Three recent developments suggest that air quality permitting is becoming an increasingly central component of data center and other large infrastructure development. A proposed update to the U.S. Environmental Protection Agency (EPA)’s New Source Review (NSR) program; new emissions standards and categories for on-site power generation; and ongoing litigation over turbine use reflect an evolving regulatory dynamic that may shape the way projects are evaluated going forward.
Proposed NSR Revisions May Impact Project Sequencing
EPA has proposed a notable revision to the Clean Air Act’s (CAA) NSR program that could materially affect how data centers and other large infrastructure projects sequence construction and air permitting. In a May 2026 proposed rule, EPA seeks to revise the definition of “begin actual construction” and add a definition of “pollutant-emitting activities” to better distinguish between pollutant-emitting and non-emitting activities, allowing developers to initiate construction of certain non-emitting structures — such as foundations, utility connections, and building shells — before securing an NSR permit. EPA’s proposed rule would impact major stationary sources subject to the Prevention of Significant Deterioration and nonattainment NSR programs, as well as minor sources constructed or modified in Indian country (as defined by EPA) and subject to the Tribal Minor NSR program. The proposed changes are intended to address ambiguity in NSR requirements and, among other things, streamline data center development, consistent with recent executive mandates.
EPA’s proposal represents a departure from the agency’s longstanding interpretation, which prohibited the construction of many permanent site activities — including foundations, piping, and structural work — prior to permit issuance. If finalized, the proposal would require a pre-construction air permit only for on-site physical construction of “pollutant-emitting activities” while allowing construction for certain non-emitting activities. This would mean developers could prepare the site, construct foundations, utility infrastructure, concrete pads, buildings, and other data center support structures prior to obtaining air permits. Consistent with prior guidance, EPA emphasizes that developers proceeding with pre-permit construction do so “at their own risk,” as permit denial or subsequent design changes may later require modification or removal of already-built components — introducing potential financial and schedule uncertainty. If finalized, the rules would immediately apply to CAA programs that EPA directly implements and certain state permitting programs that have incorporated the applicable federal regulations. In states without the requisite incorporation, EPA would need to update the delegation of authority to those states before the rules would take effect. The public comment period on the proposed rule ends on June 29, 2026.
Updated Turbine Standards for On-Site Power Generation
This proposed rulemaking coincides with recent changes EPA made to rules affecting on-site power generation, including stationary combustion and gas turbines frequently used to support data center operations. EPA revised the New Source Performance Standards (NSPS) to create several new categories of combustion turbines based on size, utilization rate, and efficiency along with new nitrogen oxide (NOx) emission standards for qualifying units. EPA created a new subcategory for small and medium (less than 850 MMBtu/h) “temporary combustion turbines” along with a streamlined approach to compliance that primarily relies on maintaining documentation of manufacturer certification. This latter category, designed to address certain turbines needed for temporary (up to 24 months at a single location) or emergency power at data centers, grants qualifying turbines relief from full regulation under the NSPS and related NSR permitting.
Litigation and DOJ Intervention
These regulatory developments come amid public scrutiny and litigation over air quality concerns associated with data center development. In one such case, the National Association for Advancement of Colored People (NAACP), represented by Earthjustice and the Southern Environmental Law Center, filed a citizen suit under the Clean Air Act (CAA) against xAI, arguing that 50 turbines at a Mississippi data center should not be treated as “temporary” sources and instead require full NSR permitting review. In a brief filed on June 15, 2026, the United States Department of Justice (DOJ) argued it has a constitutional right to intervene and effectively preempt the citizen suit. DOJ’s position highlights the importance air quality issues play in data center development and, if successful, will carry sweeping implications for the future use of the CAA’s citizen suit provisions.
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