The September 2026 edition of Virginia Business magazine quoted McGuireWoods partner Greg Riegle, leader of the firm’s Data Centers Practice Area, in a story on the rapidly evolving regulatory and political landscape facing the data center industry.
The article explored how public sentiment and legislative momentum have created new challenges for the data center industry in Virginia — home to the world’s largest data center market. Riegle offered insight into key issues shaping the debate, including the future of tax incentives and the limited authority local governments have to restrict or pause data center development.
Virginia’s sales and use tax exemption for data center equipment survived a fierce debate in the 2026 General Assembly session, but lawmakers enacted a new electricity consumption tax on data centers. Riegle told Virginia Business the debate over industry incentives remains unsettled.
“I think all of us in and around the industry expect there to be another very robust legislative debate as to whether or not we’re incentivizing the industry the right way,” Riegle said. He added that the tax exemption “has been a pivotal driver in the rapid growth of the industry in Virginia, and I think it’d be naive to think that the industry would continue to invest and grow at the same pace if that opportunity was taken away.”
While some Virginia localities have taken steps to slow data center development, Riegle said local governments “don’t have the requisite authority from the General Assembly to enact a moratorium in the traditional sense.”
Despite the challenges posed by the pace and scale of industry growth, Riegle said he sees opportunities for constructive dialogue between industry stakeholders and state and local governments.
“I think there’s still room there for the industry and those regulating it to understand each other a little bit better and try to find ways forward that can meet the collective objectives,” he said.
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