Accelerating AI Infrastructure: What EPA’s New NSR Proposal Means for Developers

Key Takeaways

• The U.S. Environmental Protection Agency (EPA) recently published a proposed rule to redefine “begin actual construction” under the New Source Review (NSR) program.
• The proposed rule aims to accelerate project timelines by allowing work on non-pollutant-emitting components, such as foundations and building shells, before a final air permit is issued.
• These revisions could provide a significant advantage to data center developers by allowing them to move forward with significant site preparation and construction activities before receiving an NSR permit.
• Developers should note, however, that all construction in advance of receipt of an NSR permit is at the owner or operator’s risk, and pre-permit construction activities will not alter or influence permitting decisions.
• Public comment on the proposed rule is due on June 29, 2026.

On May 13, 2026, EPA proposed a new rule redefining what it means to “begin actual construction” under the NSR permitting program.[1] The proposal aims to accelerate project timelines by allowing work on non-pollutant-emitting components before a final NSR permit is issued. This rulemaking, previewed by EPA in guidance issued in September 2025, bolsters the Trump administration’s efforts to rapidly deploy AI-scale data centers and associated power generation.[2] The September 2025 guidance and this proposed rulemaking also are featured on EPA’s Clean Air Act Resources for Data Centers website.

Proposed Substantial Revisions to NSR Permitting Regulations

The NSR permitting program applies to the construction of new stationary sources and major modifications of existing major stationary sources. A person intending to construct a new source generally must obtain an NSR permit before beginning construction. Historically, the regulations and agency guidance prohibited construction “on any emission unit or any installation designed to accommodate an emissions unit.”[3] In 2020, EPA issued a guidance memorandum (2020 Guidance) that revised its interpretation of “begin actual construction,” explaining that “an owner or operator [may] undertake physical on-site activities… provided that those actions do not constitute physical construction on an emissions unit.” The 2020 Guidance drew a stark contrast with earlier interpretations, stating that “an ‘installation necessary to accommodate’ the emissions unit at issue is not considered part of that emissions unit,” thereby expanding the universe of construction activities that may occur before permitting. 

In September 2025, EPA expressly applied the 2020 Guidance to a regulated company’s proposal to construct the core and shell of a building intended to ultimately house an emissions unit. In its response to a local agency request for clarification on the definition of “begin actual construction,” EPA distinguished “construction on an emissions unit” from “construction on those parts of the facility that do not qualify as an emission [sic] unit” to conclude that allowing construction of the core and shell was a permissible interpretation of the regulations. Id. Shortly thereafter, EPA signaled that it intended to formally revise the definition of “begin actual construction” in order to expedite construction timelines.

EPA’s recent proposal realizes this intention and clarifies the regulatory definition to focus on whether the construction activities themselves are pollution-emitting and to create an express allowance for construction of “non-emitting” components or structures.[4] This would allow some on-site construction activity to occur before a permit is in hand. 

Specifically, the proposed rule redefines “begin actual construction” to mean “in general, initiation of physical on-site construction of pollutant-emitting activities on a stationary source.”[5] It also defines “pollutant-emitting activities” to “include any equipment or component in a process or operation that emits or has the potential to emit a regulated NSR pollutant.”[6] For sites undergoing NSR permitting, the revised definition would relax restrictions on on-site construction activities to allow construction of “non-emitting” components, such as utility service infrastructure, concrete pads, and some types of buildings and building components, before a site obtains an NSR permit.[7] Beginning construction on “pollutant-emitting activities”—such as installing backup diesel generators for a data center—would remain prohibited until an entity receives an NSR permit. This ensures that while general site work is expedited, the core environmental oversight of actual emission sources remains intact, reflecting EPA’s broader focus on reducing permitting timelines while maintaining environmental standards.

Potential To Accelerate Data Center Construction Nationwide

The proposed rulemaking comes in the wake of a series of moves by both the Trump administration and EPA to support the buildout of domestic data centers. These efforts complement recent federal initiatives, such as the U.S. Department of Energy’s (DOE) identification of multiple sites for rapid AI development, which we discussed in an earlier Update, and EPA’s guidance on streamlining Title V permit reviews issued alongside the proposed NSR rule, each of which offer expedited permitting pathways.

Indeed, these revisions would provide a significant advantage to data center developers by allowing them to move forward with significant site preparation and construction activities, including constructing infrastructure to provide utility service to a site, foundations, and office buildings before receiving an NSR permit.[8] Developers should note, however, that EPA takes care in the proposed rule to caution that all construction in advance of receipt of an NSR permit is “at the owner or operator’s risk”[9] and that pre-permit construction activities will not “alter or influence” permitting decisions.[10] This means EPA and state permitting authorities are not obligated to issue the final permit just because construction on a facility has started. The fact that a developer has already invested in foundations or building shells cannot be used as a justification for the permit’s approval or to influence the “Best Available Control Technology” (BACT) analysis. 

Conclusion

The proposed rule represents a significant shift in how EPA regulates pre-permit construction activities and could significantly accelerate timelines for data center infrastructure projects across the country. Stakeholders should closely review the proposed rule and consider submitting comments before the June 29, 2026, deadline.[11] As the rulemaking progresses, companies planning large-scale construction projects subject to NSR permitting should evaluate how the revised definitions may affect project timelines and permitting strategies.

Endnotes

1. 91 Fed. Reg. 26958, Begin Actual Construction in the New Source Review (NSR) Preconstruction Permitting Program (May 13, 2026).

2. The administration issued an AI Action Plan in July 2025 that directed EPA to “[e]xpedite environmental permitting for qualifying projects by streamlining or reducing regulations promulgated under the Clean Air Act.” In its press release announcing this proposed rule, EPA highlighted that the rulemaking would “support the development of Artificial Intelligence (AI) infrastructure and power generation.”

3. 91 Fed. Reg. at 26963 (emphasis added); see also 40 C.F.R. 52.21(b)(11) (“[I]n general, initiation of physical on-site construction activities on an emissions unit which are of a permanent nature. Such activities include, but are not limited to, installation of building supports and foundations, laying underground pipework and construction of permanent storage structures. With respect to a change in method of operations, this term refers to those on-site activities other than preparatory activities which mark the initiation of the change.”).

4. 91 Fed. Reg. at 26969.

5. Id. at 26970.

6. Id.

7. Id. at 26960.

8. 91 Fed. Reg. at 26969.

9. Id. at 26973 (“Permit applicants that choose to undertake on-site construction activities in advance of permit issuance do so at their own economic risk that a permit may be denied or issued with unanticipated conditions on operations, potentially resulting in a lost investment or increased construction costs.”).

10. Id. at 26974 (“Owners or operators will not be allowed and cannot expect that any preparatory construction activities prior to permit issuance will alter or influence the BACT and LAER analysis for the stationary source or any other elements of the permitting decision. An applicant cannot use equity and resources expended to claim cost infeasibility or otherwise influence the BACT or LAER determinations.”).

11. Comments, identified by Docket ID No. EPA-HQ-OAR-2025-0618, should be submitted by the methods identified in the proposed notice. Id. at 26958.