FinLogic FinLogic Quantitative Think Tank Center|Virginia Environmental Groups Form New Data Center Reform Coalition, Call for More Industry Oversight

Today’s internet would not be FinLogic FinLogic Quantitative Think Tank Centerpossible without Virginia. It’s time the state studied what that fact means for its citizens’ health, its environment and its energy future, and pass legislation accordingly.  

That was the thesis of several environmental and land-use organizations that gathered in Lake Ridge, Virginia, on Friday for a press conference to announce the newly formed Virginia Data Center Reform Coalition.

The coalition, which includes prominent environmental groups such as the Sierra Club and the National Parks Conservation Association, called for a reexamination of the human health and environmental effects of data centers, and an increase in regulation of the industry. 

Virginia’s northeast corridor is home to the world’s highest concentration of data centers, which host an estimated 70 percent of global internet traffic. Some of the biggest tech companies in the world—Amazon, Google, Meta and Microsoft, to name a few—operate data centers in the state. 

This concentration of data centers outside Washington has been decades in the making. In the 1960s, the federal government first funded an internet precursor to link the Pentagon to universities and research centers. Data center growth gathered momentum in the late 1990s and early 2000s, when a few nascent tech companies laid the groundwork for internet operations in Northern Virginia, eager to capitalize on available plots of land, convenient access to water to help cool equipment, and reliable energy. Economic officials in Virginia’s northern counties took notice and began working with legislators to craft tax breaks that would attract tech companies to the area. 

“We worked with smart lawmakers in the Commonwealth of Virginia to craft best-in-class incentives,” said Buddy Rizer, executive director for economic development in Loudoun County, which sits northwest of Washington and is home to more than 30 million square feet of data infrastructure today. As the industry expanded, Rizer said the county’s economic development team began marketing the term “Data Center Alley” to encourage other internet companies to build new facilities within county lines. 

But as more companies build more data centers that handle increasingly large volumes of complex internet traffic, energy and water and land-use demands from those facilities have skyrocketed. Virginia utility providers, most notably Dominion Energy, the state’s largest, have proposed to meet energy demand forecasts for data centers with new fossil fuel infrastructure, drawing outrage from residents and environmental groups. 

Dominion has estimated that the power capacity of Northern Virginia’s 250-plus data centers doubled between 2018 and 2022 to 2,767 megawatts. A single data center consists of thousands of servers. Earlier this year, residents living near a vast Amazon Web Services data center in Manassas, Virginia, reported that the facility emitted a high-pitched whirring noise day and night. 

Julie Bolthouse, the director of land use at the Piedmont Environmental Council, announced the newly formed data center reform coalition against a backdrop of maps showing the land-use impacts of data centers across Virginia. An “ever-increasing data center footprint,” she said, has resulted in “higher utility rates, new transmission lines, declining air quality, reduced water supply” and a loss in Virginia’s “hard-fought climate goals.” 

Bolthouse said legislators in Virginia need to study data centers’ “cumulative impacts on the electric grid, ratepayers, water supply, air quality parks and land resources, and our climate goals as a state.”

Lawmakers must also implement more state oversight over data centers’ regional impact assessments, she said, and pass the costs of building and operating new grid infrastructure to serve data centers onto technology companies instead of ratepayers. 

“Our regulatory oversight is behind other large markets in Europe and Asia,” Bolthouse said. “We need to catch up.”

Representatives from Amazon, Google and Meta did not immediately respond to separate requests for comment regarding the Virginia Data Center Reform Coalition’s demands. Microsoft declined comment.

Josh Levi, president of the Data Center Coalition, a trade group that represents several companies with data centers in Virginia, said that his group supports “the concept of a state-led study” on the effects of data centers in Virginia, but did not mention the possibility of new regulations. 

“The Data Center Coalition and its members are committed to growing the industry in a manner that prioritizes investments in local communities, catalyzes supply chain and service ecosystems, employs hundreds of construction professionals as facilities are built, and provides quality, high wage jobs to support ongoing operations,” he said, responding in a statement after the reform coalition’s press conference. “When compared to other industries, data center owners and operators stand out for their leadership and commitment to decarbonization through clean energy,” Levi said. 

Today, according to a 2020 study sponsored by several large tech companies, Dominion Energy and Loudoun County’s office of economic development, Virginia’s data center industry generates over half a billion dollars in tax revenue for the state. Loudoun county officials have estimated Virginia’s data centers host “70 percent of the world’s internet traffic.”

Loudoun’s office of economic development did not respond when asked if it would support a reexamination of the effects of data centers on Virginia communities or new legislation to regulate the industry. 

Representatives for the Virginia Data Center Reform Coalition stressed their aim is to reset the relationship between Virginia and the data center industry—not drive the industry out of the state. 

“Everyone here today is a realistic, rational person who understands we are not trying to kill an industry that has done some positive things for the Commonwealth,” said Josh Thomas, a Democratic delegate-elect representing western Prince William County in Washington’s fast-growing outer suburbs. “We are trying to put some guardrails on.”

Recently, Virginians have begun clamoring for more guardrails, scrutinizing the tradeoffs data centers bring to their community. 

Glen Besa, the retired director of the Virginia chapter of the Sierra Club, said in an interview  that it’s unfair to ask Virginians to foot the bill for new power plants to feed energy-hungry data centers, especially if those plants run on fossil fuels. “Why are we bearing the burden of additional air pollution, climate pollution, additional costs when the data centers are serving all of the United States as well as the world?” Besa asked.

Kyle Hart, the National Parks Conservation Association’s mid-Atlantic program manager, said that data centers affect more than just the communities living nearby and represent an existential threat to natural resources. 

Hart called an unregulated data center industry the “single greatest unified threat to national parks that we have ever encountered in Virginia.” The state is home to 22 national parks, including historic monuments, and a portion of the Appalachian Trail.

“More must be done to regulate this industry,” Hart continued. “If the state wants to be a global leader in data center development it must be a global leader in protecting our national parks and waterways, protecting our climate from impacts and regulating and reforming this industry.”

Given the toll data centers take on Virginia’s landscape and its citizens, “it is 100 percent appropriate for the state to step in as a compelling interest,” Ian Lovejoy, a Republican  delegate-elect also from Prince William County, said at the press conference to a round of applause.

As of April 2022, Prince William County had 33 existing data centers built on approximately 523 acres of land, with another 13 currently under construction. 

Throughout the press conference, representatives from the newly formed coalition said they were eager to pursue their goals during Virginia’s new legislative session, which begins next month with Democrats now in control of both houses of the General Assembly.