Governors' Wind Energy Coalition

The moderate Democrat unveiled a package of executive actions that begins to tighten oversight of data centers, including by ordering a review of their diesel backup generators, accelerating noise regulations and designating Eastern Virginia as a “cooling-water-scarcity area.”

The governor also outlined a legislative agenda she wants the Democratic-controlled legislature to pass next year, including restrictions on on-site natural gas generation and incentives for data centers to develop their own clean energy supplies.

Data centers have become a major issue in the midterms, with candidates on both sides of the aisle scrambling to keep up with rapidly shifting public opinion. Democrats who once embraced data centers for their economic potential have pivoted to call for guardrails on them.

“We are at an inflection point with this technology,” Spanberger said Friday. “The industry has been rapidly expanding in the last few years without a coordinated or clear plan to address the impacts on Virginians – on their electric bills, their water, their land, their air, or our quality of life.”

Spanberger’s move comes amid a broader bipartisan push by governors to draw sharper lines around data centers and artificial intelligence — and comes the same day that Nevada Gov. Joe Lombardo (R) signed an executive orderputting new restrictions on data centers that want state tax breaks.

Northern Virginia is home to the world’s densest concentration of data centers. That’s made the commonwealth a flashpoint for public anger over rising power bills, as well as the facilities’ noise and air pollution. It’s also elevated Virginia into a leading indicator of how Democrats might try to balance public backlash with a tempting boom in economic development.

Virginia will play a particularly influential role in the 2028 presidential primary as one of the early states in that contest — meaning Spanberger’shandling of the issue, and Republicans’ response, could provide an important road map for Democrats who want to be president.

Spanberger earlier this year beat back a bipartisan push in the state Legislature to repeal data center tax incentives. That led to a months-long budget impasse that nearly ended in the state’s first government shutdown — and led Senate President Pro Tempore L. Louise Lucas (D) to dub Spanberger a “data center diva.”

The governor, along with House Democrats, agreed to a new energy consumption tax on data centers, capped at $600 million annually for two years. But Spanberger has held firm on tax breaks, arguing that repealing the sector’s tax incentives would be like “breaking a contract” and could undermine Virginia’s other economic development programs.

The same budget agreement directed a legislative panel to examine data center subsidies and offer recommendations for next year’s legislative session.

Lucas, the Senate’s lead budget-writer, responded to Spanberger’s actions on Friday by reprising her calls to end data center tax incentives.

“The Governor is finally feeling the heat but still ignoring the fire,” Lucas said in a statement, noting Spanberger is still defending a tax break worth $2 billion to the industry.

“I look forward to moving substantial and effective legislation that Virginians demand,” she said. “I hope the Governor will be on the same page for the 2027 session.”

A very different message emerged from the lower chamber, which sought to preserve the tax incentives in this summer’s negotiations.

House Speaker Don Scott (D) said he was proud to stand with Spanberger’sactions, which he called a “moratorium on bad actors.”

“Governor Spanberger has done something Virginia has needed for a long time: she’s turned the page on Virginia’s approach to data centers,” he said in a statement. “If you’re a developer who wants to cut corners, ignore your neighbors, or stick Virginia families with the bill, you’re not welcome here anymore.”

The Data Center Coalition, the sector’s trade association, said it did not have input into Spanberger’s actions and was awaiting details on how the governor and legislature would enact them.

The industry shares Spanberger’s goals, Nicole Riley, the coalition’s director of Virginia government affairs, said in a statement. Balanced policies can continue delivering jobs, investment and community benefits, she added, “if done right.”

“However,” she said, “significant and abrupt policy changes without meaningful stakeholder engagement could prove unworkable and jeopardize the real tangible benefits this industry can create.”

Curbing on-site gas generation could draw the commonwealth into a fight with the fossil fuel industry, too. The Natural Gas Coalition of Virginia said it was “very concerned” by Spanberger’s proposal.

The governor, though, dismissed criticism that businesses might raise about her actions.

“I don’t need industry to tell our Chief Energy Officer what they think Virginia should be doing in the way of backup generation,” she said in response to a question from POLITICO, adding that she was proud to roll out policies no other states have enacted.

“I’ll defer to the industry to determine whether they would choose to meet those very high standards,” she said. “We’re not going to apologize for setting the highest standards.”

Environmental leaders hailed Spanberger’s actions as a watershed moment in their fight to restrain the data center boom, even as they acknowledged they would press the moderate Democrat to go further.

“The political act that happened today sends a signal to all local officials and all legislators and all future candidates — that this issue is being taken seriously,” Mike Town, executive director of the Virginia League of Conservation Voters, told reporters after Spanberger’s announcement.

Those divisions underscore the way data center politics could dog Spanbergerand other Virginia Democrats who stop short of full-throated opposition — on the right and the left.

“You’re going to see statements from our partners that aren’t as glowing as the ones that we gave today, and that’s okay,” LCV’s Town said. “Because the governor still — for how excited we are to work with her — she still needs to be held accountable.”