, General Assembly nixes bills that required data centers to get SCC certificate (Mar. 6, 2026); VPM, General Assembly kills bills for certifying high-power facilities (Mar. 6, 2026).
11. Joint Legislative Audit and Review Commission, Data Centers in Virginia (2024).
12. Virginia Division of Legislative Automated Systems, RD40: Data Center Investment Report (2026).
13. Virginia Mercury, Lawmakers, Dominion say Spanberger's amendments weaken bill to shift costs onto data centers (Apr. 16, 2026).
14. Virginia Mercury, Spanberger signs assault weapons ban, package of criminal justice and energy bills (May 15, 2026).

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