Next Door To Data Center Alley, A Community Debates Whether To Welcome The Booming Sector

Northern Virginia has long held the title of the “data center capital of the world,” handling 70% of global internet traffic across just 30 square miles. 

In recent years, the sector has pushed outward throughout the rest of Virginia and the country. But right across the river from Data Center Alley is a community just starting to reckon with these information-processing giants as it considers a proposal for its first hyperscale data center.

In the western portion of Montgomery County, Maryland, Atmosphere Data Centers is seeking approval to build a 300-megawatt data center campus on a 110-acre site. Though the company hasn’t delivered any data centers, it claims to be an environmentally friendly developer, calling its projects the “greenest and most energy-efficient data centers on Earth.”

The project in Dickerson, Maryland, has become a flash point in an emerging debate in the county over how to regulate this surging asset class, a debate that hits on a nexus of tension points — from climate change and conservation to equity, jobs and economic vitality. 

“Data centers are coming to every community across the country,” Montgomery County Councilmember Laurie-Anne Sayles told Bisnow. “And so, how that happens, and at what cost, is going to be important for the local government to ensure that it’s done correctly in their community.”

Sayles is one of the co-sponsors of a zoning text amendment, a major legislative attempt to regulate data centers in the county, where right now there are no specified land-use rules for the property type.

“For the most part, they can pretty much go anywhere,” said Montgomery County Councilmember Marilyn Balcombe, who also co-sponsored the bill. 

The ZTA creates a definition for data centers and outlines where they can be located — only in industrial zones — and how they should function, including what environmental regulations they should adhere to. 

“We are hearing about the significant environmental impacts that are happening in other jurisdictions because they didn't have guardrails, they weren't intentional,” Sayles said. “We're not going to put the cart before the horse.” 

Fueled by the exponential growth of artificial intelligence tools, data center development is spreading like wildfire around the globe. In the U.S., developers are rapidly descending on available sites in what resembles a modern-day gold rush. 

And communities across the country like Montgomery County are wrestling with how to contend with these new behemoths that need extreme quantities of water and energy and cause air pollution but also produce jobs and tax revenue. 

The county is staring down a projected $854M drop in tax revenues over the next six years, fueled by federal job cuts and plunging commercial property values.

“We are all trying to do a whole lot more with a lot less because of the federal cuts,” Sayles said. “We have to consider alternative revenue opportunities.”

In front of a county council hearing late last month, some 30 speakers testified on proposed data center regulations — 218 pieces of written testimony were submitted — many requesting a moratorium on data centers in the county until the effects are better understood. 

“While the promised tax revenue from data centers is a golden carrot, it often comes with unintended or hidden costs to a county and its residents,” John Hisle, a county resident of 43 years who is now retired from the U.S. Public Health Service, said at the hearing.

“It is crucial, therefore, to carefully study and review the impacts of data centers in the county so we do not make the same mistakes made by our neighbors across the river.”

The Atmosphere project is just 11 miles away from Ashburn's Data Center Alley, and many elected officials and community members say they don’t want to be a second Virginia. 

“They are so close to communities, and there's so many complaints about that. We don't want to be that way,” County Council President Natali Fani-González, who is co-sponsoring the zoning text amendment, said of Virginia. “I think restrictions are important to protect neighbors, to protect the environment, to protect wildlife, too.”

Another piece of legislation, put forward by Councilmember Evan Glass, sought to create a task force that would be required to submit two reports within a year providing suggestions for how the county should regulate data centers. The bill failed in committee on Monday, meaning it’s likely dead unless six council members request that it go before the full council. 

Glass said in a statement he was “disappointed and frustrated” by the vote. 

“We’re being asked to make monumental, generational decisions about data centers without first doing the evaluation our community deserves,” he said.

This winter, Montgomery County Executive Marc Elrich released a draft policy paper proposing regulations to data centers, taking lessons from reports done by adjacent Maryland jurisdictions: Prince George’s and Frederick counties. He held a community forum on the issue last month. 

At the council hearing last month, the county executive’s climate change officer, Sarah Kogel-Smucker, testified that Elrich supports the zoning text amendment with some modifications.

“With rising electric costs, strains on our water supply, the acceleration of climate change, tight local budgets, we need to do data centers right,” she said. “We can act as a national model, and we need to get this right the first time.” 

There are also multiple studies underway, set to be released next fall and winter. One at the state level is set to outline the “likely environmental, energy, and economic impacts” of data center development in Maryland. For Montgomery County, an oversight study looking at the racial equity and social justice impact of the proposed ZTA is expected to be released in September.

These measures are seeking to get ahead of a data center wave that has yet to sweep through Montgomery County, which only has four existing data centers. And the state has 44 active data center facilities, compared to 663 in neighboring Virginia, according to American Edge Project. 

But Atmosphere’s project — the hyperscale data center proposal in the western part of the county — is a reality that officials and residents are having to contend with now. 

The owner of the site already secured approval for the data center as a conditional use on the property, which was formerly a coal-fired power plant. Now, Atmosphere, as the contract purchaser, is working on securing approval for the site plan and plans related to its environmental impact. 

Balcombe, whose district includes the Dickerson site, said the data center is being assessed under the county’s guidelines for cable communications companies, since data centers are absent from the zoning code. 

Atmosphere CEO Chuck McBride said in a statement to Bisnow the developer is generally supportive of the “stringent standards” in the council’s zoning text amendment, but it has some specific changes it would like to see in its lighting and fencing regulations. 

According to McBride, the data center’s average daily water withdrawal from the Potomac River would be 69,300 gallons, but it’s requesting a maximum cap of 500,000 gallons per day, which it says is “over 800 times less than the former coal-fired plant.” 

The project will get its power through transmission lines bordering the site. It will also have a new on-site substation that Atmosphere will fund and a backup diesel generator for emergency situations, which have to be routinely tested. 

“From the outset, the company’s mission has been to build data center campuses that prioritize energy efficiency, advanced cooling systems and lower overall environmental impact,” McBride said.

Atmosphere has not delivered any data centers so far, but it has projects planned in Moncks Corner, South Carolina, Kansas City, Missouri, and Nashville. 

At the hearing, Atmosphere lawyer Scott Wallace argued against a moratorium, saying it would “significantly delay and quite possibly derail the project.” And he said it’s not necessary, given that the site and the company’s plans “already mitigate impacts” on the environment and natural resources.

While a moratorium is still up for debate, Fani-González said it is clear some regulation is needed to constrain the fast-growing sector. 

"We should have some type of safeguards for the community regarding where these data centers are located — at least that, right away," she said.