The Data Center Industry Talked Itself Into a Virginia Moratorium

By Will Melton · August 2, 2026 · 8 min read read

Category: Opinion

Virginia's data center industry preserved its $1.9 billion tax exemption in June, then watched four senators from both parties back a statewide moratorium five weeks later. A Richmond marketer on why the messaging failed.

I did a double take the first time the ad played.

Sweeping aerial footage, a confident voiceover, and an opening line: "From the birth of a nation to the surge of industry." I was watching YouTube in the weeks before Virginia's budget fight came to a head, and somebody had just invoked the title of a 1915 film about the Ku Klux Klan to sell me data centers.

The ad shares its opening wording with D.W. Griffith's The Birth of a Nation, which depicted the Klan sympathetically and is widely considered one of the most racist films in American history. I have no evidence the reference was deliberate, and I am not making that claim.

What I keep coming back to is the chain of people who saw it before I did. A writer wrote that line. A creative director approved it. A client signed off. A media buyer put money behind it and pushed it across the Commonwealth. Somewhere in that chain, somebody should have said the words out loud and heard what I heard. Nobody did. Every time the ad played again, I had the same thought: who is making these decisions, and how far are they from the people they are talking to?

That distance is the whole problem. I have spent my career in marketing, which is the only credential I am claiming here, and it is enough to recognize an industry that is spending heavily to be heard while doing almost nothing to listen.

Virginia Connects, the Data Center Coalition and the Money Behind the Ads

Two separate organizations are running Virginia's pro-data center messaging, and they do different jobs.

The ad came from Virginia Connects, a nonprofit that describes itself as representing stakeholders who support the infrastructure data centers provide. As the Prince William Times documented and Channel RVA reported in June, Virginia Connects was formed by the Data Center Coalition, a Northern Virginia trade organization of 32 data center developers and owners.

Virginia Connects handles public persuasion. YouTube spots, mailers to Virginians, unsolicited text messages, some of it carrying no disclosure identifying who paid for it. The Data Center Coalition handles lobbying and political money, including a political action committee that has received at least $640,000 from Virginia Connects' founding data center partners, according to VPAP. Those founding partners include Amazon Web Services, CloudHQ, CyrusOne, Equinix, STACK Infrastructure and Vantage Data Centers. Around Christmas 2024, Virginia Connects ran roughly $700,000 in ads across the state.

The "Closed for Business" Response to Virginia Moratorium Calls

The Data Center Coalition's answer to a proposed statewide pause was a warning about Virginia's reputation.

When Sen. Glen Sturtevant called this week for a moratorium, the Coalition told reporters that moratoriums "send a signal that an area is closed for business."

I know what that sentence is built to do. It steps around every question actually on the table — groundwater levels, electricity rates, grid stability, air quality, water discharge — and substitutes a threat about the business climate. It is fear-based. It is written for officials rather than residents. It answers nothing that anyone asked.

It is also the house style. When the sales tax exemption was in play this spring, Keith Martin of the Virginia Chamber of Commerce warned that changing it "could also call Virginia's reliability as a partner for all industries into question." Gov. Abigail Spanberger, arguing to honor the existing terms, said at an April groundbreaking that "the fact that Virginia is a reliable partner matters as much as the incentives."

Reliability. Partnership. Business climate. It is a fluent and complete vocabulary for talking about capital, paired with a near-total absence of vocabulary for talking about people.

Why the Business-Climate Argument Misreads Virginia

Virginia is a good state to do business in partly because it takes the people side of business seriously.

Virginians are proud of the first half of that sentence. The industry's messaging ignores the second half, and treats the two as a trade, where protecting residents costs you investment and welcoming investment costs you residents. Virginians can hear that the trade is false.

You cannot ignore the people in pursuit of the business. Data centers are one industry among many in this Commonwealth, and every one of them has to coexist with the people who live here. Regional economic development is a legitimate thing to pursue and I am glad Virginia pursues it. If what this industry is doing to water, power and air proves unsustainable, no amount of economic development enthusiasm changes that math.

The June Budget: $1.9 Billion Exemption Preserved, Consumption Tax Added

Virginia's data center industry won the biggest policy fight of the year five weeks ago.

Spanberger signed the biennial budget on June 30. The data center sales and use tax exemption survived intact, worth roughly $1.9 billion a year in forgone state revenue and scheduled to run through 2035. The Senate's push to sunset it in 2027 failed. The House's clean energy conditions failed. What lawmakers created instead was an electricity consumption tax of $0.011 per kilowatt-hour effective July 1, capped at $600 million a year with refunds above the cap, which is about a third of the value of the exemption the industry keeps.

One month later, four senators from both parties are calling for a pause. The industry got the outcome it wanted in June, held the same messaging posture through July, and watched the moratorium conversation go bipartisan by the first weekend of August.

Bipartisan Moratorium Support in a Single Week

Four Virginia state senators, two Republicans and two Democrats, moved on data center restrictions within days of each other.

Sturtevant, a Republican from Colonial Heights, wrote to Spanberger urging an executive order pausing approval and development statewide. "The question is no longer simply how to regulate more data centers," he said.

Within a day, Senate President Pro Tempore Louise Lucas, a Portsmouth Democrat who chairs Senate Finance, said a statewide moratorium "is a serious proposal that deserves serious consideration."

Republican Richard Stuart and Democrat Russet Perry sent a joint letter asking Spanberger to call a special session on groundwater, citing a Department of Environmental Quality report finding Virginia's groundwater under "serious and immediate strain."

In Loudoun County, supervisors voted 6-1 in July to prepare a moratorium item for September, though the county attorney has said he doubts the board holds that authority under the Dillon Rule. In July a high-voltage transmission line in Ashburn went offline, some data centers switched to backup power, and the resulting ripple caused lights to flicker from Chicago to Boston to Miami. When Richmond and Henrico asked everyone to conserve water this summer, the first thing residents wanted to know was whether data centers were exempt. They were not exempt.

Nationally, Gallup found 71% of Americans somewhat or strongly opposed to data center construction in their communities. On July 14, New York Gov. Kathy Hochul signed the nation's first statewide moratorium on new hyperscale data centers, pausing state environmental permits for up to a year.

Whether a moratorium is sound policy is a genuine debate with serious people on both sides, and my read is that public opinion has already moved regardless of where I land. What I can say with confidence is that this was avoidable, and the industry spent years avoiding the work that would have avoided it.

Central Virginia's Buildout and the Loudoun Comparison

Northern Virginia is near capacity, and the overflow is arriving in Central Virginia now.

Loudoun County became the densest concentration of data centers on Earth, and it is Loudoun's supervisors who are now weighing a pause. Richmond is next in line and moving faster than Loudoun did. Google's $9 billion Virginia expansion includes its first Richmond-area data center in Chesterfield's Meadowville Technology Park, with two more county sites planned. Powhatan approved a $2.7 billion campus. Henrico already hosts more than ten facilities with more in the pipeline, and Henrico County government asked its own employees to cut power usage as electricity rates jumped 25%. My Channel RVA colleague Courtney Turrin reported that Richmond's data center inventory grew sevenfold in the first half of 2025.

Central Virginia is on track to eclipse the current data center capital, and it will do so under the same terms Loudoun accepted before anyone understood what they were agreeing to. Slowing that down long enough to set better terms is a reasonable thing for this region to want.

Spin as the Default Response to Community Concerns

The industry's reflex when a community raises a concern is to spin, and it fires every time.

Maybe they hear people. I suspect they do. There are four moves available when residents raise an objection: acknowledge it, listen to it, work the problem, and say publicly what you are working on. The industry performs the fourth one in press releases about job numbers and investment totals, and skips the first three.

The Case the Industry Isn't Making: Breakthroughs and Margin-Driven Efficiency

There is a true and compelling story here about AI, and the industry is not telling it.

AI has produced real breakthroughs in protein structure prediction, materials science, medical imaging and grid optimization. The efficiency work is real too. Closed-loop cooling, more efficient chips, better memory architecture, smarter compute scheduling.

The industry is doing that work for money. Every watt, every gallon, every idle GPU cycle is margin walking out the door, and at current growth rates the resources run out. That motive is more durable than goodwill, since goodwill evaporates the next time a quarter comes in soft. Almost no one in the industry will say this plainly in public, because it sounds less noble than a press release. It is also far more believable.

The larger claim goes unmade as well: the technology inside these buildings is a tool for the problems the buildings create. Better load forecasting, smarter grid management, materials research aimed at lower emissions. That case can be made with real examples, and Virginians would be receptive to hearing it from someone credible.

Twenty-Five Years of Quiet Buildout in Virginia

Virginia's data center problem is twenty-five years old and only newly visible.

The Commonwealth has been building these facilities since the early 2000s, and Loudoun reached global scale while most of the state paid no attention. What changed recently is visibility. Power bills rose, a drought arrived, a grid event made national news, and AI put the phrase "data center" into every headline in America.

The industry had twenty-five years of quiet in which to build relationships, disclosure habits and community standing. It used that time to build capacity.

A Virginia Permanent Fund and Other Available Solutions

Workable solutions already exist, and the industry could be championing them.

Last month in these pages I proposed one: a Virginia Permanent Fund modeled on Alaska's. A fixed share of data center revenue deposited by law into an invested endowment the legislature cannot raid, principal never spent, earnings split between rebuilding unemployment and retraining for AI-driven displacement and a flat dividend to every Virginian. Alaska's fund was built by a Republican governor, has survived fifty years and administrations of both parties, and has distributed more than $25 billion to residents.

I shared it with state legislators. I have not heard from anyone in the industry.

A fund like that is good for the industry. It buys durable social license, meaning a public with a concrete reason to say yes. Henrico County already ran a small version, channeling data center tax revenue into a $60 million affordable housing trust fund that helped finance hundreds of affordable units in two years.

It is one idea among many. Ratepayer rebates, dedicated water infrastructure funds, local generation requirements, workforce pipelines into the trades. The specific mechanism matters less than the posture behind it.

What Real Community Partnership Requires

The data center industry needs to be a better community partner in Virginia, and that requires different people doing different work.

The industry is present in the business community. I sit in chamber rooms and they are there, through representatives and through public affairs firms they have hired, and those people know the business community well. They are professionals doing the job they were hired to do.

What is missing is the principals. The developers and operators making the money are not at ground level in the communities where they build. That work does not transfer to an intermediary, because the entire value of showing up is that the person in the room has the authority to change something. A public affairs firm can carry a message. It cannot commit to a water disclosure standard, redesign a cooling system, or put money into a fund.

So: be in the community rather than in front of it. Do real listening, in rooms you did not convene, on schedules you do not control, and let what you hear change the business rather than only the messaging. Publish your water and power numbers before somebody requests them. Say the hard thing first, in your own words, while you still have the framing. Invest visibly in the places you are extracting from, and then talk about what you invested in and why.

Somebody wrote "from the birth of a nation" and nobody in that room heard it. That is the whole problem, in one line of copy.

Will Melton is the founder and CEO of Xponent21, founder of AI Ready RVA, and publisher of Channel RVA.