Executive Order Relating to AI Data Center Development: A Blueprint for P3 Collaboration

A recent Executive Order entitled “Accelerating Federal Permitting of Data Center Infrastructure” (the “EO”) establishes a framework for fast-tracking public-private partnerships that aim to develop large-scale AI data centers and supporting infrastructure. The EO broadly seeks to provide federal support in the key areas necessary for the successful implementation of any P3 project: (i) access to land on a cost-efficient basis; (ii) access to financing and tax incentives, and (iii) an expedited permitting process.  
The EO directs federal agencies—including the EPA, the Army Corps of Engineers, and other agencies—to revise permitting regulations and identify expedited options for the approval of “qualifying projects,” defined as data centers (or components thereof) requiring at least 100 megawatts of power dedicated to AI workloads, with the private sector sponsors investing over $500 million in capital expenditures. 

To streamline the site selection process, the EO directs multiple agencies to identify potential federal lands – including, Brownfield sites, Superfund sites, and military installations, that may be suitable for leasing for data center development. Not surprisingly, the EO also rescinds Biden-era climate and other requirements that were viewed as creating additional barriers to the leasing of federal lands. 

Finally, in an effort to spur private investment, the EO directs the Commerce Department to launch an initiative that provides financial support for qualifying projects, including through loans and loan guarantees, grants, tax incentives, and offtake agreements.
Implementation of the EO, particularly as it relates to the streamlining of federal permitting processes, will take time and may face legal challenges. In addition, the practical impact of these efforts are unclear, as in most cases, developers will still need to navigate complex state and local regulatory approvals for their projects. Nevertheless, the EO’s emphasis on providing access to land, substantial financial incentives, and a clear and predictable process for entitlements, will greatly facilitate AI data center public-private partnerships. And if implemented successfully, we expect the EO could also serve as a helpful blueprint for a wide variety of P3 collaborations that advance other governmental policy priorities.