U.S. Tech Think Tank Criticizes Local Data Center Ban, Warns of Impact on AI Infrastructure

Huo Xing Finance reports that on August 3, Robert D. Atkinson, Senior Fellow at the Information Technology and Innovation Foundation (ITIF) in the United States, published an article criticizing local government policies that restrict data center construction, arguing that such bans could harm tax revenues, employment, clean energy investment, and the development of U.S. AI infrastructure. Previously, Montgomery County, Maryland, enacted Emergency Ordinance 19-26, suspending the issuance of new data center construction permits for 18 months—a measure that also affects projects already under review. Local authorities stated the goal was to protect the Potomac River, alleviate pressure on rising residential electricity prices, and buy time for more sustainable planning. Atkinson argued that a blanket halt on data center construction does not effectively address environmental concerns, as many of these impacts can be managed through existing regulatory frameworks. He noted that new cooling technologies have already reduced water consumption in some data centers, and local governments should instead evaluate individual projects based on their water usage, electricity demand, and wastewater treatment capacity rather than imposing a blanket freeze on approvals. He also emphasized that attributing rising electricity prices and energy consumption solely to data centers is inaccurate; data center developers have committed to covering the costs of additional power usage to prevent passing expenses on to residents, while fluctuations in energy prices are more closely tied to factors such as fuel costs. Regarding economic impacts, Atkinson warned that the moratorium could lead to lost investment, tax revenue, and job opportunities. For example, Atmosphere Data Centers’ $1.4 billion project in the area is projected to generate approximately $758 million in tax revenue for Montgomery County over the next 15 years—but has now been delayed. He highlighted that data centers not only create construction and operational jobs but also expand the local tax base, funding education, public safety, and infrastructure. In the context of rapid advancements in AI infrastructure, local restrictions risk undermining America’s competitive advantage in artificial intelligence.