The greatest opportunity is creating a more predictable permitting process.
The federal government took an important step in July 2025 by issuing an Executive Order designed to accelerate permitting for data center infrastructure. The order streamlines certain environmental reviews, expands FAST-41 coverage for projects requiring more than 100 megawatts of new generation, encourages development on federal and previously developed lands, and establishes financial support for qualifying projects backed by at least $500 million in capital investment. It represents one of the most significant federal initiatives focused on data center development.
In June 2026, the EPA also announced that it would not pursue nationwide environmental requirements specifically targeting the AI industry. Instead, the agency indicated that decisions regarding issues such as water use and air emissions would largely remain with state and local governments. That announcement shifted much of the regulatory responsibility away from the federal level.
While that approach gives states greater flexibility, it also creates challenges for developers operating across multiple jurisdictions. During the first part of 2026 alone, lawmakers introduced more than 300 state bills affecting data center development. Those proposals address a wide range of issues, including tax incentives, energy procurement, water use reporting, air quality, community benefit agreements, and ratepayer protections. Requirements can vary significantly from one state to another, increasing both cost and uncertainty.
At the same time, private enforcement is becoming more common. Environmental organizations have already filed Clean Air Act citizen suits against certain data center operators over emissions associated with backup generation. Even where regulatory requirements remain unsettled, litigation risk continues to grow.
For developers and investors, certainty is often just as important as speed. They need a clear understanding of the permitting process, realistic timelines, and confidence that requirements will remain consistent throughout the life of a project. Whether that consistency comes through federal action, greater coordination among states, or widely accepted industry standards, a more predictable regulatory framework would encourage investment while still supporting responsible development.