The rapid growth of artificial‑intelligence applications has collided with America’s aging energy and permitting infrastructure. 

This collision of massive demand and regulatory friction creates a high-stakes environment where, as the recent invalidation of Prince William County’s 24.7 billion Digital Gateway project demonstrates, even the most monumental projects can be derailed by fundamental procedural errors. Global estimates project that data centers’ power consumption will expand by 160 percent to 165 percent by the end of the decade, with AI workloads rising to 27 percent of total demand by 2027. McKinsey estimates that meeting global AI‑driven demand will require $6.7 trillion in capital investment by 2030. At the same time, electric‑grid backlogs have ballooned from under two years to over ten years, forcing companies such as xAI and Amazon to build their own power plants. In Memphis, xAI imported 35 natural‑gas turbines with combined output of 421 megawatts, nearly the capacity of a Tennessee power plant. Researchers found that those unpermitted turbines could emit 1,200–2,000 tons of NOₓ annually, while environmentalists documented heat coming from 33 of the 35 units. By contrast, Amazon is investing $500 million in advanced small modular reactors (SMRs) and has announced plans to deploy 5 GW of carbon‑free power by 2039, starting with a 320 MW project in Washington state.

These dramatic figures underscore the national tension between economic growth and regulatory process. Nowhere is this more evident than in Northern Virginia, which hosts roughly 13 percent of global data‑center capacity. A recent court decision overturning the $24.7 billion Prince William County Digital Gateway rezoning provides a case study in how procedural missteps can derail monumental projects and offers lessons for developers navigating this evolving landscape.

A Verified Infrastructure Crisis

Growing AI demand coincides with significant differences between U.S. and foreign energy systems:

• Reserve margins and costs – American grids generally operate with 15 percent reserve margins, while China maintains 80–100 percent nationwide reserves. U.S. electricity costs about $0.18 per kWh compared with $0.08 per kWh in China, reflecting subsidies and faster construction of transmission lines overseas.
• Private generation – xAI’s unpermitted gas turbines illustrate how developers circumvent grid constraints. The company installed 35 turbines with 421 MW capacity, each lacking emissions controls. Amazon’s partnership with X‑Energy highlights an alternative approach—deploying SMRs to provide carbon‑free baseload power.
• Grid load growth – Dominion Energy’s 2023 annual report noted that data centers accounted for 24 percent of Virginia Power’s electricity sales, up from 21 percent in 2022. Northern Virginia Electric Cooperative expects peak electric load to grow more than 12 percent annually for the next 15 years, driven almost exclusively by data‑center demand.

Virginia’s Regulatory Patchwork: Opportunities and Pitfalls

Northern Virginia’s counties have adopted divergent policies toward data centers. Sophisticated developers can achieve competitive advantages by understanding these nuances:

• Loudoun County – Special exceptions for all data centers. In March 2025, the county eliminated by‑right development, requiring legislative Special Exception approval for every project. This shift ends the open‑door policy that made Loudoun the world’s data‑center capital.
• Fairfax County – Comprehensive ordinance changes. September 2024 amendments require full enclosure of equipment, 200‑foot setbacks from residential properties, a 1‑mile buffer from Metrorail stations, and strict architectural requirements. Only applications deemed “complete” before July 16, 2024, were grandfathered; all others face the new restrictions.
• Prince William County – Relatively permissive, but politically volatile. The county’s 26 existing data centers produce $79 million in annual tax revenue, and the ill‑fated Digital Gateway promised $400–$500 million annually. However, community opposition and procedural errors can overwhelm permissive regulations.

Virginia also offers generous incentives. The Data Center Retail Sales and Use Tax Exemption, in place until 2035, exempts qualifying equipment from state sales tax. Participation is widespread, with nearly all major operators taking advantage of the program, which cost Virginia $750 million in lost sales tax revenue in 2023. While this incentive can significantly reduce capital costs, the size of the subsidy has drawn legislative scrutiny.

Case Study: The Digital Gateway Decision

On August 7, 2025, the Prince William County Circuit Court invalidated the rezoning approvals for the Digital Gateway, which would have created a 2,100‑acre corridor for 37 data centers. Judge Kimberly Irving declared the ordinances “void ab initio,” holding that the county failed to comply with Virginia Code § 15.2‑2204 notice requirements. Key violations included:

• Late advertisement – The county published its public-hearing notice on December 9, 2023, only three days before the December 12 hearing, falling short of the statutory minimum notice period. The law requires notice to be published twice, with specific timing requirements between the publications and the hearings, which the Court explained were not met.
• Failure to make application materials publicly available – The county did not provide rezoning documents for public review when it issued the first notice, violating statutory requirements and depriving citizens of meaningful participation.
• Proceeding despite legal warnings – County Attorney Michelle Robl advised the Board to re‑advertise. Developers stated they were willing to “assume the risk” of litigation, and the Board proceeded with a 27‑hour meeting that concluded with a 4‑3 approval.

These procedural errors allowed the Oak Valley Homeowners Association and individual residents to challenge the rezoning successfully. The court’s decision illustrates that public notice requirements are a mandatory, foundational part of the land use process. The case is a powerful reminder that in a fast-paced, high-stakes development environment, even unintentional administrative oversights can have project-ending consequences for all parties involved. Notably, the invalidation highlights how strictly courts will enforce statutory requirements, making procedural diligence essential to avoid costly litigation and delays.

National Permitting Crisis and International Comparisons

Virginia’s experience is emblematic of a broader American permitting crisis. Research compiled by Competitive Enterprise Institute documents that the $64 billion in delayed or blocked U.S. data‑center projects stems from systemic bottlenecks in environmental review and litigation. Environmental impact statements (EISs) now average 4.5 years to prepare, while transportation projects require seven years from application to construction. The Fiscal Responsibility Act of 2023 sought to streamline federal reviews by:

• Designating a lead agency and single environmental document.
• Imposing page limits and deadlines, requiring agencies to complete environmental assessments within one year and EISs within two years.
• Allowing project sponsors to prepare environmental documents under agency supervision and authorizing reliance on programmatic environmental documents.

Many countries treat major infrastructure as an overriding public interest. The European Union’s provisional agreement to amend the Renewable Energy Directive designates renewable energy as “an overriding public interest,” simplifies permitting procedures, and establishes acceleration areas for renewables. CEI’s study notes that the EU promotes one‑stop‑shop permitting and unified application processes. Denmark’s Danish Energy Agency acts as a one‑stop shop for wind farms, reducing regulatory risk by coordinating all authorizations. These approaches contrast sharply with America’s fragmented system and highlight reforms that could accelerate clean‑energy deployment.

Strategic Takeaways for Developers and Municipalities

The confluence of soaring AI‑driven demand and complex permitting regimes creates both risks and opportunities. Practitioners should consider the following strategies:

• Prioritize procedural compliance. As the Digital Gateway case shows, courts will invalidate approvals when statutory notice requirements are ignored. Developers should build schedules that allow sufficient time for legal advertising and ensure that application materials are available upon notice.
• Choose jurisdictions strategically. Loudoun’s special‑exception regime, Fairfax’s strict setbacks, and Prince William’s community opposition illustrate how regulatory landscapes can differ dramatically across neighboring counties. Understanding these differences early can inform site selection and negotiations.
• Engage communities early and substantively. The Digital Gateway opposition mobilized homeowners, environmental groups, and the National Park Service. Early outreach can surface concerns and lead to design changes that avoid litigation.
• Plan for energy independence. Given grid constraints and interconnection delays, large projects may need on‑site generation or long‑term power‑purchase agreements. xAI’s unpermitted turbines offer a cautionary tale, while Amazon’s SMR investments suggest a path toward carbon‑free reliability.
• Incorporate federal permitting reforms into schedules. The Fiscal Responsibility Act’s deadlines provide predictability, but agencies may extend them only as necessary. Developers should prepare complete applications and monitor lead‑agency designation to benefit from streamlined reviews.

Conclusion

America’s race to build AI infrastructure is testing the limits of its energy and permitting systems. Northern Virginia remains the epicenter of this conflict, offering lucrative opportunities and cautionary examples. By respecting procedural requirements, choosing jurisdictions wisely, engaging stakeholders, and planning for energy independence, developers can navigate this landscape effectively.

If you have questions about how these developments might affect your project or would like assistance navigating local ordinances and permitting requirements, please contact Andrew Gregg at (703) 284-7254 or agregg@beankinney.com. Bean, Kinney & Korman regularly represents property owners, contract purchasers, tenants, and other stakeholders in zoning and land‑use matters throughout Northern Virginia and the D.C. metro area.

This article is for informational purposes only and does not contain or convey legal advice. Any views expressed herein are those of the author and may not reflect the views of the firm or its clients.