The great American data center gold rush is in full swing, and it's bringing with it a familiar refrain: make the data centers provide their own electricity. Pennsylvania Governor Josh Shapiro recently announced a moratorium on any AI data center that doesn't bring, develop, and pay for its own power, citing electricity costs in a post on Instagram. Texas Governor Greg Abbott blocked new data centers from connecting to the state's power grid. Consumer advocates and regulators have been beating this drum for months, arguing that it'll shield utility ratepayers from data center costs. And it might.

But here's the twist: the Environmental Protection Agency just published guidance clarifying that the Clean Air Act's Acid Rain Program doesn't apply to power plants that aren't connected to the larger electricity grid. These so-called "islanded" power plants, built to serve a single facility, get to skip the acid rain rules. It's part of a broader effort to loosen regulations for data centers and their dedicated power sources.

The Acid Rain Program, added to the Clean Air Act in 1990, targets sulfur dioxide and nitrogen oxide emissions from large power plants. It applies to utility plants that sell electricity for public use, and it's been pretty effective - emissions have dropped significantly since the '90s. But by exempting islanded plants, the EPA is removing one of the few tools states have to monitor what these data center power plants are spewing into the air.

The timing is no coincidence. The electricity industry, after years of steady demand, is facing massive projected load growth thanks to generative AI and hyperscale data centers. This has shifted the trajectory of an industry that was trending away from fossil fuels. "For a long time, we just didn't have anybody building gas plants at all because wind and solar are cheaper," said University of Texas law professor David Spence. "Then along came data centers with their incredibly large demands for power that has to be 24-7 and a lot of money to spend on these things."

And spend they do. OpenAI has announced a 9.2-gigawatt natural gas plant, to be built by the U.S. Energy Department, at a data center site in Ohio. Amazon is planning a 7.65-gigawatt gas plant in Texas, and Nexus has proposed a 6-gigawatt plant. These would be some of the largest power plants in the country. Even smaller ones, like a 500-megawatt plant for an unspecified data center and a 90-megawatt facility in Georgia to power a Serverfarm data center, are cropping up.

The EPA says its guidance is just guidance, not a binding rule, and that states can still do more. But the agency is also proposing a formal rule change that would further streamline permitting for data centers and power plants, potentially eliminating public notice and comment for "minor" pollution sources. "This is a piecemeal approach to trying to clear the way for data center siting," said Mindy Goldstein, director of Emory Law School's environmental law program. "It seems like a continuous knockdown of dominoes to clear the way for these data centers and they're leaving states and communities to hold it back."

Meanwhile, some companies are skipping even local permitting. VoltaGrid and Serverfarm got violation notices in Georgia for starting construction before getting permits. The NAACP is suing over xAI's 495-megawatt power plant in Mississippi, which allegedly skipped permits entirely. So while the federal government is busy clearing the path, the states and communities are left to pick up the pieces. As Spence put it, "If AI had been invented in 1975 all of this growth would have been regulated because politics of regulation was starkly different then than it is now. The partisan environment in Congress is not conducive to regulating this explosive growth."