Vermont House Bill 727 (H.727), the Vermont Sustainable Data Centers Act, passed the House on March 31, 2026, and has been moving through the Senate at an accelerating pace since mid-May. The Senate Natural Resources and Energy Committee passed the bill unanimously, 5 to 0. The Senate Finance Committee also reported it favorably. On May 15, the full Senate agreed to a proposal of amendment on a 26-to-3 vote, with bipartisan support, and placed the bill on third reading. As of May 19, it remains at that stage pending a final Senate vote.
The bill was introduced by Representative Laura Sibilia, an Independent from Dover, and applies to any facility using 20 megawatts (MW) or more of power engaged in data processing and hosting services. That threshold is intended to cover large-scale commercial data center operations while leaving smaller facilities outside the regulatory framework.
The Senate Version Replaces the Original Tariff Structure With a Large Load Service Equity Contract
The House-passed version of H.727 directed Vermont's Public Utility Commission (PUC) to establish a separate ratepayer class and tariff schedule for data centers. The Senate amended the mechanism. Rather than a tariff class, covered facilities will now be required to enter into a large load service equity contract with their electric distribution company, subject to PUC approval. The contract must run long enough to protect other ratepayers from stranded infrastructure costs, require minimum payments based on projected electricity usage, include collateral against stranded cost risk, and mandate demand-side management practices including demand response, load shifting, and peak shaving. The PUC must find that any approved contract will not adversely affect the efficiency, reliability, and resilience of the electric power system before it takes effect.
Water Use and PFAS Requirements Added in Senate Version
The engrossed bill includes a water use section that was not present in the original House version. Data centers that use water for cooling must use a closed-loop cooling system, defined as a sealed process in which the same water circulates continuously without withdrawing from municipal water supplies, groundwater, or surface water except in de minimis quantities under a permit. Facilities proposing to use groundwater or surface water must obtain applicable withdrawal permits from the Agency of Natural Resources. The bill also prohibits adding per- and polyfluoroalkyl substances (PFAS) to any water discharged from a data center in Vermont and requires facilities discharging wastewater to surface waters to submit a PFAS monitoring plan approved by the Agency.
Reporting and Decommissioning Requirements Take Effect on Passage
Data centers subject to the act must begin submitting quarterly reports to the PUC and the Department of Public Service within three months of becoming operational. Reports must include water and energy usage figures, peak usage per day, and an itemization of payments toward shared infrastructure built to support the facility. The bill also directs the Commissioner of Public Service to submit draft legislation for a data center decommissioning regulatory model by December 15, 2026, covering bond requirements, environmental remediation standards, data sanitization guidelines, and site restoration procedures. The act applies to any data center not operational on the effective date and takes effect on passage.
