Electricity demand from data centers has sparked debate across the country over who pays for infrastructure expansion and manages environmental impacts. Several governors have responded by restricting data center development or requiring facilities to generate their own power. Pennsylvania Governor Josh Shapiro implemented a moratorium on artificial intelligence data centers that do not develop and fund their own electricity supplies, while Texas Governor Greg Abbott blocked new data centers from connecting to the state’s power grid. Advocates for this approach argue it will protect utility customers from bearing costs associated with data center buildout.
However, recent EPA guidance regarding independent power plants built to serve single facilities has raised environmental concerns among experts and advocates. The agency clarified that the Clean Air Act’s Acid Rain Program does not apply to power generation facilities disconnected from the broader electricity grid. This exemption eliminates one permit requirement for dedicated data center power plants. According to environmental law experts, the Acid Rain Program has historically served as a critical enforcement mechanism requiring continuous emissions monitoring and reporting by power plants. Since its creation in 1990, the program produced significant reductions in sulfur dioxide and nitrogen oxide emissions from power generation facilities.
The data center boom has reversed decades of declining fossil fuel power plant construction. As artificial intelligence and hyperscale data centers require massive amounts of continuous electricity, companies are proposing numerous large natural gas facilities. OpenAI announced plans for a 9.2-gigawatt natural gas plant in Ohio, while Amazon is planning a 7.65-gigawatt facility in Texas, alongside other proposals from developers like Nexus. These projects represent some of the largest power plants nationwide, with smaller facilities also being proposed across states.
Environmental regulators note that without the Acid Rain Program’s monitoring requirements, state agencies lose a reliable tool for tracking emissions impacts from dedicated data center power plants. While EPA guidance is non-binding and states retain authority to impose stricter standards, the agency has also proposed additional rule changes to streamline permitting for data centers and associated power infrastructure. The outcome will depend on state environmental agencies’ decisions regarding permit approvals and enforcement requirements.
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