Virginia EO 22 Changes the Rules for 25 MW+ Data Centers

If FERC clears the program, Virginia data centers could face curtailment obligations that most current operating plans have not modeled

Alert Level

Active monitoring required; one element demands immediate action. The exclusion of new data center projects with anticipated peak electrical demand of 25 MW or greater from Virginia’s Business Ready Sites Program and discretionary site-readiness and expedited-review programs took effect September 18, 2026 — the day the order was signed. For operators with active site evaluations, the acceleration benefit those programs provided is already gone. Everything else in the order operates on agency deadlines running from 120 to 240 days, but the incentive removal carries no transition period.

What Is Changing

Executive Order 22 establishes the Virginia Data Center Accountability Framework and directs multiple executive branch agencies to implement it under coordinated deadlines. The order rescinds prior Youngkin Administration orders, though some features remain active until superseded by new agency action.

For energy-focused operators, four provisions carry direct operating weight.

Cost allocation and grid reliability. The Office of the Chief Energy Officer must engage utilities, the State Corporation Commission, and PJM to redirect data-center-driven infrastructure costs — including PJM Reliability Backstop Procurement costs — away from residential ratepayers and toward the large loads generating them. This represents active state pressure on cost-allocation structures that have historically favored large loads inside PJM’s territory.

Curtailment exposure. The same office is directed to work with utilities on emergency curtailment procedures for data centers under PJM’s Interim Resource Adequacy Service program, pending FERC approval. If FERC clears the program, Virginia data centers could face curtailment obligations that most current operating plans have not modeled.

VA-LEAD scoring. The Office of the Chief Energy Officer must develop a tiered scoring framework — modeled on LEED and Energy Star — evaluating energy and infrastructure impacts, water use, noise, workforce development, clean-energy investment, and community benefits. Draft criteria are due to the Governor’s office by end of 2027. Once finalized, VA-LEAD could determine which projects access state support.

Backup generation review. The Department of Environmental Quality, alongside the Department of Health and Virginia Energy, must complete a cumulative-impact review of diesel and alternative backup generators at data centers within 180 days. Permitting recommendations follow. Operators running significant diesel backup capacity inside Virginia should treat this as a pre-regulatory warning signal.

Who Is Most Exposed

Operators with active development pipelines in Northern Virginia carry the sharpest near-term exposure. Projects at or above 25 MW that had counted on Business Ready Sites support, expedited review, or discretionary site-readiness assistance are now outside the eligibility boundary. Hyperscalers and large colocation providers with multi-campus builds in Ashburn, Manassas, and adjacent markets will feel this most acutely, given how those programs historically compressed local approval timelines.

Operators using groundwater-based cooling in the Eastern Virginia Groundwater Management Area face a second exposure layer. The order directs the DEQ to establish “cooling water scarcity areas” and accelerate rulemaking. The final rule timeline extends beyond the 180-day reporting deadline, but the regulatory direction is clear.

Diesel backup generator portfolios — standard across the Northern Virginia campus ecosystem — represent a third and underweighted exposure. The cumulative-impact review is oriented toward permitting recommendations, which could restrict new generator additions or require mitigation for existing capacity.

What Happens If You Do Not Act

The immediate cost is forfeited optionality. Virginia’s incentive programs reduced early-stage development friction and compressed infrastructure-readiness timelines. Projects moving forward without accounting for the new Framework face cost-allocation restructuring mid-cycle, permitting complications from the backup-generator review, and exclusion from VA-LEAD support once that system governs state access.

On the grid side, curtailment exposure under PJM’s Interim Resource Adequacy Service program — if FERC approves it — could materially affect SLA commitments and power-delivery reliability assumptions. Virginia operations that have not modeled curtailment scenarios will need to revise load forecasts before the program is finalized.

The NDA ban adds a legal dimension requiring immediate counsel review. Executive branch agencies are prohibited from entering or enforcing nondisclosure agreements covering material information about proposed developments, with narrow exceptions. Operators accustomed to using NDAs to manage disclosure timing during site selection will need to adjust their approach across the Virginia portfolio.

3-Step Action Path

This week: Map every active Virginia project against the 25 MW threshold. Projects below it retain access to state incentive programs for now. Projects at or above it do not, and development assumptions — including timeline, permitting sequencing, and infrastructure-readiness costs — should be revised accordingly.

This month: Initiate a baseline review of diesel backup generator inventory and water-use profiles across Virginia facilities. The DEQ cumulative-impact review will be the first formal regulatory lens on this exposure. Documented baseline data on generator count, fuel consumption, and cooling water sourcing positions your team to respond when permitting recommendations land.

This quarter: Engage your PJM affairs team and external regulatory counsel on two fronts simultaneously: the cost-allocation engagement the Office of the Chief Energy Officer is required to pursue with utilities and the SCC, and the curtailment framework under PJM’s Interim Resource Adequacy Service program. The cost-allocation shift is politically durable and likely to have lasting effects on the economics of large Virginia data center loads regardless of how the curtailment element resolves.

What Is Still Unclear

The VA-LEAD tiered scoring criteria are not due until end of 2027. The scoring thresholds, weighting, and access consequences remain undefined. Whether VA-LEAD will function as a mandatory gateway or an optional qualification layer for state support has not been confirmed. Compliance investment cannot be sized against a framework that does not yet exist.

The curtailment procedures depend on FERC approval of PJM’s Interim Resource Adequacy Service program — a variable entirely outside Virginia’s control. The order directs state preparation, not implementation. Actual curtailment exposure does not crystallize until FERC acts.

The 180-day rulemaking timelines on noise and cooling water scarcity areas set a reporting deadline, not a final rule deadline. Operators should not read the 180-day clock as the end of the regulatory process; it marks the beginning of the formal recommendation phase, with rulemaking to follow.