Updated Nov 3, 2023

A large-scale data center project now underway in Montgomery and Frederick Counties has hit some roadblocks.

The project involves: (a) a 2,100-acre data center “campus” located near Adamstown, and (b) 43 miles of underground fiber optic cables crossing beneath the Potomac River in two locations and the Monocacy River in one location.

The Monocacy River location is at the border of Dickerson and Frederick County in an area off Mouth of Monocacy Road. Near Adamstown, Md., the 2,100 acres is at the former site of the Eastalco aluminum smelting plant.

The underground and under-river cables (called the Q-Loop) will connect the new campus with the fast-growing data center industry in Virginia (collectively called the “Ashburn Internet ecosystem,” one of the largest such systems in the world).

As initially conceived, the Adamstown project has a 15-year construction phase until full completion in 2038. It’s initial four data centers buildings could start operating as soon as 2026. Construction is estimated to cost around $2 billion. Total investment in the campus, including equipment, is estimated at $25 billion.

The companies behind the project are Quantum Loophole, based in Austin, TX, and Aligned Data Centers, based in Plano, TX. You can read all about them and the project at www.quantumloophole.com and www.aligneddc.com.

Recent developments have put the project in some jeopardy, however, with the outcome as yet uncertain. On October 25, lawyers for Aligned wrote the Maryland Public Service Commission (PSC) saying they would bow out of the project because of a PSC decision on October 10 related to the scope and scale of back-up energy from diesel generators.

The issue is technical: it involves whether more than 150 diesel generators when pressed into use together constitute a single network of energy, with significant CO2 emissions. Data centers must have a back up energy source in case of power outages because they operate continuously. PSC said its October10 decision was based on its responsibility under Maryland law to take greenhouse gas emissions into consideration when assessing such large-scale energy generation. The PSC also said its decision was based on the judgment that the generators constituted a linked system.

The October 27 letter (read it here) from Aligned’s attorneys suggests the company’s decision is final, but it is not clear whether Aligned could or would reverse its decision. Moreover, the company’s partner in the project, Quantum Loophole, is rumored to have said recently that Aligned is very much still involved. SCA called Aligned’s Texas headquarters but has not heard back.

How this dispute plays out is not clear. Aligned could seek an alternative source of back-up energy—such as a high-tech battery storage facility. The state legislature could get involved, possibly exempting the project from state environmental rules and climate change goals. (See below for estimate of tax revenues.) Aligned could take the PSC to court—unlikely since courts usually defer to regulators’ decisions. Or Quantum Loophole could seek a new partner for the project.

Separately, a pending legal case brought this fall by local citizens and the Frederick-based environmental group Sugarloaf Alliance could reverse an exemption Quantum Loophole received from Frederick County last summer to dredge in wetlands and floodplain areas.

In May, the Maryland Department of the Environment (MDE) informed Quantum Loophole that it had illegally dumped hundreds of thousands of gallons of possibly contaminated ground water into Tuscarora Creek, which flows directly into the Potomac River. MDE further charged the company with failure to get proper permits for a sewer line. Quantum Loophole did not deny the allegations and pledged to address them. Work on Q-Loop continues today.

These violations were not Quantum Loophole’s first, however. Residents who live off Mouth of Monocacy Road in late 2022 sued the company for damage to their properties at the dredging site for the Monocacy River crossing. The land in question includes designated wetlands and farmland. Montgomery County officials last year also cited the company for not obtaining proper permits. The Dickerson residents settled with the company this past summer.

These issues and increased scrutiny of the fast-growing data center industry—particularly its need for massive amounts of energy—prompted Frederick County Executive Jessica Fitzwater to create a Data Center Workgroup to examine the benefits and risks of data centers, and the possible need for new regulations to govern it. The group has been meeting since summer and is due to issue a report in January.

Additional related information:

A study commissioned by the Maryland Tech Council estimates that the Aligned-Quantum Loophole campus would generate $41 million a year in county tax revenue and $197 million a year in state tax revenue. It would employ some 1,700 people. Read about it here.

In 2020, the state of Maryland passed a law allowing data centers to apply to be exempt from the state’s sales and use tax on data centers’ personal property for up to 20 years.
All the data centers in Loudoun County use diesel fuel as backup power but the industry in that state is seeking alternatives.
The two Q-Loop Potomac crossings have been completed. A map of the project can be found here.
Terra Energy, the new owner of the Dickerson power plant property, gave permission for the Q-Loop project to cross part of their land, and stands to benefit in the future from the existence of Q-Loop if a data center is ultimately built at the site. (See “A New Era for the Dickerson Power Plant Property.”)
Developers in Frederick and Urbana continue to express interest in data centers on land along I-270. The properties in question are close to local farms and low-density rural communities. (See “Protect the Sugarloaf Mountain Area.”)

We will update this post as things develop.

MoCo and Frederick County Data Center Project Runs into Problems