Washington Legislature Punts Comprehensive Data Center Legislation to Next Year

With the adjournment of the Washington Legislature earlier this month, a major effort to regulate data centers comprehensively was left unfinished. House Bill 2515, titled "Addressing Emerging Large Energy Use Facilities," passed the House by a 51-41 vote, but died in the Senate.

The bill spotlighted several of the most pressing policy issues of the AI era: how to accommodate rapid data center growth that provides benefits such as construction jobs and significant new tax revenues (especially to rural communities), while protecting other utility customers from sharp rate increases, preserving grid reliability, and maintaining alignment with the state's ambitious climate goals. These issues are not going away.

From Workgroup to Legislation

Days after his inauguration, Governor Bob Ferguson signed Executive Order 25-05, directing the Department of Revenue to convene a Data Center Workgroup, with participation from the Department of Commerce, the Utilities and Transportation Commission, the Department of Ecology, electric utilities, labor organizations, environmental advocacy groups, and industry stakeholders. The workgroup was charged with evaluating the impacts of data centers on Washington's economy, tax revenue, energy use, and the environment, and delivering findings and recommendations back to the Governor.

The workgroup's preliminary report, delivered on December 1, 2025, provided the policy backdrop for HB 2515. Introduced in January 2026 by Representative Beth Doglio and others, the bill defined "emerging large energy use facilities" in a way that includes data centers that use over 20 megawatts of electricity. The bill addressed three core policy questions:

Utility Cost Allocation

Affordability is a popular buzzword these days, and policymakers are particularly focused on preserving energy affordability for ordinary ratepayers. That leads directly to a cost-allocation question: Who should bear the costs of serving data centers? HB 2515 would have required utilities serving data centers to develop and publicly file specific tariffs or policies addressing that question. Those tariffs or policies were to ensure that data centers do not shift disproportionate costs onto other utility customers.

Supporters viewed that approach as a necessary response to a boom in data center development that will require substantial upgrades to generation, transmission, and distribution infrastructure. Opponents argued that utilities already have tools to require large customers to bear appropriate costs, and that singling out data centers would inject uncertainty into an industry that remains an important source of innovation, jobs, and tax revenue. The workgroup's preliminary report underscored both sides of that tension, noting the sector's economic significance while also identifying the pressure that large data centers may place on energy infrastructure and affordability.

Reliability

Keeping the lights on is a political and economic imperative. To assure reliability as data center development accelerates, the bill would have required utilities to craft tariffs or policies to address how data centers would be treated during an energy emergency, including scenarios in which the data center's load could be curtailed. That debate is likely to continue in Washington and elsewhere: Should data centers be treated as fully interruptible loads, or do the critical services they support justify at least some protection from curtailment? That question will become only more pressing as clean energy developers struggle to get their projects approved and utilities grapple with reliability challenges caused by aging infrastructure.

Alignment With the State's Climate Laws

The number one recommendation of the Data Center Workgroup's preliminary report was to ensure that Washington's Climate Commitment Act and Clean Energy Transformation Act (CETA) "operate as envisioned to cover any fossil or unspecified power sources used by large data centers." Specifically, CETA requires that utilities achieve carbon neutrality by 2030, and use 100% renewables or non-emitting resources by 2045. While HB 2515 failed to cross the finish line, the Legislature passed a separate bill, SB 5982, which the Governor is expected to sign. Among other things, SB 5982 clarifies that large customers, including data centers, are to meet the same clean energy deadlines as utilities, and directs the Utilities and Transportation Commission to establish reporting requirements by which compliance can be demonstrated.

What Comes Next

The Data Center Workgroup remains active and is expected to issue its final report sometime later this year. That report will in turn inform next year's legislative debate. That debate will also be informed by the ongoing national debate. MultiState recently reported in February that more than 300 state data center bills had already been filed in 2026 across more than 30 states, reflecting a move toward greater regulation of data centers. At the federal level, the White House announced on March 4, a "Ratepayer Protection Pledge" under which major technology companies agreed to protect consumers from price hikes by covering the cost of increased electricity production required for AI data centers.

For data center developers and operators, the takeaway is that substantial changes are on the horizon. The exact nature and extent of those changes are not entirely predictable, but the general direction is clear and the time to plan for them is now.

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Craig Gannett is senior counsel, Wendy Kearns is a partner, and Elyse Sparks is an associate in the Seattle office of DWT. For more insights, reach out to Craig, Wendy, Elyse, or another member of our energy and technology teams or sign up for our alerts.