Virginia Legislators Pushing to Use Taxpayer Funds for Natural Gas Projects

RICHMOND, Va.—Lawmakers from both parties are seeking to use state tax dollars to boost new natural gas infrastructure projects related to data centers and chicken processing plants, as a proposed spending plan is nearing completion before going to the governor for review.

House Appropriations Chair Del. Luke Torian (D-Prince William) is including in the House budget proposal $15 million to provide “road extension, grading, and natural gas pipeline extension” for business site readiness improvements for a natural gas power plant and potential data center in Pulaski County, in rural Southwest Virginia. 

Del. Rob Bloxom (R-Accomack) is seeking up to $7.4 million in the House proposal for Chesapeake Utilities to extend natural gas from Maryland into Accomack County, Virginia, on the Eastern Shore to serve chicken processing plants owned by Perdue Chicken and Tyson Foods, as well as NASA’s Wallops Island facility, among other potential users. 

“These counties, what they’re telling us, is that they need money in order to put in the infrastructure for future economic growth, whether for the data center or some other industry that will come in,” said Torian. “Pulaski is perhaps not the only county that is in need of resources for infrastructure development, whether it be some level of energy design. They all need it.”

Details of the proposal for Pulaski County are sparse. 

According to information included in the House proposal, the county would enter into memos of understanding with the state’s Department of Housing and Community Development to require “a dollar for dollar match of non-state resources for these site readiness improvements.”

In Pulaski County, the state funding would also “help secure up to $3.0 billion in capital investment in the region through the construction of a data center and powerplant in the County,” the budget proposal says. 

In an interview, Torian said county officials “need money for infrastructure, so they can do economic development.”

Dels. Jason Ballard and Jonathan Arnold, Republicans who represent the locality, said they didn’t have any details about the project. 

“Generally speaking, any time when we get money coming into [the county] that’s a good thing, but I just don’t know what it’s for,” Ballard said.

The proposal comes as the state is wrestling with the high energy needs of, and the frequent community opposition to, data center development. 

Virginia’s non-partisan legislative research arm, called the Joint Legislative and Audit Review Commission, found that about 70 percent of the world’s internet traffic moves through Virginia data centers, which house large numbers of computer processors. Northern Virginia, birthplace of the internet, is home to the world’s largest concentration of data centers—largely because of access to fiber internet cables and a tax break.

While the JLARC found that localities throughout the state have been seeking to lure the facilities to reap local tax revenue, the research agency found that proximity to fiber optic cables has not been a priority for the industry. 

In Loudoun County, where 25 million square feet of data centers comprise “Data Center Alley,” the locality expects to receive about $895 million in real estate and personal property tax revenue this year, allowing for lower local tax bills than neighboring localities. But concerns about the noisy, warehouse-like buildings exist in many communities, given their electricity demand, which is expected to more than double the amount of electricity in Dominion Energy’s service territory from about 23 gigawatts in the summer of 2024 to about 45 gigawatts in 2039. 

That concern is prompting claims that more natural gas infrastructure is needed to provide reliable power, as natural gas proponents say solar and wind alternatives can’t produce electricity at all times, and batteries aren’t widely adopted yet. Wind and solar advocates say the renewable sources can meet the demand, cost less than natural gas and will not flood the atmosphere with air pollutants and greenhouse gases. 

Many communities also have expressed concerns about the amount of water the data centers need to keep the computers cool.

A representative from Pulaski County, where Torian’s funding would go, did not respond to a request for comment. 

The Chesapeake Climate Action Network, an environmental nonprofit adamantly opposed to any natural gas buildout in the state, took issue with the House amendments supporting natural gas development, saying that “Virginia must continue to lead on climate.”

“The state should not be using taxpayer dollars to fund new fossil fuel infrastructure at this critical juncture in our climate journey,” said Victoria Higgins, the group’s Virginia director, noting that the Virginia Clean Economy Act seeks to decarbonize Vriginia’s electric grid. 

“Any gas infrastructure built now will outlast the Virginia Clean Economy Act, and science-backed deadlines to achieve net zero emissions and stave off the worst effects of climate change,” Higgins said.

The $7.4 million request would give Accomack County funds for infrastructure support for 48.5 miles of natural gas pipeline extension. The extension would cost a total of $76.3 million to complete construction within 45 months.

U.S. Rep. Jen Kiggans (R-Virginia Beach) previously tried to secure funding at the federal level in support of the pipeline project, but withdrew the request after it drew criticism. Under the state House proposal, state funds would go to the county, and the Virginia Economic Development Partnership would enter into a memo of understanding with for-profit companies to use the funds.

“It scares me that they’ll just pull the plug and move somewhere else, and that would just be devastating to us,” Bloxom, the delegate, said in an interview with Inside Climate News, referring to the chicken plants that would tap into the natural gas. The plants are a reliable market for Virginia’s farmers to sell grain for feed, and natural gas is better for the climate than burning oil, he said.

“The state should not be using taxpayer dollars to fund new fossil fuel infrastructure at this critical juncture in our climate journey.”

— Victoria Higgins, Chesapeake Climate Action Network

Bloxom, who has requested the funding repeatedly, is one of the handful of legislators that will negotiate final spending requests behind closed doors before sending the plan to Republican Gov. Glenn Youngkin, who is a proponent of natural gas alongside renewables.

In the interview, Bloxom cited a Virginia Economic Development Partnership study, funded through a budget request he sponsored in 2022, that found natural gas is “62 percent less expensive than propane and 75 percent less expensive than electricity for industrial users.”

“The downside risk of not proceeding with the project could include the ultimate closure of the Perdue and Tyson’s chicken processing plants,” the report found, adding the locality would lose about 4,160 jobs and $22.2 million in annual state and local tax revenue.

Hobey Bauhan, president of the Virginia Poultry Federation, expressed support for the amendment, given the contributions of poultry as the largest sector of the state’s agricultural economy. 

“We’re supportive of doing that, because it gives you another option for fuel for facilities versus propane, and might be a little cheaper,” Bauhan said.

The NASA Wallops Flight Facility, home to the Virginia Spaceport Authority and Rocket Lab, could also benefit from the pipeline expansion, the study concluded.