EPA exempts data center power plants from pollution limits seeking to prevent acid rain

Energy & Environment EPA exempts data center power plants from pollution limits seeking to prevent acid rain Comments: by Rachel Frazin - 07/27/26 3:43 PM ET Comments: Link copied by Rachel Frazin - 07/27/26 3:43 PM ET Comments: Link copied

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The Trump administration announced Monday that it is exempting power plants that only serve data centers and do not connect to the broader grid from pollution limits that seek to prevent acid rain.

The administration announced new guidance on Monday clarifying that these “islanded” power plants do not have to be part of the Clean Air Act’s Acid Rain Program (ARP).

This program requires power plants to reduce emissions of acid rain precursors sulfur dioxide and nitrogen oxides.

Acid rain can cause environmental damage, including to aquatic wildlife, such as fish. In addition, exposure to sulfur dioxide and nitrogen oxides can worsen respiratory issues in humans.

The Environmental Protection Agency (EPA) said it was taking the action to try to help data centers flourish while also mitigating their impacts on consumer electric bills by incentivizing data centers to bring their own power plants instead of relying on the electricity that’s already on the grid.

“Ensuring that the United States maintains our artificial intelligence dominance is essential to national security and economic prosperity. At the same time, it is equally important that we safeguard our communities from utility price hikes,” EPA Assistant Administrator for Air and Radiation Aaron Szabo said in a statement.

“This guidance will provide an avenue to do both. EPA is proud to further the President’s agenda through commonsense approaches to regulating,” Szabo added.

The announcement comes as the Trump administration is trying to get data centers to build their own power sources to try to blunt the impacts of their high electricity use on consumer electric bills.

This is also not the first time the Trump administration is prioritizing data centers over environmental concerns. Last month, it backed Elon Musk’s xAI in court after the NAACP accused the company of illegal air pollution.

The administration has also previously sought to curtail environmental reviews of data centers and expedite approvals of new chemicals that are expected to be used for them.

The EPA’s new guidance says that because the acid rain program is supposed to apply to electric utilities, power plants that serve data centers should not count because it does not consider them to be utilities.

“The EPA believes that, considering the plain text of these definitions, the ARP does not apply to power generation facilities that are not connected in any way to the larger electricity grid,” the guidance document said.

The EPA said it was issuing the document after states and companies contacted the agency “requesting clarity on certain regulatory provisions in the Acid Rain Program.”