Robert D. Atkinson, a senior researcher at the Information Technology and Innovation Foundation, criticized local government policies that restrict data center construction in the U.S., saying such bans could damage tax revenue, employment, clean energy investment, and the country’s AI infrastructure development.
The criticism came after Montgomery County, Maryland, passed expedited Bill 19-26, which pauses the issuance of new data center construction permits for 18 months. Projects already in the approval process are also affected. Local officials said the measure is meant to protect the Potomac River, reduce pressure from rising electricity prices for residents, and allow more time to design a more sustainable development plan.
Atkinson says a blanket freeze is the wrong tool
Atkinson said a full pause on data center construction would not effectively solve environmental issues and argued that many of the related impacts can be handled through existing regulatory mechanisms. He said newer cooling technologies have already reduced water demand at some data centers, and that local governments should review water use, electricity demand, and wastewater treatment capacity on a project-by-project basis instead of freezing approvals across the board.
He also argued that it is inaccurate to simply attribute rising electricity prices and energy consumption to data centers. According to his argument, developers have already committed to covering the cost of added electricity demand so those expenses are not passed on to residents, while changes in energy prices are influenced more by factors such as fuel costs.
Warning over investment, tax revenue, and jobs
On the economic side, Atkinson said the moratorium could lead to lost investment, tax revenue, and employment opportunities. He cited Atmosphere Data Centers’ local $1.4 billion project, which is expected to contribute about $758 million in tax revenue to Montgomery County over the next 15 years but has now been delayed.
He said data centers create construction and operational jobs and can expand the local tax base, providing funding for education, public safety, and infrastructure.
U.S. AI competitiveness could be affected
Atkinson said that as AI infrastructure develops quickly, local restrictions of this kind could weaken the United States’ competitive position in artificial intelligence.