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Key developments
Virginia advances data-center power tax compromise
Virginia Mercury reported that Virginia legislators approved a two-year, $205 billion budget on June 22, sending it to Gov. Abigail Spanberger before the July 1 effective date. The deal creates a $0.011-per-kWh monthly energy consumption tax on data centers, capped at $600 million annually with excess revenue refunded, while preserving the sales and use tax exemption through 2035. It also directs DEQ to set cooling-water scarcity rules by July 2027, impose stricter cooling requirements in the Eastern Groundwater Management Area after July 1, 2027, and establish noise rules by 2029 with $32,500-per-day fines beginning in 2030.
Why it matters
Virginia is turning data-center growth into a statewide tax, water, and noise regulatory framework rather than ending the industry’s core sales-tax exemption.
Sources & driving stories
VIRGINIA MERCURY
Virginia Mercury coverageCARDINAL NEWS
Cardinal News coverageDOJ seeks dismissal in xAI turbine lawsuit
ESG Dive and Military Times reported that the Justice Department intervened in a Clean Air Act lawsuit filed by the NAACP against xAI and MZX Tech over 27 temporary gas turbines totaling 495 MW at the Stanton Road site near Southaven, Mississippi. Plaintiffs allege the turbines powering xAI’s Colossus data centers lack required air permits and pollution controls, while Mississippi regulators say the portable units fall under mobile-source provisions. A Defense Department filing from Chief Digital and AI Officer Cameron Stanley argued that shutting the plant could impair Grok model development, and Military Times reported that the filing disclosed Grok’s use in Iran combat operations, including Maven Smart System targeting during Operation Epic Fury.
Why it matters
The case could test whether AI data-center power infrastructure can be defended against environmental litigation on national-security grounds.
Sources & driving stories
ESG DIVE
ESG Dive coverageMILITARY TIMES
Military Times coverageCalifornia backlash yields bans and moratoriums
KVCR Public Media reported that Monterey Park became the first U.S. city to ban data centers after backlash to HMC Stratcap’s proposed AI facility of up to 250,000 square feet and roughly 50 MW. The same report said Coachella approved a temporary pause after residents opposed Stronghold Power Systems plans tied to six data centers and a proposed city-owned utility. CalMatters reported that Imperial County reversed course on the nearly one-million-square-foot Imperial Data Center, imposed a 45-day moratorium, created a public zoning commission, and now faces a planned developer restraining-order request, a CEQA lawsuit from the City of Imperial, and a possible local referendum.
Why it matters
California communities are converting data-center concerns over power, water, air quality, and transparency into binding land-use limits and litigation risk.
Sources & driving stories
KVCR PUBLIC MEDIA
KVCR Public Media coverageCALMATTERS
CalMatters coverageWorth noting
WORTH NOTING
Microsoft locks in 2.67 GW gas
The Register’s Brandon Vigliarolo reported that Microsoft signed a 20-year PPA with Chevron subsidiary Energy Forge One for behind-the-meter natural-gas power at Project Kilby in Pecos, Texas, using closed-loop cooling and nonpotable brackish water plans.
WORTH NOTING
Illinois pauses new data-center incentives
Illinois Environmental Council’s Kate Katauskas reported that Gov. JB Pritzker announced a framework pausing new data-center tax incentives effective July 1 while seeking rules on energy costs, clean energy, water disclosure, and air standards.
WORTH NOTING
Oregon lawsuit challenges Hillsboro abatements
1000 Friends of Oregon reported that it filed a writ of review challenging 17 Hillsboro Enterprise Zone approvals tied to data-center tax breaks, citing estimated annual abatements of $117.3 million to $124.9 million citywide.
Still unclear
OPEN QUESTION
Will Spanberger alter Virginia’s budget deal?
The data-center tax and DEQ mandates are not final until the governor acts before the July 1 budget deadline.
OPEN QUESTION
Will national-security arguments reshape permitting fights?
DOJ’s xAI intervention could become a precedent for defending AI compute and dedicated power projects against citizen environmental enforcement.