Ratepayer-funded subsidy for Amazon and Dominion?

Posted on by Kevin Kask
Amazon’s Blackwell Road site. Photo by Hugh Kenny/PEC

Dear Supporter,

Following up on our June email alert regarding the Amazon data center proposed in Warrenton, we want to highlight how this proposal fits into a pattern that PEC is seeing across the region. We also want to share some new information about Amazon’s Warrenton proposal that we’ve received as a result of Freedom of Information Act (FOIA) requests to the Town of Warrenton and Fauquier County (more on that further down below). Right now, the power to make this damaging project go away rests entirely in Warrenton’s hands. We must urge Town Council members to put the brakes on this project. 

Let’s start with the pattern. 

First, local governments are considering and increasingly approving data centers, a massively energy-consumptive use, on land not planned for data centers. Second, many of the sites we’ve been seeing recently are not located along existing transmission line corridors, requiring expensive new infrastructure. For example, three data center proposals associated with Amazon—in Haymarket (already built), Culpeper (just approved), and now this one in Warrenton—are in locations that require that new substations and transmission lines be routed, designed, and built to meet their extremely high energy demand, all of which is paid for by Virginia ratepayers. 

The net result? Ill-conceived and poorly sited projects that amount to a ratepayer-funded subsidy for both Amazon and Dominion, with individuals and local communities bearing the brunt—suffering negative impacts to their property, the environment, and surrounding natural, cultural and historic resources. 

Why is this happening?

Localities see data centers as economic development opportunities (i.e. a chance to bring in revenue) and are actively recruiting data centers into their communities. Because data centers use an enormous amount of energy, and because Dominion receives a guaranteed rate of return (above what they spend) on all construction, Dominion is also pushing data center development. 

As a result, county and town staff, elected officials, the data center applicant and Dominion are often discussing potential projects behind closed doors well before the public knows anything about it. And it appears that these conversations often don’t fully consider impacts to the community, such as the need for new transmission lines.

Data centers are a part of our modern infrastructure and it is up to localities, like the Town of Warrenton, to make careful decisions about where they are sited so that the negative impacts do not outweigh the benefits. 

However, the trend we see happening is that the data center industry uses promises of significant tax revenue to pressure local governments into ignoring community opposition and the potential negative impacts of a project. We saw this in Culpeper with the approval of Marvell Data Center (an Amazon subsidiary), and now we’re seeing it play out in Prince William County with the proposed Prince William Digital Gateway. Curious about how the proposed Amazon data center in Warrenton might fit in to these trends, PEC submitted FOIA requests for more details.

What’s going on in Warrenton?

To get a full picture of what has happened in Warrenton so far, our FOIA requests to the Town and County asked for correspondence related to the Amazon data center dating back to May 2020. 

The chain of emails we acquired, which are linked below, demonstrate that both the Town and County were for some time quietly pursuing an economic development opportunity with Amazon, without full transparency to the public. And while doing so, they either failed to recognize or ignored the potential broader impacts on the community from the associated transmission line upgrade.

A Few Concerning Takeaways from the FOIA Responses

Below are some of our key takeaways from the documents we received in early June 2022 (from the Town) and July 2022 (from the County):

  • The Town of Warrenton Director of Community Development and Zoning Administrator both signed nondisclosure agreements with Amazon, possibly limiting what they can share with the public. (page 11-12 of the Town FOIA document)
  • Three months PRIOR to Amazon’s purchase of the Blackwell site, Amazon and Town staff discussed the zoning text amendment that subsequently passed (last summer) permitting data centers on industrially zoned land with the approval of a Special Use Permit. (page 9 of Town FOIA document)
  • At the same time, the Town looped the County economic development department staff into the discussion so that the Town and applicant could get more information about the County’s taxing structure and estimate the annual revenue to the Town and County. (July 7, 2021 email chain)
  • If the data center is contracted by the federal government, then revenue to the Town or County could be significantly diminished since the federal government can’t be taxed by localities. The County Commissioner of the Revenue urged caution that the Town be sure about who the end user of this data center would be. (August 11, 2021 email chain)
  • The Town and Amazon discussed the old wire factory site at 615 Falmouth Street, also zoned industrial, as a potential site and indicated it could be considered for data center development in the future. This is concerning because it could potentially require ANOTHER transmission line at a later date. (page 15 of the FOIA document)
  • In an email to select Town Council members on July 15, 2021, and later in other emails to other council members, the Town Manager shared that the initial phase of the data center could be adequately served by existing infrastructure. Clearly, that is not the case, given the transmission line is being pursued. It is unknown who (Amazon, Dominion, or Town staff) provided Town Council members the incorrect information. (pages 18, 25-30, 39 of the Town FOIA document)
  • On March 31, 2022 Town staff told PEC that no pre-application meeting had been held with Amazon, although these FOIA requested documents clearly say they had one on March 2, 2022. (pages 174-176 of the Town FOIA document)
  • The Opal Substation site approved by the County Board of Supervisors on March 10, 2022 was described by Dominion as a project to improve grid reliability, but Town staff indicate in this correspondence that the intent was to help serve Amazon’s power needs. (pages 178-181 of the FOIA document)
  • Some of the records obtained through the FOIA request to the Town were exempt and/or redacted due to sections 2.2-3705.7 (2), 2.2-3705.1 (2), and 2.2-3705.6 (3) of the Virginia State Code, so we still may not have complete information or context.

These findings raise a number of questions:

  • Did Amazon get some form of assurance from the Town—before purchasing the Blackwell property—that the data center would be approved?
  • Why did Town staff tell PEC there was no pre-application meeting with Amazon, when there clearly was, and why are there no notes from this meeting?
  • How complete is this information and what else has been left out?
  • Why have two of the Town’s key Community Development Department staff members—the very people who are responsible for providing the public with information on the Special Use Permit application—signed non-disclosure agreements with Amazon? And have others done so as well?
  • Where are the revenue calculations the County ran, and did the County ever determine if the federal government would be the end user of the data center?
  • Why was the town manager under the impression that there was adequate electrical infrastructure to serve the initial phase of site development? Did Amazon lie to the Town? Did Dominion?
  • Should the Opal substation upgrade, approved on March 10, 2022, have gotten more scrutiny? Was it really needed for grid reliability?
  • If the data center and transmission line is approved, can the community then expect even more data center proposals along the line or off the new Blackwell substation in the future? 
  • If other industrially zoned land in Town moves forward with data center applications, can the community then expect new transmission lines to be extended to these properties as well? 

We encourage you to review the FOIA responses yourself and ask your elected officials these questions.

The Public Process So Far

Dominion’s Routing Process:

While PEC has been learning the back story provided by these FOIA materials, Dominion has continued with its lackluster efforts to include potentially impacted communities in its routing process. While turnout was high at the latest community open house meetings, these meetings were held in a format that divided community members into small tables and avoided fielding questions publicly. 

The same week, Dominion also held a stakeholder meeting that was not open to the media but that PEC attended as a member of the stakeholder group. During this meeting, Dominion explained that undergrounding the transmission line would cost 15 times as much as an above-ground line, making it clear that the underground routes would likely not be considered feasible by the State Corporation Commission (SCC). SCC is the agency that ultimately approves any proposed transmission line route and considers cost to ratepayers as among the most, if not the most, important factor. Representatives in the stakeholder group raised many questions, including how this transmission line would benefit the community and why Amazon could not be required to pay the additional cost of undergrounding the line.

Town’s Special Use Permit Process:

The Town of Warrenton is currently reviewing the Special Use Permit application, which puts the Warrenton Town Council at a critical juncture. If the Council chooses to issue the permit, it will not only be approving a substation and a large data center building on Blackwell Road, it will in essence also be approving an overhead 230-kV transmission line at the gateway into the Town. To be clear, no matter what the community wants, Town Council has no say over the routing decision or whether the line is above or underground. Both of these decisions lie in the hands of the SCC, which rarely chooses underground routes due to the cost burden to ratepayers.  

While considering the Special Use Permit for the data center at the Blackwell site, we believe the Town Council needs to seriously consider the potential decades of harm the transmission line could inflict on Fauquier residents, property values, public trust, and the rural character that attracts tens of thousands of residents and visitors a year, against the immediate promise of tax revenue. 

We believe a decision on the data center Special Use Permit should occur before the SCC is asked to consider the transmission line proposal. The Town has not yet scheduled any public hearings on the Special Use Permit, while Dominion has said it anticipates submitting a transmission line route to the SCC on September 29. We suspect Amazon and Dominion are likely counting on a quick approval process from Warrenton around late August/early September. We think the Town can and should disappoint them.

Ways You Can Help

It’s important to weigh in early and often.

  • Write to the Town Council and ask council members to turn down Amazon’s request. If you live in Town, be sure to reach out directly to the Town Council representative who covers your Ward.
  • Speak up at “citizen’s time” at the beginning of Warrenton Town Council meetings. Town Council meetings typically occur the 2nd Tuesday of every month. There is a citizen’s time tonight, July 12 at 6:30 p.m., and should be one on August 9. Elected officials take notice of an issue when they see new faces and large numbers. During citizen’s time, local residents are allowed up to three minutes to speak to issuesthat are not on the agenda for the meeting. 
  • Reach out to the Fauquier County Board of Supervisors. Write to bos@fauquiercounty.gov and urge them to push back against this short-sighted project in any way they can.
  • Write to your state legislators. They can raise the issue of the subsidization of Amazon and other big tech companies with their colleagues in Richmond and will be important allies should this case head to the State Corporation Commission. 

Thank you for taking the time to read through this lengthy alert. Please don’t hesitate to reach out with your thoughts or questions! 

Sincerely, 

Kevin Kask
Fauquier Field Representative 
kkask@pecva.org
(540) 347-2334 ext. 7046