Key Takeaways
- President Trump issued a new Executive Order (EO) that directs agencies to streamline reviews, prioritize high-capacity projects, and support infrastructure critical to AI and national security. The move aims to boost U.S. competitiveness in digital infrastructure and reduce regulatory delays.
- The EO specifically directs agencies to streamline permitting for data centers, data center energy projects, and related manufacturing projects in several key respects, including expediting permitting under Section 404 of the Clean Water Act (CWA), establishing new National Environmental Policy Act (NEPA) categorical exclusions, streamlining regulations under the Clean Air Act (CAA) and CWA, making federal land available, and using the Fixing America's Surface Transportation Act (FAST-41) process to track and expedite permitting.
- If federal agencies successfully implement these streamlining efforts, businesses developing data centers or associated energy sources may be subject to reduced regulatory requirements and may be able to take advantage of expedited permitting procedures. Many aspects of the EO will require changes to existing regulations, a lengthy process that is also likely to spur litigation.
Issued on July 23, 2025, the EO, Accelerating Federal Permitting of Data Center Infrastructure and an accompanying report (Winning the Race America's AI Action Plan) aim to facilitate "the rapid and efficient buildout" of "artificial intelligence (AI) data centers and infrastructure that powers them[,]" including using "federally owned land and resources for the expeditious and orderly development of data centers."
The accompanying report explains that "AI will require new infrastructure—factories to produce chips, data centers to run those chips, and new sources of energy to power it all" and that "America's environmental permitting system and other regulations make it almost impossible to build this infrastructure in the United States with the speed that is required."
Accordingly, the EO:
- Directs the Secretary of Commerce to "launch an initiative to provide financial support" (e.g., loans, loan guarantees, grants, tax incentives) for Qualifying Projects (certain high-capacity AI data centers and related energy and component manufacturing projects).
- Directs relevant agencies to identify to the Council on Environmental Quality (CEQ) any established/adopted categorical exclusions for NEPA compliance that could facilitate the construction of Qualifying Projects and directs CEQ to coordinate with relevant agencies on establishing new categorical exclusions to cover actions related to Qualifying Projects "that normally do not have a significant effect on the human environment."
This direction aligns with the Administration's ongoing work to streamline NEPA processes for infrastructure projects. Many agencies are in the process of revising their NEPA rules, providing an opportunity to incorporate these new provisions.
- States that "loans, loan guarantees, grants, tax incentives, or other forms of Federal financial assistance for which an agency lacks substantial project-specific control and responsibility over the subsequent use of such financial assistance shall not be considered a 'major Federal action' under NEPA" and that "Federal financial assistance representing less than 50 percent of total project costs shall be presumed not to constitute substantial Federal control and responsibility."
- Allows the Executive Director of the Federal Permitting Improvement Steering Council (FPISC) to designate agency-identified Qualified Projects as Transparency Projects under FAST-41 and "expedite the transition" of those projects from Transparency Projects to "covered projects" as defined by 42 U.S.C. 4370m(6)(A). Note that data storage projects were already covered under FAST-41, and associated energy and component manufacturing projects will now be included.
- Directs the U.S. Environmental Protection Agency (EPA)
Administrator Lee Zeldin to:
- "[A]ssist in expediting permitting on Federal and non-Federal lands by developing or modifying regulations" promulgated under the CAA, CWA, Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), Toxic Substances Control Act (TSCA), and other relevant applicable laws;
- "Identify Brownfield Sites and Superfund Sites for use by Qualifying Projects[;]" and
- "[D]evelop guidance to help expedite environmental reviews for qualified reuse and assist State governments and private parties to return such Brownfield Sites and Superfund Sites to productive use as expeditiously as possible."
EPA Administrator Zeldin identified AI as one of the Agency's five key priorities shortly after his confirmation, signaling strong EPA engagement with this priority. This suggests an opportunity to work with EPA on regulatory and permitting areas relating to data centers and associated infrastructure.
- Directs the U.S. Department of Interior (DOI) and U.S. Department of Energy (DOE) to "offer appropriate authorizations for sites identified by [DOI and DOE]." For these identified sites, the action agency must initiate consultation at a programmatic level under Section 7 of the ESA for common construction activities associated with Qualifying Projects that will occur over the next 10 years. DOE has already undertaken a process to identify such sites; this recommendation would expand the initiative to DOI.
- Directs the U.S. Department of Defense to
- "[I]dentify suitable sites on military installations" for infrastructure related to materials, products, and infrastructure that are required to build data centers or that data centers otherwise depend upon; and
- "[C]ompetitively lease available lands for Qualifying Projects to support the Department of Defense's energy, workforce, and mission needs."
- Directs the Secretary of the Army to review the nationwide permits issued under Section 404 of the CWA and Section 10 of the Rivers and Harbors Appropriation Act "to determine whether an activity-specific nationwide permit is needed to facilitate the efficient permitting of activities related to Qualifying Projects." While current U.S. Army Corps of Engineers regulations include a nationwide permit that is viable for permitting some data center projects, this permit requires pre-construction notification (PCN) and is limited to projects that result in less than half an acre of wetland loss. The Action plan would remove that PCN requirement and the acreage limitation.
The EO marks the starting point of what may be a significant shift in federal permitting policy, with the potential for regulatory changes that have implications for data center developers, utilities, and AI infrastructure providers. By mandating expedited reviews and interagency coordination, it aims to reduce permitting timelines for high-capacity facilities while aligning infrastructure development with national strategic priorities.
Many of these policies will require changes to existing regulations before they have practical relevance, which will necessitate significant time and effort from the relevant agencies and business stakeholders. As agencies begin implementing the EO, this is a critical window for industry stakeholders to engage with regulators and advocate for rule changes that support scalable, energy-efficient, and resilient data center growth. Proactive engagement now could help shape a more predictable and favorable regulatory environment for years to come.
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