Highland County's Proposed Data Center Ordinance Raises New Standards and Questions

Executive Summary

Highland County, Virginia, is weighing a proposed data center ordinance that would establish minimum development standards as a condition of receiving a conditional use permit. The move signals a tightening regulatory posture toward data center siting — a trend spreading across rural Virginia counties as large-scale digital infrastructure demand accelerates. Developers stand to face more complex, time-intensive permitting processes if the ordinance advances. Local government and community stakeholders gain oversight leverage; developers and investors absorb the schedule and cost risk. The InfraSale takeaway: get ahead of the regulatory curve now, before permit windows narrow further.

What Happened

Highland County Attorney Julian Harf circulated a document proposing minimum development standards that would govern the conditional use permit (CUP) process for data center projects in the county. The specifics of the full standards list have not been publicly disclosed in detail, but the document frames a structured threshold that any data center applicant would need to meet before receiving county approval.

The proposal is generating pushback. At least one local letter — questioning the county attorney's approach — has surfaced publicly, suggesting the ordinance language and its scope are already drawing scrutiny from stakeholders who see the standards as potentially overreaching or unclear in their intent.

The timing matters. Virginia's data center market is among the most active in the country, and secondary markets outside Northern Virginia's core corridor are increasingly on developers' radars. A rural county codifying new barriers — even well-intentioned ones — sends a signal to the site selection community.

Source: The Recorder Online

Why This Matters

This story is a local ordinance, but the market dynamic it reflects is regional and accelerating. As Loudoun County and its neighbors have absorbed the bulk of Virginia's hyperscale data center growth, development pressure has begun migrating into less-saturated rural markets. Counties like Highland — historically agricultural and lightly industrialized — are now on the receiving end of project inquiries they were not zoned, staffed, or politically prepared to absorb.

When a county attorney proactively drafts minimum development standards before a wave of applications arrives, it suggests the county is trying to shape the market rather than simply react to it. That instinct is understandable from a planning standpoint. The risk is that poorly constructed standards — or standards developed without direct developer input — create ambiguity that freezes investment rather than directing it.

The public letter questioning Harf's document indicates that the standards may not yet reflect full community or industry consensus. Contested ordinance language is a red flag for developers evaluating site certainty. A CUP process that is undefined or actively litigated at the county level introduces approval risk that most project finance models cannot accommodate without a material risk premium.

Industry context: Across Virginia and neighboring states, counties that move too quickly to restrict data center development without clear, objective criteria have seen developers quietly redirect site searches to more permissive jurisdictions — sometimes within the same ISO footprint.

Power & Interconnection Impact

The source document does not specify power or interconnection requirements within the proposed standards. However, the introduction of a CUP framework almost always creates an indirect grid planning constraint. When permitting timelines extend, interconnection study timelines and queue position windows fall out of sync — a project that clears zoning 18 months late may find its original interconnection offer expired or its queue position lost.

Assumption: If the ordinance eventually incorporates energy efficiency or on-site generation requirements — common in newer data center ordinances drafted elsewhere in Virginia — that would add further technical complexity to the development pro forma. Developers should monitor the full text of the ordinance for any embedded infrastructure standards that could affect utility coordination.

Land, Zoning & Permitting Impact

This is where the ordinance bites hardest. The introduction of a formal CUP process — with enumerated minimum standards — transforms data center development from a by-right or streamlined administrative process into a discretionary review proceeding. That shift carries real consequences.

Discretionary review means elected or appointed bodies have latitude to impose conditions beyond the written standards, incorporate public comment, and slow or deny approvals for reasons that are difficult to predict at the outset of a project. For developers who have already committed capital to site control, that unpredictability is costly.

The contested nature of the current draft is an additional concern. If the county attorney's proposed standards face legal or procedural challenges, the ordinance could be revised, delayed, or litigated — leaving developers in a holding pattern with no clear approval pathway. Zoning ambiguity at the local level is one of the most common causes of project failure in greenfield data center development.

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Assumption: Developers who engage early in the public comment process — particularly with technical input on how standards should be written to be both protective and workable — are more likely to shape an outcome that preserves project viability.

Investment Takeaway

Permitting risk is repriced upward. Any project in Highland County must now underwrite the possibility of a contested CUP process, adding time and cost to the development pro forma.
Site optionality gains value. Investors with exposure to multiple Virginia sites — particularly in counties with clearer zoning frameworks — are better insulated against single-county regulatory risk.
Early engagement is a competitive advantage. Developers who participate in the public comment period can influence the final ordinance language, potentially locking in standards that are workable before less-informed restrictions get codified.
Monitor for replication. If Highland County's ordinance passes, neighboring rural Virginia counties may adopt similar frameworks. The asset class impact is not limited to this single jurisdiction.
CUP timeline assumptions need revision. Any deal model assuming standard 6–9 month permitting cycles in Highland County should be stress-tested against 12–18 month discretionary review scenarios.

InfraSale Market Angle

For developers actively sourcing sites in secondary Virginia markets, Highland County's proposed ordinance is an early warning signal — not a stop sign, but a prompt to act before the regulatory window closes. The county is in the drafting phase, which means the standards are not yet final. That is precisely when developer input carries the most weight.

Landowners in Highland County with parcels that could accommodate large-scale digital infrastructure should understand that the regulatory environment around their assets is shifting. Land that was straightforwardly leasable or sellable for data center use may now carry permit contingency risk that affects valuation.

Investors evaluating Virginia secondary market exposure should factor this ordinance into their underwriting. The CUP framework being proposed could either become a manageable checklist or a discretionary gauntlet — the difference depends heavily on how the final language is written and who is at the table when it is.

Market Signal

Location: Highland County, Virginia
Primary Issue: new development standards
Infrastructure Theme: zoning regulations
Who Benefits: local government and community due to increased regulatory oversight
Who's at Risk: developers facing tougher permitting processes
InfraSale Takeaway: Developers should prepare for potential regulatory changes to navigate the new permitting landscape effectively.

Take Action

Highland County's ordinance is still being drafted — which means the window to shape it remains open. Developers and landowners with assets or projects in Virginia's secondary markets should assess their exposure now, before the final language locks in conditions that are harder to work around. Submit a data center power requirement.

FAQ

What are the new standards proposed for data centers in Highland County?

The full list of standards has not been publicly disclosed in detail. County Attorney Julian Harf's document outlines minimum development thresholds required for a conditional use permit, but the specific criteria — covering topics such as setbacks, noise, water use, or energy requirements — have not been fully reported in publicly available sources. Developers should request the full draft document directly from the county.

How will this ordinance affect data center development timelines?

The introduction of a formal CUP process moves data center approvals from administrative to discretionary review, which typically adds months to a permitting timeline. If the ordinance language remains contested or is revised before adoption, the approval pathway could remain unclear for an extended period — a material risk for projects tied to interconnection queue deadlines or equity commitment timelines.

What can developers do to adapt to these changes?

The most effective strategy is early engagement: participate in the public comment period, submit technical input on how standards should be written, and build relationships with county planning staff before an application is filed. Developers should also run parallel site searches in adjacent counties with clearer zoning frameworks, so Highland County exposure is one option in a portfolio rather than a single-point dependency.

Is this ordinance unique to Highland County, or part of a broader trend?

Industry context: Rural Virginia counties are increasingly receiving data center inquiries as Northern Virginia's core markets reach capacity constraints. Highland County's move to draft proactive standards is part of a wider pattern of secondary-market localities trying to get ahead of development pressure — sometimes with well-designed frameworks, sometimes with restrictions that inadvertently deter investment. This trend is worth watching across the full Virginia secondary market.