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Will moving fast and breaking air permits exacerbate tensions with locals?

The Trump administration is trying to ease data centers’ power permitting burden. It’s likely to speed things up. Whether it’ll kick up more dust for the industry is literally up in the air.
On Tuesday, the EPA proposed a rule change that would let developers of all stripes start certain kinds of construction before getting a historically necessary permit under the Clean Air Act. Right now this document known as a New Source Review has long been required before you can start building anything that will release significant levels of air pollutants – from factories to natural gas plants. If EPA finalizes this rule, it will mean companies can do lots of work before the actual emitting object (say, a gas turbine) is installed, down to pouring concrete for cement pads.
The EPA’s rule change itself doesn’t mention AI data centers. However, the impetus was apparent in press materials as the agency cited President Trump’s executive order to cut red tape around the sector. Industry attorneys and environmental litigants alike told me this change will do just that, cutting months to years from project construction timelines, and put pressure on state regulators to issue air permits by allowing serious construction to start that officials are usually reluctant to disrupt.
“I think the intended result is also what will happen. Developers will be able to move more quickly, without additional delay,” said Jeff Holmstead, a D.C.-based attorney with Bracewell who served as EPA assistant administrator for air and radiation under George H.W. Bush. “It will almost certainly save some time for permitting and construction of new infrastructure.”
Air permitting is often a snag that will hold up a major construction project. Doubly so for gas-powered generation. Before this proposal, the EPA historically was wary to let companies invest in what any layperson would consider actual construction work. The race for more AI infrastructure has changed the game, supercharging what was already an active debate over energy needs and our nation’s decades-old environmental laws.
Many environmental groups condemned the proposal upon its release, stating it would make gas-powered AI data centers more popular and diminish risks currently in place for using dirtier forms of electricity. Normally, they argue, this permitting process would give state and federal officials an early opportunity to gauge whether pollution control measures make sense and if a developer’s preferred design would unduly harm the surrounding community. This could include encouraging developers to consider alternate energy sources.
“Inevitably agencies have flexibility as to how much they ask, and what this allows them to do is pre-commit in ways that’ll force agencies to take stuff off the table. What’s taken off the table, it’s hard to know, but you’re constraining options to respond to public concerns or recognize air quality impacts,” said Sanjay Narayan, Sierra Club’s chief appellate counsel.
Herein lies the dilemma: will regulatory speed for power sacrifice opportunities for input that could quell local concerns?
We’re seeing this dilemma play out in real time with Project Matador, a large data center proposal being developed in Amarillo, Texas, by the Rick Perry-backed startup Fermi Americas. Project Matador is purportedly going to be massive and Fermi claims its supposed to one day reach 11 GW, which would make it one of the biggest data centers in the world.
Fermi’s plans have focused on relying on nuclear power in the future. But the only place they’ve made real progress so far in getting permits is gas generation. In February, the Texas Commission on Environmental Quality gave Fermi its air permit for building and operating up to 6 gigawatts of gas power at Project Matador. At that time, Fermi was also rooting for relaxed New Source Review standards, applauding EPA in comments to media for signaling it would take this step. The company’s former CEO Toby Neugebauer also told investors on their first earnings call that Trump officials personally intervened to help get them gas turbines from overseas. (There’s scant public evidence to date of this claim and Neugebauer was fired by Fermi’s board last month.)
But now Fermi’s permit is also being threatened in court. In April, a citizens group Panhandle Taxpayers for Transparency filed a lawsuit against TCEQ challenging the validity of the permit. The case centers around whether the commission was right to deny a request for a contested case hearing brought by members of the group who lived and worked close to Project Matador. “Once these decisions are made, they don’t get reversed,” Michael Ford, Panhandle Taxpayers for Transparency’s founder, said in a fundraising video.
This is also a financial David vs. Goliath, as Ford admits in the fundraising video they have less than $2,000 to spend on the case – a paltry sum they admit barely covers legal bills. We’re also talking about a state that culturally and legally sides often with developers and fossil fuel firms.
At the same time, this lawsuit couldn’t come at a more difficult time as Fermi is struggling with other larger problems (see: Neugebauer’s ouster). Eric Allman, one of the attorneys representing Panhandle Taxpayers for Transparency, told me they’re still waiting on a judge assignment and estimated it’ll take about one year to get a ruling. Allman told me legally Fermi can continue construction during the legal challenge but there are real risks. “Applicants on many occasions will pause activity while there is an appeal pending,” he told me, “because if the suit is successful, they won’t have an authorization.”
Aerial photos reported by independent journalist Michael Thomas purportedly show Fermi hasn’t done significant construction since obtaining its air permit. Fermi did not respond to multiple requests for comment on the lawsuit.
Industry attorneys I spoke to who wished to remain anonymous told me it was too early to say whether EPA’s rulemaking would exacerbate local conflicts by making things move faster. “A lot of times the environmental community likes to litigate things in the hope delays will kill a project, so in that regard, this strategy may be harder for them to implement now,” one lawyer told me. “But just because a plant gets a permit doesn’t mean they can build.”
Environmental lawyers, meanwhile, clearly see more potential for social friction in a faster process. Keri Powell of the Southern Environmental Law Center compared this EPA action to xAI’s rapid buildout in Tennessee and Mississippi where the Al company’s construction of gas turbines before it received its permits has only added to local controversy. This new rule would not make what xAI did permissible; this is a different matter. Yet there are thematic similarities between what the company is doing and the new permitting regime, with natural gas generation expanding faster when companies are allowed to start forms of site work before an air permit is issued.
“By the time a permit is issued, the company will be very, very far along in constructing a facility. All they’ll need to do is bring in the emitting unit, and oftentimes that doesn’t entail very much,” she said. “Imagine you’re a state or local permitting agency – your ability to choose something different than what the company already decided to do is going to be limited.”
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Senior executives at EDP, Apex, Pattern, and other large renewables companies did something remarkable in a recent court filing: They publicly criticized the administration.
Major energy developers are going all in against the Trump administration in court, in what appears to be the first time many are publicly challenging the president in spite of any potential risk of retaliation.
As I chronicled, Trump is now effectively blocking any new wind projects in the U.S., utilizing federal authority over American aerospace to stop what was once a run-of-the-mill approval process for the height of turbines through the Federal Aviation Administration. They’ve done this by using the Defense Department to gum up the interagency review process, with the Pentagon holding up bureaucratic machinations citing vague, alleged national security concerns. Earlier this month, regional renewable energy trade groups filed a lawsuit against the Pentagon and FAA seeking a judicial order akin to what they’ve already won against the Interior Department’s anti-renewables permitting freeze. The case argues Trump can’t hold these routine processes up because, well, they’re mandated by law to ultimately clear things if they meet basic specifications. It arrives as the Trump administration appeals a separate lawsuit against the Interior Department’s de facto permitting freeze, which was formally filed today.
Last week, the renewables trades filed a motion to immediately end this de facto national freeze. Attached to this motion: a murderer’s row of on-the-record statements from senior executives for large U.S. energy developers seeking to build their wind projects. I’ve honestly never seen anything like it – declarations railing against the Pentagon from top personnel for Pattern Energy, Apex Clean Energy, EDP Renewables, Triple Oak Power, Bordas Renewable Energy, Nova Clean Energy and Palmer Capital.
The declarations describe each company’s individual experiences struggling to get these routine height clearances. Adam Clark of Pattern Energy said the Pentagon’s inaction has “jeopardized committed capital, threatened project viability” and “delayed or blocked local and state permitting.” Thomas LoTuro at EDP Renewables said the military’s behavior “effectively halted” a “substantial portion of [EDP] North America’s project portfolio,” stalling some proposals for so long that it risks violating existing local road agreements for construction.
Some of these executives – such as those for Invenergy, Bordas, and Triple Oak – only describe themselves as representatives of the subsidiaries or LLCs developing individual wind projects affected by the freeze. Those filings do not make any reference by name to their parent companies. But quick background checks revealed each of these individuals holds broader development or management roles at the parent companies and I understand from conversations with individuals involved in this litigation that their statements were a significant step not taken likely.
“You are very observant,” one senior renewable energy industry insider told me when I asked about the executives’ statements.
This insider – who has firsthand knowledge about the litigation – told me the companies going on the record are largely doing so because of the extent they’re at risk. Often the height clearance for turbines is one of the final procedural steps before starting construction, and the incoming sunset of tax credits under the Inflation Reduction Act has made construction start dates key to projects’ budgets. Wind development has been drastically undermined by Trump’s permitting freezes. American Clean Power has said turbine orders halved in the first half of 2025, reaching their lowest levels since the COVID-19 pandemic lockdowns.
There’s also the sheer magnitude of the freeze. Before the Pentagon ruined the lives of wind developers, the Trump renewable permitting freeze was an obstacle companies could design around by avoiding wetlands, species habitat, and federal lands. It should’ve been a relief, for example, that the Trump administration dropped its legal defense of the president’s Day 1 executive order going after wind permitting. But the military’s hold on approvals had nothing to do with that and its scope reaches further than just the federal government, as height clearances are often needed for state, county, and municipal permits too.
Ultimately the Pentagon wind freeze represents an existential threat to renewable energy developers’ businesses and reputations in the investment community. Sean Stocker, head of development for Apex Clean Energy, stated in a declaration submitted in the Pentagon wind litigation that more than $133 million in project costs incurred were at risk of being lost, including over projects that had already been determined “do not pose an unacceptable risk to national security.” This has resulted in “impacts and losses” that are “not fully recoverable” even if the companies win in the litigation because of the damage to wind energy’s reputation.
“If Apex is forced to cancel projects as a result of DoD inaction, the resulting economic, reputational, and business losses could irreparably harm the company,” Stocker stated.
Since the start of Trump 2.0, wind energy developers have been skittish to publicly challenge the president in any way for fear of retribution. Trump could hypothetically make wind energy life hell in fresh new ways. Like for example, targeting energy companies critical of the administration in an ongoing crackdown on bird deaths at operational wind farms. A reasonable fear! “Companies are still risk averse and they’re afraid. The knock-on business impacts could hypothetically be worse than the loss on the wind project itself,” said the industry insider, who requested anonymity because they did not have permission to speak on the record about the litigation.
Based on the statements submitted in court, it appears energy companies are now emboldened after winning myriad legal battles against the administration via trade group campaigns and lawsuits filed by supportive Democratic attorneys general. Time will tell whether putting all their chips onto the table will work out in the end.
A representative for the groups involved in the litigation did not respond to a request for comment.
And more of the week’s top fights around development.
1. Apache County, Arizona – Renewables developers are trying to head off restrictions in a coveted region of the sun-swept Arizona desert.
2. Montgomery County, Alabama – A so-called “AI watchman” has won the GOP nomination for Alabama Public Service Commission, indicating how deeply frustrations run in red states against the nascent infrastructure buildout for artificial intelligence.
3. Goodhue County, Minnesota – The mayor of a small city at the center of a significant data center conflict abruptly resigned, indicating further municipal dominoes will fall because of the AI data center backlash.
4. Reno County, Kansas – We close this week’s Hotspots with a county rejecting a data center moratorium.
A conversation with Mark Muro, senior fellow at the Brookings Institute’s metro policy program
Today’s conversation is with Mark Muro, senior fellow at the Brookings Institute’s metro policy program. Too often I’m asked, what’s the version of a data center boom that people like? I reached out to Muro because he recently coauthored research into the ways communities and data centers can potentially work together to build more mutually beneficial and popular industry growth. The conversation wound up perfect for The Fight, so I had to include it in full.
The following Q&A was lightly edited for clarity.
What do you identify as the primary driver of the backlash we’re seeing to data center development in the United States?
They are potentially disruptive, large scale developments and also take on a talismanic quality where they stand for something. Both dimensions have really agitated people. On the one hand, often in rural communities there’s a lot of concern about energy use, price impacts, noise in some cases and so on, and for many communities these are a quality of life issue. For others, AI stands in for anxiety about jobs not coming. At a time when people are worried about jobs being displaced by AI, data centers are a convenient Other. They agitate and are focal points for a lot of concerns.
The data is pretty clear: a data center brings to a community an initial surge of construction jobs and then a quite modest level of operational jobs. A community might gain in the near-term several thousand jobs but then the long-term employment is welcome but not as large as had been advertised. Some of them can be decent jobs and we should acknowledge that.
What about tax revenue?
It can be significant but the deals are often worked out quietly. It’s hard to get a systematic take on that. A lot of that also depends on the skillfulness and aggressiveness of local public officials because all of it needs to be worked out in a deal. There are certainly tax benefits in some cases, but those are harder to pin down and seem to range.
Okay, so what is the pathway towards these projects being a more meaningful and positive long-term community investment?
That’s the right question because a data center isn’t inherently a negative for a place.
We think the need is first for communities to use the data center in its own aspirational plans. Places need to know what they want. They should be focusing on high-quality jobs, long-term employment, and in some cases even innovation gains for their local economies. Too rarely have communities taken an aspirational view.The deals are worked out on the fly, without a gameplan for the region.
Communities need to ask for more, require more, and come into these deals with their own priorities.
In some cases there have been communities that for a long period of time built up a number of data centers and felt like they gained benefits. Areas near the Columbia River in the Northwest seem to have worked with Microsoft and other companies to facilitate data center construction while also gaining quality employment and funding for schools. It is possible.
In our report we detail a number of places that have begun to put together these kinds of deals that are beneficial, often in places with a university nearby where there’s interplay on the technology front. I think in those cases, we may be beginning to see a rethinking of how these projects should go down and benefit.
Also, this year the backlash has become such a hurdle for the companies that they’re beginning to rethink how they operate. I think the jig is up for the bad old days and we’re going to see more thoughtful arrangements made in the next few years because everybody agrees, what’s been going down the past few years hasn’t been beneficial for any of the actors.
Do you see industry players picking up on a need to be more mindful of what a community needs? I’m thinking about Meta’s recent announcements around workforce training, for example.
Yes. Both for reasons of seeing what’s needed but also the need to make some concessions to really be a better neighbor. It’s forcing some really beneficial outcomes.
Workforce is one of the key aspects of how Microsoft has been far-sighted in Wisconsin, working with the state university and a community college and so on. I think hyperscalers are beginning to move in a more promising direction.
Do you think we’re still going to be having this same conversation a year from now? Things are moving so fast.
Regions are really up in arms about this. It’s become clear that in many cases they’re going to block development. So to the extent hyperscalers want to continue to build, they’re going to have to pursue a more community friendly way to do that.
I think the conversation is going to change. It’ll have to change if the industry wants to continue building capacity.