Time for an 18-Month Moratorium on Data Center Moratoriums

Montgomery County’s new data center moratorium will do little for the environment, but plenty to weaken growth, deter investment, and undermine the infrastructure powering AI.

Hey, if you want to save the planet and please your selfish NIMBY constituents, I have an idea: ban data centers.

Several jurisdictions have bizarrely decided that this is the thing to do. Just this week, Montgomery County, Maryland—a deeply blue suburb of Washington, D.C., where I live—took the enormously courageous step of approving an 18-month moratorium on new data centers. The measure is a “compromise” between an existing six-month pause and a proposed two-year ban.

Expedited Bill 19-26 imposes an 18-month ban on issuing new permits for data center construction and places strict limitations on large-scale data center development. The legislation takes effect immediately and applies to projects already in the pipeline.

Councilmember Evan Glass, chair of the Transportation and Environment Committee and lead sponsor of the bill, stated:

I’ve been working tirelessly to hit pause on data center development in Montgomery County so we can protect the Potomac River, prevent an exorbitant rise in electric bills, and chart a more sustainable path forward. This moratorium is a necessary step to give our community the time we need to make thoughtful, responsible decisions about our future and to ensure that economic growth never comes at the expense of our environment, our ratepayers, or the quality of life we value.

Councilmember Will Jawando, who introduced the measure calling for a two-year pause, does not reject the label of “democratic socialist” and recently won the Democratic primary for Montgomery County executive. He said:

Jurisdictions across the country are facing the same choice. You can chase corporate promises of profits that may never come, or you can listen to your residents and lead. We chose to lead.

First, you chose to pander. Second, “profits that may never come”? If you allow data centers and none are built, then no new profits or tax revenues materialize, and the county is in the same position as before. What is the downside, exactly?

The Montgomery County Council cited “robust public support” for the measure. Few written testimony submissions opposed the moratorium. And, surprise, surprise, environmental groups overwhelmingly supported some version of the ban, although many urged the County Council to adopt even stricter restrictions.

It’s popular to blame data centers for today’s societal worries. But the vast majority of the purported harms attributed to data centers are either manageable through existing regulation or entirely overblown.

Consider the Potomac River, which many environmental groups identified as a primary concern. Any discharge associated with a data center would already be subject to applicable federal and Maryland laws. Data centers are also becoming incredibly water-efficient as new technologies emerge that offer superior cooling with limited or zero water consumption. A blanket moratorium is an extraordinarily blunt substitute for evaluating the best state-led model of water governance for large industrial users.

And why pick on data centers? The Council not only allowed but actively promoted the creation of the Pinkney Innovation Complex for Science and Technology, which also uses electricity, consumes water, and produces wastewater. Apparently, that complex qualifies as a worthy venture while digital infrastructure powering critical 21st-century technologies does not.

The same inconsistency applies to electricity demand. If rising electricity consumption is inherently bad, why does the county continue to encourage and subsidize electric vehicle adoption? EVs require more electricity and grid capacity, too. Perhaps EV owners should pay a special tax for the additional energy generation their vehicles require. Better yet, given that there are roughly 50,000 EVs registered in Montgomery County, it’s clearly time to impose an 18-month moratorium on new EV purchases. I’ll be damned if I want my electric bill to go up!

To be clear, the evidence does not support the simplistic claim that data centers have caused higher electricity costs for consumers. National average retail electricity prices have tracked with general inflation since 2010, and wholesale prices are closely tied to fuel costs, especially natural gas, which powers about 40 percent of U.S. generation.

Moreover, Councilmember Glass, all the leading data center developers have made solid commitments to pay the marginal costs of the new electricity their facilities require so that those costs are NOT shifted onto local ratepayers. If the county is concerned about higher costs for residents, then it should hold developers to their commitments—not prohibit development altogether.

Even more preposterous is the county’s invocation of climate change as a reason to block data centers. First, if it believes it can solve climate change by stopping economic and technological growth, its leaders and resident activists are delusional. Global energy consumption will continue to rise, regardless of whether Montgomery County embraces degrowth.

Second, large technology companies are making massive investments in clean energy innovation and deployment, including advanced geothermal energy and small modular reactors. Those investments are especially critical given the Trump administration’s disastrous cuts to Department of Energy research and commercialization funding. These technologies cost hundreds of millions, if not billions, of dollars. If the federal government won’t adequately support them, few institutions besides Big Tech have the bank accounts, incentives, and commitment to addressing climate change needed to do so at scale.

So who opposed Bill 19-26? Organizations concerned about the county’s long-term economic competitiveness, workforce development, jobs, and high-growth sectors, including the Montgomery County Chamber of Commerce (MCCC), the International Brotherhood of Electrical Workers (IBEW) Local 26, the Maryland Tech Council, and the Greater Capital Area Association of REALTORS.

As many of those organizations noted, data centers generate substantial local tax revenue, a benefit supporters of the moratorium were either unaware of or ignored. For example, MCCC explained in its testimony:

Data centers provide significant and stable tax revenues, strengthen the property tax base through substantial capital investment, and support income tax revenues through both construction employment and long-term operational jobs. These benefits help fund schools, public safety, and essential infrastructure, while placing comparatively minimal demands on local services.

If three midsized data centers operated in Montgomery County and officials used the additional revenue to reduce residential taxes—perhaps property taxes, since I pay an arm and a leg for my modest bungalow—residential tax bills could decline by an estimated 2.3 percent.

Yet the Office of Management and Budget concluded that the moratorium will “not affect County revenues or expenditures” because it requires no county spending. Really, the ban will have no fiscal impact? What about the tax revenue the county will forgo by preventing projects from moving forward? Foregone revenue is a fiscal consequence, even if it doesn’t show up as a new line item in the budget.

The approved moratorium pauses Atmosphere Data Centers’ proposed $1.4 billion project in Dickerson, which the county was in the process of approving. According to Atmosphere, the Dickerson Data Center Campus would contribute roughly $758 million in Montgomery County tax revenue over 15 years. Alas, the county won’t see a penny of that for at least 18 months (and maybe ever, if the developer decides Montgomery County is not worth the trouble).

What is especially hilarious is that the same newsletter from Council President Fani-González discussing the recent data center action includes a section titled “Your Property Tax Questions, Answered.” Yeah, I have a question: Why not allow data centers and use the additional revenue to lower my exorbitant taxes?

Oh, and did I mention that Montgomery County lost more jobs in 2025 than any other county in Maryland? In its submission opposing Bill 19-26, IBEW Local 26 stated:

I ask the Council if they have any other ideas on growing the economy or providing private sector jobs that include healthcare benefits and defined pensions... These are the jobs of the 21st century, and I ask you to seek these well-paying jobs and not put a moratorium on them.

Good point. Is the Council working on any alternatives? Given the serious cuts to federal employment across the D.C. metro area and the possibility of further reductions, the county can no longer assume that job growth will remain on autopilot, as it largely did for decades. Nor can county officials continue acting as though the local business climate does not matter.

Virginia is certainly not thinking this way. While Montgomery County debates how long to ban the infrastructure underpinning today’s innovation economy, neighboring Northern Virginia is building a dominant position in it. Northern Virginia contains the country’s largest concentration of operating data centers, and the state leads the nation in planned facilities.

And if the ban is good for the county, why did the Montgomery County Economic Development Corporation (MCEDC) not weigh in? There is no mention of the measure on MCEDC’s website. Perhaps its leaders also realize that the moratorium will hurt efforts to attract business. It would be funny if it were not so tragic that one of the top four goals of MCEDC’s Strategic Plan is to “Elevate Montgomery County’s brand as a desirable place to live, work, and do business.”

Temporarily banning data center development will certainly affect Montgomery County’s brand, but probably not in the direction MCEDC intended. The decision will not only constrain the county’s participation in strategically important advanced industries that depend on data center infrastructure but also weaken its long-term economic competitiveness by deterring future private investment.

As the Greater Capital Area Association of REALTORS outlined in its testimony:

Montgomery County continues to face an unfavorable economic outlook… cancelling projects already moving forward is not good faith governance. It is a signal that Montgomery County continues to encourage business and development go elsewhere, leaving our residents and taxpayers with fewer county services and higher tax bills to show for it.

The developer behind the paused project reinforced that point. Atmosphere Data Centers’ submission to the Council put it bluntly:

Montgomery County has worked hard to position itself as a place where innovative industries can invest, create jobs, and contribute to the tax base. Repeated pauses and temporary restrictions send the opposite message. They suggest that even when a project follows the rules and participates in the public process, the rules may change before a decision is reached.

That is not the message Montgomery County should be sending to the business and investment community.

This aspect of the moratorium is incredibly damaging. It tells every prospective investor that satisfying the county’s established requirements may not be enough. Companies considering investments in laboratories, manufacturing facilities, energy projects, or other advanced industry infrastructure will notice.

But none of this seems to matter because anti-corporate, anti-growth ideologues, allied with selfish NIMBYs, are simply too powerful. If you are a degrowther, as many Montgomery County activists appear to be, then this ban on new data centers is a good thing. To them, economic stagnation is just an unfortunate side effect of a bigger, “more important” cause.

Don’t worry, I have a solution! For 18 months, Montgomery County residents should be banned from using AI. They want all the benefits while letting other communities bear the costs. (The perceived costs, that is. There are almost no costs of having a data center in your community, and the net benefits vastly outweigh any that might exist. But that’s not how NIMBY Luddites see it.)

I’m just kidding. As a resident, I cannot live without my AI assistant, which has become the most important nonperson in my life. It makes me better informed and makes my life so much easier. But that is precisely why long-term data center moratoriums are so ridiculous. AI services do not materialize from the ether; they all depend on physical infrastructure somewhere.

If Montgomery County were serious about supporting data center development to ensure that its residents’ data needs are met, it might impose a genuinely brief pause of several months. It should not require 18 months to determine what tax contributions, electricity commitments, environmental standards, siting rules, utility agreements, or community benefits developers must satisfy. Besides, if this were truly about “getting it right,” why did the Council pair the moratorium with strict limitations specifically targeting large data centers before completing the supposedly necessary analysis?

Of course, one deeply blue county won’t make or break the nation’s ability to prosper and compete in AI. But hundreds of counties adopting similar restrictions could. Local bans can add up to a de facto national constraint on the infrastructure necessary for technological leadership. Meanwhile, China is not pausing its digital infrastructure and advanced technology ambitions.

That’s why I’m proposing an 18-month moratorium on data center moratoriums.