The environmental permitting landscape for data centers is shifting rapidly, with federal and state regulators often pulling in opposite directions. The Trump Administration has moved to accelerate federal environmental review and to open federal lands for data center siting. States and localities have responded by tightening scrutiny of the energy, water, and land use impacts of these facilities. This post summarizes the relevant permitting framework, the key federal and state developments, and what comes next.
Environmental Permitting Overview:
Large-scale data center projects typically require overlapping federal, state, and local environmental authorizations, with the precise mix turning on site location, project design, and affected resources.
Federal requirements may include National Environmental Policy Act (NEPA) review for projects involving federal action; Endangered Species Act (ESA) Section 7 consultation for projects affecting listed species or critical habitat; National Pollutant Discharge Elimination System (NPDES) coverage for cooling water, stormwater, and process wastewater discharges; Section 404 Clean Water Act (CWA) permits (with Section 401 certification) for discharges of dredged or fill material; Prevention of Significant Deterioration or Nonattainment New Source Review preconstruction permits and Title V operating permits for major air sources; and Section 106 National Historic Preservation Act review where applicable.
State requirements commonly include air, water withdrawal, industrial wastewater, stormwater, and hazardous waste permits, along with review under “little NEPA” statutes such as the California Environmental Quality Act (CEQA). Local approvals typically include zoning, conditional use, building, noise, traffic, and grading permits.
Executive Order 14318 and Federal Acceleration:
On July 23, 2025, President Trump signed Executive Order 14318, “Accelerating Federal Permitting of Data Center Infrastructure.” EO 14318 applies to data center projects and associated components that involve at least $500 million in capital expenditures, more than 100 MW of incremental load, that protect national security, or that are otherwise designated by the Secretaries of Defense, Interior, Commerce, or Energy. Among other things, EO 14318:
- Directs federal agencies to identify NEPA categorical exclusions for qualifying data center projects, and provides that federal financial assistance under 50% of project costs is presumed not to trigger NEPA review;
- Authorizes the Federal Permitting Improvement Steering Council to designate qualifying data center projects as “transparency projects” under Title 41 of the Fixing America’s Surface Transportation Act (FAST-41) and to expedite their transition to FAST-41 “covered projects” (thereby streamlining environmental review);
- Directs EPA to develop or modify regulations under the Clean Air Act, CWA, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the Toxic Substances Control Act (TSCA), and other applicable laws to expedite data center permitting;
- Directs EPA to identify Brownfield and Superfund sites suitable for Qualifying Project reuse;
- Directs the US Army Corps of Engineers to consider activity-specific Section 404 nationwide permits to facilitate data center permitting;
- Directs programmatic ESA Section 7 consultation for common construction activities expected to occur over the next 10 years on identified data center sites; and
- Directs the Departments of Energy, Defense, and the Interior to take certain actions to use federal land to facilitate the development of Covered Projects.
Federal agencies have moved quickly to implement EO 14318. For example, on July 24, 2025, the Department of Energy (DOE) announced the selection of four sites for data center development and subsequently issued solicitations for DOE’s Idaho National Laboratory, Oak Ridge Reservation, and Savannah River Site. In October 2025, the Department of the Air Force issued Requests for Lease Proposals for approximately 3,100 acres across five Air Force bases. In January 2026, EPA issued guidance for redeveloping Superfund and Brownfield Sites as data center sites, and launched a dedicated Clean Air Act resources page for data center developers. On April 2, 2026, the Federal Permitting Improvement Steering Council designated the first data center to receive FAST-41 covered project status. On May 11, 2026, EPA issued a pre-publication version of a proposed rule to revise certain definitions within the CAA’s New Source Review Program to authorize start of construction before obtaining air emission permits to facilitate data center development.
Substantive Permitting Pressure Points:
Several substantive permitting issues continue to drive scrutiny of data center projects at the federal, state, and local levels.
- Air Quality and Backup Power. Backup power systems—historically diesel generators classified as “emergency” units—are increasingly subject to Clean Air Act permitting conditions resembling major source analyses, particularly in nonattainment areas. Battery storage, stationary fuel cells, and hydrogen-ready installations are increasingly being considered as alternatives.
- Water Use, Cooling Systems, and PFAS. Water consumption is an increasingly significant siting consideration. Cooling-related discharges generally require NPDES permit coverage. In addition, immersion cooling fluids and other data center equipment sometimes contain intentionally added PFAS, which may implicate hazardous substance control laws and PFAS product and reporting laws.
- Local Land Use and NEPA Review. At the local level, zoning, noise, traffic, and visual impact considerations remain a primary driver of scrutiny. For projects requiring federal action or that utilize federal funding, agency-specific NEPA review obligations remain in place notwithstanding EO 14318. Notably, data center projects may qualify for a categorical exclusion (CE) from NEPA review, consistent with the Council on Environmental Quality’s (CEQ) recent “CE-first” approach.
- Federal Public Land Use Planning. Siting data center projects on federal public lands requires approval from the federal land manager (e.g., BLM or USFS) and may necessitate amending the governing Resource Management Plan (for BLM lands) or Forest Plan (for USFS lands)—a process that itself triggers time-consuming NEPA review and public participation requirements.
State and Local Response:
While the Trump Administration has been seeking to accelerate data center development, states and local governments have begun pushing back. In 2026 alone, over 300 data center legislation bills have been filed across more than 30 states. Data center legislation has generally focused on three issues:
- Energy cost allocation and large-load consumer obligations. Over 20 states are considering legislation targeting “large load” customers, and others introduced bills establishing special rate classes for large energy users to avoid residential customers from bearing the cost of data center power. For example, Oregon’s POWER Act, signed into law in August 2025, creates separate rate class for facilities of 20 MW or more and requires long-term power purchase agreements.
- Water usage reporting and cooling system requirements. Several states have proposed monthly or annual disclosure obligations on data center energy and water usage, including California (AB 1577), Virginia (HB 496 and SB 553), and New Jersey (S3379), and closed-loop cooling mandates in South Carolina and Kansas.
- Construction moratoriums. Over ten states have introduced data center moratorium bills to pause construction pending further study on impacts to utilities, the environment, and local communities. Maine’s bill (LD 307) passed last month but was vetoed by Governor Janet Mills.
Community organizations are also pushing back, though data center developers have been able to calm some of this resistance through community benefit “good neighbor” agreements.
Key Considerations Going Forward:
Developers and operators of large-scale data center projects should anticipate and be prepared to navigate continued tension between federal and state regulatory priorities. Project proponents should consider:
- Developing state-specific permitting strategies that account for emerging state and local requirements, particularly in jurisdictions with active legislative activity;
- Engaging early with local stakeholders on land use, water, and community-benefit issues to facilitate project development, keeping in mind the creation of a fulsome administrative record that can be used in any potential litigation;
- Monitoring agency-specific NEPA implementing procedures and CEQ guidance, including CEQ’s April 2026 categorical exclusion guidance for projects with a federal nexus;
- Identifying PFAS-related compliance obligations associated with cooling system chemistry and other products used in data center construction, particularly in states with PFAS product or reporting requirements; and
- Evaluating opportunities to participate in DOE’s ongoing AI data center solicitations and monitoring whether DOI initiates similar processes for BLM-managed lands.
Please get in touch with the authors or your SPB contact if you have questions about data center environmental permitting, federal lands authorizations, or any of the federal or state developments discussed above.