How the EPA’s New Rules Could Spark Backlash for Data Centers

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How the EPA’s New Rules Could Spark Backlash for Data Centers The EPA’s plan to fast-track data center construction may cut red tape but also ignite legal battles and intensify environmental concerns. The Trump administration’s proposed overhaul of federal air permitting rules could help accelerate the construction of AI-focused data centers, but it may also intensify political and public backlash already building around the industry’s environmental footprint. Earlier this month, the US Environmental Protection Agency (EPA) unveiled a proposal that would allow developers to begin constructing certain non-emitting infrastructure components – including concrete pads, piping, wiring, and support structures – before obtaining full federal air permits under the Clean Air Act’s New Source Review program. The EPA says the revision is intended to reduce permitting delays affecting data centers, power generation projects, and domestic manufacturing tied to the administration’s broader AI infrastructure agenda. Yet, with growing scrutiny on the environmental footprint of hyperscale developments, the proposal risks fueling perceptions of preferential treatment for data centers. Redefining Construction Rules for Hyperscale Data Centers Vivian Kong, a senior analyst at Structure Research, told Data Center Knowledge that the proposal would clarify the regulatory definition of “construction” in the New Source Review (NSR) permit to apply only to the construction of pollutant-emitting facilities such as generators and turbines. “Other parts of a data center, including the foundation and building shells, would no longer trigger requiring an NSR permit to start construction,” she explained. Currently, the definition is broader, and any activity that could support an emitting unit, such as the foundation and pipework, would require a permit. “For data center developers, where a large proportion of construction is on the physical shells, a facility or even whole campuses can be substantially built out while the NSR permit for the generators is still under review,” Kong said. She noted that data centers, especially large hyperscale campuses, occupy an enormous physical footprint, sometimes exceeding 1,000 acres. Because the data halls themselves don’t emit, under a “build first, permit later” framework, a large portion of construction work–the foundation, data halls, and office buildings, for example – can proceed before having permits. Kong said the surge in demand for new hyperscale data centers has resulted in permitting delays and bottlenecks, with NSR permit cycles stretching to over 18 months in some jurisdictions. “Being able to start construction on a building or campus while awaiting permits could compress project timelines by months, and that is important in an industry where speed to market is a critical competitive advantage,” she said. Opponents argue the EPA’s proposal undermines air quality protections and could intensify community opposition to hyperscale data center projects. (Getty Images) ‘Build First, Ask Permission Later’ While some industry experts have praised the proposal for streamlining construction processes, others have raised significant legal and environmental concerns about its potential implications. John Walke, senior attorney for Natural Resources Defense Council (NRDC), told Data Center Knowledge that if the EPA proposal is finalized as-is, for the first time in nearly 50 years, major sources of air pollution in the US – including hyperscale data centers – would be allowed to construct parts of the facility and related infrastructure without first obtaining a Clean Air Act reconstruction permit. “EPA would allow this to happen in violation of multiple provisions of the law, so long as construction had not begun on so-called pollutant-emitting activities,” he said. “The proposal from Trump’s EPA would let data centers, power plants, and other major polluters build first and ask permission later.” Walke cautioned that if the EPA proposal is finalized, the “new and unlawful approach” could accelerate the pace of AI-driven data center construction over vocal community opposition. “It could affect the geography of opposition by allowing state officials who want to avoid Clean Air Act permitting and accelerate data center construction to tout this rollback as a deregulatory incentive to locate in their states, instead of another state that refuses to follow the Trump EPA rollback,” he said. David Streicker, an energy and data centers lawyer at law firm Polsinelli, told Data Center Knowledge the EPA proposal affects the pace, geography and political opposition surrounding future AI-driven data center construction. “In terms of pace, this will provide more clear and expanded allowance of certain construction prior to permit issuance to accelerate the construction timeline after the permit is issued,” he said. Issues related to geography remain the same – all projects should be sited with air quality in mind to determine whether the area is in attainment of the CAA air quality standards. “If the air quality is poor, the permit will be more restrictive and take much longer to be issued,” Streicker said. He added that the political opposition is likely to be the same because construction has been allowed prior to permit issuance previously; it is just clarified and expanded in this proposed rule. Kong said the proposal could lead to more data center sprawl, with data centers being built in new markets, particularly in areas with land availability and receptiveness to new development and investment. “Developers could start on construction and take advantage of pro-development legislation while waiting for permits to be reviewed,” she said. Final Rulings, Legal Challenges Stacy Stotts, an environmental lawyer at Polsinelli, noted the comment period will close late in June of this year. “I encourage data centers to review the proposal and provide any comments that would identify clear examples of construction activity to proceed for those projects, if that needs to be clarified in the final EPA rule,” she said. She explained that after the comments are considered, the EPA will issue the final regulations, including a response to the comments received; parties will have 60 days to appeal. Kong said any final ruling will likely face legal challenges from opposing parties that will argue against the narrowed definition of construction for the NSR permit. Reviewing courts and opposing groups, including environmental advocacy organizations, would also want robust explanations for this modification, and the EPA would need to address any concerns. “Federal courts have struck down EPA rules in the past for inadequate justifications for policy changes,” she said. The outcome of these legal challenges could shape the future of data center development in the US, with significant implications for both industry growth and environmental policy.