The Trump administration told power companies Monday that generators built solely to serve data centers do not have to comply with the federal Clean Air Act’s Acid Rain Program, a move the Environmental Protection Agency says will accelerate artificial intelligence infrastructure development across the country.
EPA Assistant Administrator Aaron Szabo made the determination in a July 16 letter, writing that “the Acid Rain Program does not apply to power generation facilities that are not connected in any way to the larger electricity grid.” The agency released the guidance publicly on Monday.
The ruling covers so-called “islanded” power plants, meaning natural gas and diesel generators that exclusively supply electricity to a specific data center campus without feeding into regional power grids. Because those facilities technically do not deliver power to the public utility network, the EPA says they fall outside the statute’s definitions.
“The EPA believes that, considering the plain text of these definitions, the Acid Rain Program does not apply to power generation facilities that are not connected in any way to the larger electricity grid,” Szabo wrote.
The Acid Rain Program, created under the 1990 Clean Air Act amendments, has long required power generators to meet caps on sulfur dioxide and nitrogen oxide emissions. Regulators credited it with dramatic reductions in smog and soot pollution from industrial facilities over three decades.
The EPA said Monday that exempting islanded data center generators from those rules would give developers “greater flexibility in where and how quickly they can build new data centers,” which are consuming electricity at a pace that has strained regional grids from Texas to Virginia. The agency said the move also supports President Donald Trump’s Ratepayer Protection Pledge, which the administration expanded last week.
Under that non-binding pledge, data center developers, utilities and state regulators are expected to bear costs associated with new projects themselves rather than passing them onto residential electricity customers.
The guidance does not require congressional approval and takes effect immediately as the agency’s official legal interpretation of existing statute.
Data center construction has surged since 2023 as tech giants race to build the computing infrastructure needed for AI model training and deployment. Industry analysts estimate annual electricity demand from data centers could double by 2030, prompting federal and state regulators to work through a backlog of permitting and grid interconnection requests.
Environmental groups, including the NAACP, criticized the administration’s action, arguing that diesel and gas generators operating outside normal pollution rules could increase localized air quality problems for communities near planned facilities.
