Guest column

Energy experts: Executive order enhances federal permitting for AI data centers

A new EO could streamline regulatory burdens for the development of data centers supporting AI. Getty Images

In an effort to accelerate the development of artificial intelligence, President Trump signed an executive order (EO) aimed at expediting the federal permitting process for data centers, particularly those supporting AI inference, training, simulation, or synthetic data generation.

Following the White House’s issuance of a broader AI Action Plan, the EO seeks to streamline regulatory burdens and utilize federal resources to encourage the development of data centers supporting AI, as well as the physical components and energy infrastructure needed to construct and provide power to these data centers.

Qualifying Projects

The EO directs several federal agencies to take actions to incentivize the development of “Qualifying Projects,” which the EO defines as “Data Centers” and “Covered Component Projects.” The EO defines “Data Center Projects” as facilities that require over 100 megawatts (MW) of new load dedicated to AI inference, training, simulation, or synthetic data generation. The EO defines Covered Component Projects as materials, products, and infrastructure that are required to build Data Center Projects or upon which Data Center Projects depend, including energy infrastructure projects like transmission lines and substations, dispatchable base load energy sources like natural gas, geothermal, and nuclear used principally to power Data Center Projects, and semiconductors and related equipment. For eligibility as a Qualifying Project, the project sponsor must commit at least $500 million in capital expenditures. Data Center Projects and Covered Component Projects may also meet the definition of Qualifying Project if they protect national security or are otherwise designated as Qualifying Projects by the Secretary of Defense, Secretary of the Interior, Secretary of Commerce, or Secretary of Energy.

Streamlining Permitting of Qualifying Projects

The EO outlines the following strategies aimed at improving the efficiency of environmental reviews and permitting for Qualifying Projects:

  • NEPA Applicability: The Council on Environmental Quality (CEQ), in coordination with relevant agencies, is directed to utilize existing and new categorical exclusions under the National Environmental Policy Act (NEPA) to cover actions related to Qualifying Projects, which “normally do not have a significant effect on the human environment.” The EO states that where federal financial assistance represents less than 50 percent of total project costs of a Qualifying Project, the Project shall be presumed not to be a “major Federal action” requiring NEPA review.
  • FAST-41: The Executive Director of the Federal Permitting Improvement Steering Council (FPISC) is empowered to designate a Qualifying Project as a “transparency project” under the Fixing America’s Surface Transportation Act (FAST-41) and expedite its transition from a transparency project to a “covered project” under FAST-41. FPISC is directed to consider all available options to designate a Qualifying Project as a FAST-41 covered project, even where the Qualifying Project may not be eligible.
  • EPA Permitting: The US Environmental Protection Agency (EPA) is directed to modify applicable regulations under several environmental protection statutes impacting the development of Qualifying Projects on federal and non-federal lands. EPA is also directed to develop guidance to expedite environmental reviews for identification and reuse of Brownfield and Superfund Sites suitable for Qualifying Projects. Importantly, state environmental permitting agencies are not subject to the EO.
  • Corps Permitting: The US Army Corps of Engineers is directed to review the nationwide permits issued under Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act of 1899 to determine whether an activity-specific nationwide permit is needed to facilitate the efficient permitting of activities related to Qualifying Projects.
  • Interior Permitting: The US Department of the Interior is directed to consult with the US Department of Commerce regarding the streamlining of Endangered Species Act consultations for Qualifying Projects, and to work with the US Department of Energy to identify federal lands that may be available for use by Qualifying Projects and offer appropriate authorizations to project sponsors.

Federal Incentives for Qualifying Projects

The EO also directs the US Secretary of Commerce to “launch an initiative to provide financial support for Qualifying Projects,” which may include loans, grants, tax incentives, and offtake agreements. The EO further directs all “relevant agencies” to identify and submit to the White House Office of Office of Science and Technology Policy any relevant existing financial support that can be used to assist Qualifying Projects, consistent with the protection of national security.

The EO reinforces the Trump administration’s focus on AI and creates new opportunities for both AI data center developers and energy infrastructure companies providing power or project components to these data centers. Proactive engagement with relevant agencies will be crucial for capitalizing on the opportunities created by this EO and the broader AI Action Plan. By leveraging these financial and environmental incentives, project developers may be able to shorten permitting timelines, reduce costs, and take advantage of federal financial support.

---

Jason B. Hutt, Taylor M. Stuart and Anouk Nouet are lawyers at Bracewell. Hutt is chair of the firm’s environment, lands and resources department. Stuart counsels energy, infrastructure, and industrial clients on matters involving environmental and natural resources law and policy. Nouet advises clients on litigation, enforcement and project development matters with a focus on complex environmental and natural resources law and policy.

Trending News

A View From HETI

Energytech Cypher co-founders Nada Ahmed and Jason Ethier. Photo via energytechcypher.com

Houston-based Energytech Nexus has rebranded.

The cleantech founders community will now be known as Energytech Cypher. Organizers say the new name was inspired by the Arabic roots of the word cypher, ṣifr, which is also the root of the word zero.

"A cypher is a key that unlocks what's hidden," Nada Ahmed, co-founder and chief revenue officer of Energytech Cypher, said in a news release. "And zero? Zero is where every transformation begins, the leap from 0 to 1, from idea to reality, from potential to power. We decode the energy transition by connecting the right founders, the right capital, and the right corporate partners at the right time, because the most important journey in energy is the one that takes you from nothing to something."

Energytech Nexus has rebranded to Energytech Cypher.

Co-founder and CEO Jason Ethier says that the name change better reflects the organization's mission.

"The energy transition doesn't have a technology problem. It has a connection problem," Ehtier added in the release. "The right founders exist. The right investors exist. The right partners exist. What's been missing is the infrastructure to bring them together—to decode the complexity, remove the friction, and make sure the best technologies find the markets that need them. That's what this community has always done. Energytech Cypher is the name that finally says it."

Energytech Cypher, previously known as Energytech Nexus, was first launched in 2023 and has grown from a podcast to a 130-member ecosystem. It has supported startups including Capwell Services, Resollant, Syzygy Plasmonics, Hertha Metals, Solidec and many others.

It is known for its flagship programs like the Pilotathon, which connects founders with industry partners for pilot opportunities. The event debuted in 2024.

Energytech Cypher also launched its COPILOT Accelerator last year. The accelerator partners with Browning the Green Space, a nonprofit that promotes diversity, equity and inclusion (DEI) in the clean energy and climatech sectors. The inaugural cohort included two Houston-based startups and 12 others from around the U.S.

It also hosts programs like Liftoff, Energy Tech Market, lunch and learns, CEO roundtables, investor workshops and international partnership initiatives.

Last year, Energytech Cypher also announced a new strategic ecosystem partnership with Greentown Labs, aimed at accelerating growth for clean energy startups. It also named its global founding partners, including Houston-based operations such as Chevron Technology Ventures, Collide, Oxy Technology Ventures, and others from around the world.

Trending News