EPA Proposes Redefining 'Begin Actual Construction' Under NSR — Allows Datacenter Construction Before Air Permits

On May 11, 2026, EPA Administrator Lee Zeldin signed a proposed rule (published Federal Register May 13, 2026; Docket 2026-09524) redefining “begin actual construction” in the Clean Air Act’s New Source Review (NSR) preconstruction permitting program. If finalized, the rule would allow datacenter developers, power plant operators, and manufacturers to begin building non-emitting structures and components before obtaining major-source air permits — reversing decades of EPA interpretation that any physical on-site construction triggers the NSR permitting requirement.

What the Proposed Rule Changes

The existing NSR preconstruction permitting framework requires facilities that will emit above major-source thresholds to obtain Prevention of Significant Deterioration (PSD) or Nonattainment New Source Review (NNSR) permits before beginning “actual construction.” The historic interpretation covered the initiation of any physical on-site construction.

EPA’s proposed rule redefines “begin actual construction” to mean “in general, initiation of physical on-site construction of pollutant-emitting activities.” The proposed rule adds a new defined term, “pollutant-emitting activities,” meaning “any equipment or component in a process or operation that emits or has the potential to emit a regulated NSR pollutant.”

Under the proposed definitions, facilities may construct:

• Building structures (foundations, shells, server halls)
• Cooling tower structures
• Power infrastructure conduits and substations (non-emitting components)
• Access roads and site grading

…before obtaining NSR permits, as long as the emission-producing equipment (backup diesel generators, combustion turbines, on-site power generation arrays) has not been installed or initiated.

Precursor Actions

The proposed rule formalizes an administrative reinterpretation Zeldin began informally in September 2025:

• September 2, 2025: EPA issued an approval letter for a semiconductor facility in Arizona permitting “core and shell” construction before air permits were obtained for emission units inside the building — the first facility-specific application of the new interpretation.
• September 9, 2025: EPA publicly announced plans to codify the case-by-case approach into a formal rule.
• September 15, 2025: EPA reinstated the 2017 Trump-era “no second guessing” policy, prohibiting the agency from challenging industry emissions projections used in NSR permit applications.
• September 23, 2025: EPA eliminated the NSR permit requirement for idle facilities reactivating operations, unless a “major modification” occurs.

Why This Event Matters

Datacenter-specific structural impact: AI hyperscale datacenters trigger NSR permitting requirements because their backup diesel generation and on-site power generation typically exceed major-source emission thresholds. The historic NSR permitting timeline — obtaining PSD/NNSR permits before breaking ground — could delay construction by 12–36 months for complex sites. Zeldin’s proposed redefinition permits the vast majority of the physical construction to proceed during the permitting process rather than waiting for its completion.

This is the most concrete CAA-specific implementation action under Section 7 of the July 23, 2025 EO “Accelerating Federal Permitting of Data Center Infrastructure,” which directed EPA to modify Clean Air Act regulations “to expedite the permitting of Qualifying Projects.” The September 2025 informal reinterpretation was the first-pass implementation; the May 2026 proposed rule is the APA-formal codification.

Structural significance: The “begin actual construction” redefinition is an administrative bypass of the NSR permitting framework that does not repeal the Clean Air Act. NSR remains in force; the proposed rule removes the permitting trigger for the largest share of physical project work, narrowing the trigger to the specific equipment that emits pollution while the facility enclosing that equipment is already built. This is operationally analogous to the Section 5(c) <50% federal-financial-assistance NEPA carve-out in the same EO: both operate by redefining what triggers the statute’s review requirement rather than repealing the statute.

Enforcement backstop elimination: The September 15, 2025 “no second guessing” policy reinstates the enforcement gap that existed under Trump 1 — operators can file low-ball emissions projections to avoid NSR triggers, and EPA has committed not to second-guess those projections until years of operational data accumulate. The proposed rule and the enforcement policy together form a two-layer permitting-escape architecture: (1) build the facility without a permit while claiming non-emitting construction; (2) project emissions below major-source thresholds in permit applications that EPA will not challenge.

Comment Period and Status

Comments were due June 29, 2026. Final rule timeline not yet established. State-AG challenges anticipated; industry comment support expected from datacenter developers, power plant operators, and manufacturers. The rule requires D.C. Circuit review if challenged under CAA § 307(b)(1) — the same exclusive-review channel used to foreclose pre-effective judicial relief on the Endangerment Finding repeal.

Research Gaps

• Comment record composition: industry support vs. state-AG opposition split not yet reviewed
• Whether any facility has formally relied on the September 2025 informal reinterpretation for a major datacenter project (i.e., has the theory been applied in a permit approval beyond the single Arizona semiconductor facility?)
• CAA § 307(b)(1) petition: if the rule is finalized as proposed, which entities are positioned to challenge it in the D.C. Circuit?

Related Entries

• zeldin-lee — EPA Administrator and rule signatory
• datacenter-permitting-deregulation-2025 — full five-lever Section 7 EO analysis
• 2025-03-12–epa-31-deregulation-actions — antecedent 31-action deregulatory announcement
• 2026-02-12–epa-zeldin-repeal-endangerment-finding-climate — simultaneous track: Endangerment Finding finalized
• cross-agency-operational-gate-timing-survey — CAA § 307(b)(1) exclusive-review foreclosure pattern