Build Now, Permit Later? What EPA’s Air Permitting Proposal Means for Data Centers and Major Projects

Last fall, the Environmental Protection Agency (“EPA”) gave project developers a valuable thing in Clean Air Act permitting: a usable bright line. In a letter regarding a proposed Arizona semiconductor facility, EPA said the company could begin building the foundation and “core and shell” of the facility before receiving its New Source Review (“NSR”) permit, as long as it did not install emissions units and did not install foundations, piping, or supports that are specifically configured for those units. We described that guidance as giving developers “new room to maneuver, but not without risk.”

EPA has now proposed to put that bright line into the federal rulebook.

In a proposed rule published May 13, 2026, EPA would revise the NSR regulations to distinguish between construction of a stationary source and construction of non-emitting components or structures. The proposal would clarify that certain non-emitting work may proceed before an NSR permit is issued, while physical on-site construction of pollutant-emitting activities would still need to wait. Comments are due June 29, 2026.

The punchline: the air permit may no longer be the starting gun for every shovel

EPA’s proposal would redefine “begin actual construction” to mean the initiation of physical on-site construction of “pollutant-emitting activities” on a stationary source. It would also add a new definition of “pollutant-emitting activities,” meaning equipment or components in a process or operation that emit, or have the potential to emit, a regulated NSR pollutant.

That reframing matters. EPA would move away from its old interpretative guidance and toward a more practical rule: is the thing being built actually part of what emits?

The proposed exclusions are significant. EPA would make clear that “begin actual construction” does not include engineering and design, geotechnical work, clearing vegetation, grading, surveying, soil compaction and stabilization, associated pile driving, excavation and blasting, ordering and storing equipment and materials, temporary construction trailers, and paving. EPA would also exclude from “pollutant-emitting activities” items such as office buildings, retail stores, certain storage buildings, utility-service infrastructure, HVAC for human workspaces, certain sealed junctions or tie-ins, and concrete pads and building foundations, walls, and roofs that are not closed in on the interior side and do not have design elements specifically and uniquely configured to serve emitting equipment.

Put simply: Build the shell, not the source. Clear the site, move dirt, stage equipment, pour foundations, connect utilities, but avoid construction that is specifically designed or configured for emitting processes and equipment. For example, a generic pad would likely fall under the proposal’s exclusions, but a pad specifically designed (with fuel piping, anchor bolts, and wiring) to support a generator might not.  

Why companies should care

For capital-intensive projects, air permitting often sits on the critical path. EPA’s proposal could allow sponsors to pull forward portions of the schedule that historically waited for permit issuance: civil work, site prep, concrete, shells, utility corridors, and other non-emitting infrastructure.

That can be real money. It can also be real leverage in procurement, labor scheduling, financing milestones, seasonal construction windows, and interconnection sequencing.

But this is not a blank check. EPA repeatedly emphasizes that pre-permit construction remains at the developer’s risk. A permitting authority may still deny the permit, impose conditions that require redesign, or require modification or rebuilding of work already completed. And developers may not use sunk costs to influence BACT/LAER determinations, compliance with air-quality requirements, or the ultimate permitting decision.

Data Center Developer Callout: A New Critical-Path Tool

Data center campuses are exactly the kind of project that may benefit from this rule. Many data center air permits are driven by a discrete set of emitting assets — backup generators, on-site engines or turbines, boilers, fuel systems, and related stacks or controls — while the schedule is driven by dirt, concrete, buildings, utility service, and server racks.

Under EPA’s proposal, data center developers may have a stronger basis to begin carefully scoped early-work packages before NSR permit issuance, including site grading, excavation, stabilization, paving, general building-shell construction, non-emitting utility corridors, and electrical/water/wastewater/telecom service infrastructure, while seeking further clarification on systems that are not expressly addressed, such as data-hall cooling. The agency’s proposed definition expressly identifies utility-service wiring, piping, and associated support structures — including electrical, water, wastewater, and telecommunications infrastructure — as outside “pollutant-emitting activities.” Cooling systems present a particular edge case: if the cooling system includes a component that is itself a potential emission source — such as a cooling tower with drift — the system may fall within “pollutant-emitting activities,” and servers or other infrastructure physically attached to or specifically configured for that cooling system may be implicated as well.

The red line is still important. Generator-specific pads, anchor bolts, fuel piping, exhaust systems, selective catalytic reduction or oxidation catalyst housings, stack foundations, dedicated generator-yard structures, and other components uniquely configured to serve emitting equipment are more likely to be treated as construction of pollutant-emitting activities. The same caution applies to on-site power plants or central utility plants if the early work is specifically and uniquely configured for equipment that will emit regulated NSR pollutants.

For data center sponsors, the playbook should be deliberate:

1. Separate the “clean” early-work package from the “hot” emissions package. Drawings, scopes of work, EPC instructions, and procurement packages should make clear which work is non-emitting and which work waits for the permit.
2. Avoid accidental specificity. A generic slab or building shell may be one thing; a slab with generator-specific anchor bolts, exhaust penetrations, fuel connections, or emissions-control integration is another.
3. Build a record before breaking ground. Developers should document why early work is not a pollutant-emitting activity, how it remains separable from emissions units, and why it will not constrain the permitting authority’s BACT/LAER or modeling analysis.
4. Coordinate early with state/local permitting agencies. EPA’s federal proposal will not instantly rewrite every State Implementation Plan (“SIP”)-approved state or local program. State rules, minor NSR programs, local ordinances, and agency practice still matter.
5. Comment now. Data center developers should consider using the comment period to confirm that common early-work packages — substations, switchgear yards, duct banks, campus electrical distribution, water and wastewater infrastructure, and telecommunications pathways — are treated as non-emitting utility infrastructure where they are not specifically and uniquely configured to serve emitting equipment. Comments could also seek clarity on how the proposal applies to common data center edge cases, including non-emitting compute/server equipment, battery energy storage systems, chilled-water and cooling systems (particularly where the cooling system includes a potential emission source such as a cooling tower), the status of infrastructure attached to or configured for such cooling systems, and the line between general site work and generator-specific construction.

The state-law wrinkle

The proposed rule would revise federal NSR regulations, including PSD, NNSR, Appendix S, and Tribal NSR provisions. But many projects are permitted under SIP-approved state or local programs. EPA notes that some permitting authorities may need or want to revise their SIP-approved rules to incorporate the new definitions, and states remain free to adopt more stringent requirements.

That means developers should not assume the federal proposal automatically unlocks early work in every jurisdiction. The value of the rule may depend on where the project is located, how the applicable SIP defines “begin actual construction,” and whether the permitting authority is willing to apply the new approach before state rule revisions are complete.

Expect a fight

EPA is not just making a policy argument. It is framing the proposal as the “best reading” of the Clean Air Act after Loper Bright, arguing that the statute requires permits for construction of sources of air pollution — not for construction of things that do not emit.

That framing is important, but it also tees up the likely litigation issue. Courts, not EPA, will have the final word on whether the Clean Air Act allows this line to be drawn where EPA proposes to draw it.

Bottom line

EPA’s proposal could turn a project-specific permitting interpretation into a broader construction strategy. For data centers and other fast-build infrastructure projects, it may move months of non-emitting work out from behind the air-permit gate.

The opportunity is meaningful. So is the potential risk. The winners will be developers who plan the emissions boundary early, paper the record carefully, and use the comment period to make the final rule work for real-world project delivery.

V&E knows how to get major projects permitted — and built. We regularly advise developers, sponsors, and lenders on the air permitting strategies behind some of the largest data center, power generation, manufacturing, and energy infrastructure projects in the United States. As EPA redraws the line on pre-permit construction, V&E is helping clients turn that new flexibility into real schedule value while managing the permitting and litigation risk that comes with it.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.