Virginia Launches Data Center Accountability Framework

What happened: On September 18, 2026, Virginia Governor Abigail Spanberger signed Executive Order (EO) 22, launching a sweeping Data Center Accountability Framework to promote transparency, environmental protection, energy affordability, grid reliability, and workforce and economic benefits in the Commonwealth. The EO establishes an AI Task Force to address the “unparalleled risks posed by unregulated AI development,” and names the Office of the Chief Energy Officer (OCEO) as the lead for coordinating implementation of the EO. With the EO, Governor Spanberger seeks to “lead the nation and this industry in setting the standard for what responsible data center development means.”

Who’s Impacted: Data center developers, owners, and operators in Virginia; companies considering new Virginia data center sites or expansions; utilities and other energy providers; local governments; and companies involved in data center construction, equipment, energy, water, and related infrastructure in Virginia. While some measures take effect immediately, most of the EO’s provisions set in motion accelerated agency action across a broad range of topics related to data center development.

Recommended Next Steps: Companies should revisit Virginia development strategies now. Developers should evaluate community engagement, backup-generation emissions, noise, water availability, grid impacts, energy costs allocation, workforce impacts, and local procurement earlier in site selection and project design. They should also monitor upcoming Virginia Department of Environmental Quality (DEQ) proceedings and other agency processes that may shape future permitting and operating requirements, and ensure their interests are considered through regulatory advocacy and, if necessary, litigation.

Key Dates: Several provisions took effect immediately on September 18. Additional agency actions and recommendations are due over the next 120 to 240 days, with criteria for a new plan for responsible data center development due by the end of 2027.

Immediate Changes

Several immediate changes may have direct implications for project development.

• Transparency and nondisclosure agreements: Executive branch agencies may no longer enter into, require, or enforce nondisclosure agreements that prevent the disclosure of material information about proposed commercial data centers, including public incentives, anticipated resource demands, and potential community impacts. Existing contractual commitments and nondisclosure agreements remain in effect with limited exceptions.
• State development and expedited-review assistance: The Virginia Economic Development Partnership (VEDP) may no longer provide assistance through the Virginia Business Ready Sites Program, expedited permitting programs, site-readiness, or similar discretionary programs for new data center projects with anticipated peak electrical demands of 25 megawatts (MW) or greater.
• Cooling water scarcity designation: The EO designates the Eastern Virginia Groundwater Management Area as a “cooling water scarcity area,” immediately subjecting that region to the designation contemplated by the EO’s broader water use framework.

Environmental Requirements on the Horizon

The EO also directs DEQ, Virginia Energy, and other agencies to undertake and, in some cases, accelerate work on several siting and environmental issues affecting data center development.

• Noise: DEQ must accelerate the timeline for its existing plan to develop statewide noise regulations for data centers. Within 180 days of the EO, DEQ must provide the Governor with a proposed accelerated timeline, workplan, and stakeholder engagement plan for the rulemaking process. The EO orders DEQ to develop “a public process that meaningfully engages affected communities, local governments, data-center operators, public-health experts, and other stakeholders.”
• Backup generator cumulative impact and emissions reduction: DEQ, in consultation with the Virginia Department of Health and Virginia Energy, must review cumulative impacts from diesel and other backup generation operations at data centers, including localized air-quality effects and lower-emission alternatives. The review will incorporate concepts reflected in several proposed bills during the last legislative session, such as requiring a review of the number and location of all backup generators in the Commonwealth, and evaluating potential measures to retrofit existing Tier 2 generators to more stringent Tier 4 standards. This provision of the EO, combined with the recently enacted HB507 requiring Tier 4-equivalent technology at new data centers, underscores the substantial scrutiny on backup generators at Virginia data centers. DEQ’s report on its findings and recommendations is due within 180 days.
• Water: DEQ is also required to develop criteria to designate “cooling water scarcity areas,” defined as areas “where the evaporation of water for cooling purposes could have detrimental reductions in the quality or quantity of water available for other beneficial uses.” Under the EO, DEQ must propose an accelerated timeline, work plan, and stakeholder-engagement plan for the cooling water scarcity area rule.
• Siting:  Within 180 days, Virginia Energy must solicit input from local governments and other stakeholders to identify opportunities for data center developments that diversify economic benefits while minimizing impacts on energy, water, land, infrastructure, and communities. The analysis must consider brownfields and previously developed sites, smaller or distributed data centers, regional diversification, use of reclaimed water or waste heat, and impacts on scenic and historic landscapes. Virginia Energy must submit recommendations to the Governor within 240 days of the EO.

Community Engagement and Responsible Development Will Carry More Weight

The EO also directs the OCEO and other agencies to develop tools and standards to encourage responsible data center development and increase community engagement.

• Community engagement: The OCEO must publish an initial Data Center Planning and Community Engagement Toolkit for use by local governments and communities. The Toolkit will include model questions, information requests, and disclosure templates for proposed data centers, as well as guidance for evaluating electricity demand, water use, wastewater management, backup generation, air emissions, noise, traffic, public-service needs, and other material impacts. It will also address community-benefit agreements, early and accessible community engagement, and approaches to project planning, design, landscaping, buffering, and mitigation of impacts on neighboring communities. The EO also permits the OCEO to pursue grants, philanthropic support, and nonstate resources; establish partnerships; and engage with nonprofit organizations, academic institutions, and independent experts to strengthen local and community capacity.
• Responsible development: The OCEO must also develop criteria and an implementation plan for the Virginia Local Energy and Accountable Data Centers (VA-LEAD) designation, a tiered program intended to identify responsible developments and improve transparency and understanding of data center development impacts on the Commonwealth’s economy and communities. VA-LEAD criteria will address energy and infrastructure impacts, water and land use, noise, workforce development, clean-energy and resilience investments, local sustainable construction materials, and community benefits.
• State incentives and administrative services: The EO contemplates using the VA-LEAD designation as a baseline for executive agencies to align incentives and administrative services, prioritizing developers that achieve the highest responsible-development tier. Although the program remains under development, the criteria could influence how Virginia evaluates and supports future projects.

These initiatives could make community engagement and responsible development considerations increasingly important early in the development process. Developers can use the period before the Toolkit and VA-LEAD criteria are finalized to assess disclosure practices, community engagement strategies, project design, and potential community benefits against the factors Virginia has identified for future guidance and incentives. 

Focus on Energy Infrastructure, Costs, and Grid Reliability

The EO also directs the OCEO and other agencies to address broader issues like energy costs, community benefits, and grid reliability associated with large data center loads.

• Infrastructure costs: The OCEO must work with utilities, the State Corporation Commission, PJM, and other stakeholders to allocate infrastructure costs associated with large data center loads. This could include assigning costs from PJM’s Reliability Backstop Procurement to large-load data centers and promoting equitable cost allocation from PJM’s Interim Resource Adequacy Service.    
• Affordable community energy programs: The OCEO must also identify strategies that direct data center investment to local energy projects that reduce household energy costs, expand energy access for low- and moderate-income and historically disadvantaged communities, strengthen local grid reliability, and include consumer protections.
• Grid reliability: Virginia Energy must evaluate operational practices, including ride-through and voltage protections, that could improve grid reliability.
• Methane emissions: Within 180 days, the Chief Energy Officer must develop recommendations supporting data center investment in reducing methane emissions from natural gas infrastructure. Growing data center electricity demand is expected to increase demand for natural gas-fired power, whether supplied through the grid or generated on site. This initiative could affect emissions-related planning beyond a data center’s own equipment.

Taken together, these initiatives could influence how data centers obtain power, who bears the associated infrastructure costs, and the extent to which data center investments support grid reliability, energy affordability, and greenhouse gas emissions. Developers should consider whether clean-energy procurement, storage, or similar investments could mitigate risk to project economics.

What Data Center Developers and Operators Should Do Now

Companies with existing or planned Virginia projects should:

• Prepare for greater project transparency and community involvement. Review disclosure practices, community engagement plans, and potential community benefits before local concerns become project-critical.
• Evaluate environmental risks. Assess backup generation, cumulative air impacts, noise, cooling technology, groundwater availability, wastewater, and other site-specific impacts against the issues DEQ has been directed to address.
• Model energy and grid costs. Consider how future cost allocation measures, curtailment procedures, and grid-reliability expectations could affect large load projects.
• Participate in implementation proceedings. The next 120 to 240 days will include stakeholder processes that could influence future rules, guidance, and siting policies.
• Track the 2027 General Assembly session. Additional components of the Governor’s Framework may require legislation before they become binding requirements.

The EO does not establish a new permitting regime for Virginia; rather it is the catalyst for a series of agency actions that, if implemented, could materially affect data center development in the Commonwealth. Developers that incorporate those issues into project planning now will be better positioned to respond as the state translates the Framework into regulations, guidance, and legislation.  Developers may also want to consider applying Virginia’s community engagement and community benefit-related tools and criteria in jurisdictions outside of Virginia, as these measures may help address growing local concerns across the country about data center growth.

With deep experience in Virginia and across the Mid-Atlantic, Beveridge & Diamond regularly represents energy developers, utilities, and large industrial consumers in litigation, regulatory, and transactional matters. The firm’s Data Center, Electric Power, and Renewable Energy practice groups provide comprehensive environmental regulatory, litigation, and transactional support to clients across the data center, manufacturing, and energy development sectors.