Virginia Gov. Spanberger Imposes Sweeping New Data Center Regulations, Bans NDAs

Virginia Governor Abigail Spanberger on Friday, September 18, 2026, unveiled a comprehensive package of executive actions and legislative proposals aimed at establishing what she termed the “highest standards in America” for data centers operating within the Commonwealth. The move, formalized under Executive Order 22, introduces significant new guardrails, including an immediate prohibition on state agencies from entering into non-disclosure agreements (NDAs) for data center projects, a requirement for community benefits agreements, and the country’s first crackdown on on-site natural gas power plants for data centers.

The Governor’s announcement in Richmond comes amid escalating public frustration, particularly in Northern Virginia—home to the world’s densest concentration of data centers—over issues such as rising power bills, noise and air pollution, unannounced facility expansions, and strain on the energy grid. This regulatory pivot also follows a contentious legislative battle earlier this year with state leaders regarding data center tax incentives, signaling a broader shift in how Virginia seeks to balance economic development with environmental and community concerns.

For small and mid-sized companies involved in or impacted by the data center industry, these new regulations represent a substantial shift in the operational landscape. We’ve seen firsthand how rapidly evolving regulatory environments can create significant compliance challenges and unexpected financial burdens for businesses that aren't prepared. The elimination of by-right approval for larger facilities and the new requirements around environmental impact and community engagement mean that site selection, permitting, and project development will become more complex and time-consuming. Businesses need to proactively reassess their operational strategies, supply chain dependencies, and financial projections to account for these changes. Our view is that proactive engagement with these new standards, rather than reactive adjustments, will be key to maintaining competitiveness and avoiding costly penalties. C&S Finance Group LLC specializes in outsourced CFO services, helping clients navigate such complex regulatory shifts, optimize business processes, and manage financial risk. We encourage affected businesses to contact C&S Finance Group LLC at csfinancegroup.com to develop a robust strategy for compliance and sustained growth.

Executive Order 22, the first action under Virginia’s newly proposed “Data Center Accountability Framework,” immediately activates several key initiatives. Beyond the NDA ban, it eliminates by-right approval for data centers consuming more than 25 megawatts of power, now mandating local approval for such large-scale projects. This change is designed to give local communities greater oversight and input into development decisions. The order also directs state agencies to expedite the development of new regulations concerning data center noise, emissions, water use, and energy costs, with the goal of strengthening environmental protections and lowering energy costs for residents. Furthermore, it incentivizes data centers to adopt clean energy sources, aligning with broader state environmental goals.

In a move reflecting growing concerns about emerging technologies, Governor Spanberger also established Virginia’s Artificial Intelligence Task Force through Executive Order 22. This task force is charged with crafting legislative guardrails to address critical issues such as automated workforce displacement, data privacy, and cybersecurity risks, signaling the state’s intent to proactively govern the broader tech landscape alongside data center expansion. While some of the policies outlined by Spanberger are immediate executive actions, others will require codification during the 2027 General Assembly session, indicating an ongoing legislative process.

Governor Spanberger emphasized that the order does not prevent the construction of new data centers but rather ensures they adhere to higher standards. She also stated her intention to work towards bringing existing facilities into compliance with these new, more stringent requirements. “Starting today, this industry no longer has carte blanche to play by their own rules in Virginia,” Spanberger declared at the press conference, underscoring the shift from a hands-off approach to one of active governance. The Virginia Senate Democratic Caucus expressed support for the Governor’s focus, noting that a Joint Tax Subcommittee is already studying data center policy and related fiscal matters, and will carefully consider the Governor’s proposals.

This development in Virginia mirrors a broader bipartisan push by governors across the nation to establish clearer boundaries around data centers and artificial intelligence. On the same day, Nevada Governor Joe Lombardo also signed an executive order imposing new restrictions on data centers seeking state tax breaks, highlighting a national trend towards increased regulatory scrutiny of the rapidly expanding industry.

Moving forward, businesses and policymakers will closely watch the legislative process in the 2027 General Assembly session as key components of the Data Center Accountability Framework seek codification. The specific regulations developed by state agencies concerning noise, emissions, water, and energy will also be critical, as will the initial findings and recommendations of the AI Task Force. The industry’s adaptation to these new standards, and how these changes influence future investment and development decisions in Virginia, will provide important insights for other states grappling with similar challenges.