Local governments push back against data center development

Local governments across the US are grappling with balancing artificial intelligence infrastructure growth against resident concerns over electricity demand, water use, land use and community impacts.

In Maryland, the Montgomery County Commission unanimously approved an 18-month moratorium on permits for large-scale data centers and adopted a zoning amendment defining and temporarily prohibiting new hyperscale facilities. The vote came after months of debate over electricity demand, environmental impacts and potential utility rate hikes. New rules define a large data center as a facility or group of facilities with an aggregate monthly electricity demand of at least 25 megawatts and pause new projects while the county develops a longer-term regulatory framework.

Montgomery County is just one of dozens of counties and municipalities that have passed specific legislation to slow or prevent potential data center projects. A Bipartisan Policy Center report released July 29 identified 54 local data center moratoriums nationwide and said at least 15 states have considered statewide moratorium legislation as policymakers search for ways to manage the industry's rapid expansion.

"The real question isn't whether data centers will be built, they will be. It's how to build them responsibly," said Robert Montejo, a Duane Morris partner who represents data center developers nationwide. "The next generation of data centers can be part of the solution, not just another demand center. Many projects are being designed with behind-the-meter generation, renewable energy, battery storage and direct investment in transmission infrastructure that can improve grid reliability and economic growth."

Montgomery's moratorium

Montgomery County councilmembers said their 18-month pause will allow time for state and county studies on the impacts of hyperscale facilities before considering permanent zoning rules. The moratorium applies to projects that have not yet received building permits.

Local legislators have repeatedly emphasized that the pause is intended to provide time, not permanently prohibit development. Councilmember Evan Glass said the county needed answers about impacts on the Potomac River, electricity rates and surrounding communities before establishing a lasting regulatory framework.

Councilmember Will Jawando stressed the importance of being "right" rather than "first," when it comes to hyperscaler projects, arguing that officials need a delay to determine appropriate safeguards.

A bill that would have instituted a statewide temporary ban on data centers in the Maryland General Assembly stalled in a House of Delegates committee in February. Maryland state lawmakers also failed to pass a framework that would have created the first data center registry in the US to track exact energy and water usage earlier this year.

In May, Gov. Wes Moore signed the Utility RELIEF Act into law, which requires data centers to pay for their own energy upgrades.

Montejo said predictable regulatory frameworks will increasingly influence where companies invest billions of dollars in AI infrastructure.

"States that provide clear, predictable rules for permitting and energy planning are far more likely to attract the billions of dollars in AI infrastructure investment now flowing into the market," Montejo said. "Broad moratoriums, by contrast, create uncertainty that can cause developers and investors to shift projects to competing jurisdictions with more predictable regulatory environments."

The Bipartisan Policy Center warned that communities risk losing their "social license" for future development if resident concerns are not addressed transparently. Its report was based on discussions with more than 150 participants from industry, utilities, government, environmental organizations and local communities.

The Montgomery County action comes as voters are set to sound off on data center projects through ballot measures in a number of localities this fall.

Hillsboro, Oregon, a suburban tech hub outside of Portland, became the first in the state to approve a moratorium on land use for data centers July 27. Earlier that same month, New York Gov. Kathy Hochul signed an executive order that made the Empire State the first in the nation to issue a moratorium on hyperscaler data centers.

What's happening this week?

Below is a list of hearings, webinars and other tech, media and telecom-related events taking place virtually and in person in the nation's capital and beyond this week:

Aug. 3

➤ California State Senate: AI appropriations vote

Aug. 4

➤ Senate Judiciary Subcommittee on Crime and Counterterrorism: Hearings to examine data and profit, focusing on the consumer cost of AI surveillance pricing

➤ Senate Indian Affairs: Hearing to examine tracking prediction markets' exponential growth, focusing on tribal implications and beyond

Aug. 5

➤ GovTech: Governing AI in the Public Sector — Managing Shadow AI, Collaboration Risks and Data Security

Aug. 6

➤ Federal Communications Commission: Open Meeting

Aug. 7-8

➤ Community Over Code Asia