A new executive order seeks to streamline funding for and construction of data center projects by reducing regulatory red tape.
On July 23, 2025, the Trump administration issued an executive order titled “Accelerating Federal Permitting of Data Center Infrastructure” (the Order). The Order aims to “facilitate the rapid and efficient buildout” of data centers and associated infrastructure such as high‑voltage transmission lines and other equipment by “easing Federal regulatory burdens” and “utilizing federally owned land and resources.”
Key Provisions of the Order
- Encouraging “qualifying projects.” The Order directs the Secretary of Commerce to launch an initiative to provide financial support for “qualifying projects,” such as loans and loan guarantees, grants, tax incentives, and offtake agreements. All relevant agencies are to identify any such relevant existing financial support that can be used to assist qualifying projects. The Order states that this financial assistance will not be considered a “major Federal action” under the National Environmental Policy Act (NEPA).
- Streamlining and expediting permitting review. The Order aims to identify streamlining opportunities and avenues to expedite the permitting process. For example, the Order directs relevant agencies to coordinate with the Council on Environmental Quality (CEQ) to identify existing and develop new categorical exclusions to NEPA that could facilitate the construction of qualifying projects. Additionally, the Order directs the Administrator of the Environmental Protection Agency (EPA) to “assist in expediting permitting on Federal and non-Federal lands by developing or modifying regulations” promulgated under the Clean Air Act and the Clean Water Act, among other environmental laws.
- Expedited review for brownfield and Superfund sites. The Order directs the Administrator of the EPA to promptly identify brownfield and Superfund sites for use by qualifying projects and to develop guidance to expedite the environmental review process. However, it remains unclear how the Administrator will implement this provision, particularly given the criticism that the Inflation Reduction Act, which offers tax incentives for clean energy projects on brownfield sites, is too restrictive.
- Federal lands availability. The Order directs the departments of the Interior, Defense, and Energy to identify suitable sites for qualifying projects and/or provide necessary authorizations for use. The Order also mandates the initiation of programmatic consultations under the Endangered Species Act for construction activities related to these qualifying projects over the next decade, and requires the Secretary of the Army to review nationwide permits to determine the need for activity-specific permits to streamline the permitting process. As a response to the Order, the Department of Energy announced on July 24, 2025, that it has selected four sites to potentially build data centers on federal lands.1
What Is a “Qualifying Project”?
The Order applies to certain “data center projects” and “covered component projects,” as defined in the Order. A “data center project” refers to “a facility that requires greater than 100 megawatts of new load dedicated to AI inference, training, simulation, or synthetic data generation.” The term “covered component project” refers to “infrastructure comprising Covered Components, or a facility with the primary purpose of manufacturing or otherwise producing Covered Components.”
Wind and solar energy infrastructure are excluded from qualifying for financial support. Consequently, new energy projects required to power upcoming data center projects will be encouraged to utilize natural gas, coal, nuclear, or geothermal sources. This diverges from the Executive Order 14141 issued by President Biden on January 14, 2025, which promoted the use of clean energy for data centers and was revoked by the Order.
Whether a data center project or covered component project is considered a qualifying project can be determined by the financial contribution of the private stakeholders, the size of the project, or the discretion of the head of relevant federal agencies. A data center project or covered component project will be considered a qualifying project if (i) sponsors have committed at least $500 million in capital expenditures (subject to the Secretary of Commerce determination), (ii) it involves an incremental load addition of greater than 100 megawatts, (iii) it “protects national security,” or (iv) it has otherwise been designated by the head of an agency.
Potential Implications of the Order
Through the Order and related actions, the administration aims to accelerate the buildout of large-scale data center infrastructure through a combination of federal funds, increasing utilization of federal lands, and deregulatory actions. To do so, the Order seeks to (i) provide financial and tax incentives to project sponsors, (ii) make federal lands available for data center development, and (iii) direct environmental agencies to pursue new regulations and exclusions to facilitate expeditious permitting and environmental review processes.
The Order sets a presumption that when the “Federal financial assistance represent[s] less than 50 percent of the total project costs,” such federal financial assistance to qualifying projects will not be considered a “major Federal Action.” Where this presumption is satisfied, the applicable financial support to qualifying projects would not require an environmental impact statement under NEPA, leaving, at most, a comparatively less onerous environmental assessment.
The Order goes a step further to avoid NEPA by requesting CEQ to establish “new categorical exclusions to cover actions related to Qualifying Projects that normally do not have a significant effect on the human environment.” Under the Order, such categorical exclusions would apply to actions beyond federal financing, so long as the agency (and, possibly, courts) agree that the actions do not have a significant impact on the human environment.
Similarly, the Order seeks to promote streamlining under the Clean Air Act, Clean Water Act, Endangered Species Act, and other environmental laws. However, it is unclear what this streamlining will actually entail.
In addition, the Order emphasizes the need to expand and stabilize the grid in order to support energy-intensive data center infrastructure. The Order lists natural gas turbines, coal power equipment, nuclear power equipment, and geothermal power equipment as examples of energy sources that qualify as covered components; however, the Order does not refer to renewable energy sources such as solar, wind, or battery storage. The Order’s emphasis on fossil fuels and nuclear energy aligns with the administration’s energy goals.2
Latham & Watkins will continue to monitor developments around the Order and other data center activities.
The authors would like to thank James Clark for his contribution to this blog post.
