This article appears in the Q2 2025 issue of EM Plus Magazine, a copyrighted publication of the Air & Waste Management Association ( A&WMA)
Introduction
The data center market is experiencing rapid, large-scale growth driven by the rise of artificial intelligence (AI) and cloud computing. Data centers require a substantial amount of reliable electricity to power and cool the servers and networking equipment that comprise the facilities. Data centers that rely on the local grid for electricity often require numerous fossil fuel-fired emergency generators to ensure that the facility’s power needs are met during potential grid outages. Depending on the size of the facility, an air permit to install and operate the emergency generators and potentially other air emitting equipment at the facility (e.g., cooling towers) may be required.
Data center operators are also increasingly exploring on-site power generation to ensure a steady, reliable power supply. These prime power plants utilize technologies such as natural gas engines, simple cycle turbines, combined cycle turbines, linear generators/alternators, fuel cells, or a combination thereof. On-site power generation results in higher air emissions and different types of air emission sources that can trigger significant additional air permitting requirements.
Air quality due diligence and permitting is a crucial step in the design process of a data center that can often impact all phases of a project. The purpose of this article is to discuss some of the primary air permitting considerations for data center and prime power facilities and to discuss best practices to consider during the air quality due diligence and permitting phases of these projects.
Data Center Air Permitting Considerations
With the exponential growth of the data center market across the United States and the increasing interest in prime power facilities, air quality permits in this sector have grown increasingly complex. Emission limitations and associated operational restrictions imposed in these air permits have the potential to significantly impact the operational flexibility of the regulated data centers. It is therefore imperative that data center developers and operators plan a sound strategy when embarking on the air permit application process. The following sections discuss three challenges to consider when devising a permitting strategy.
Site Attainment Status
The attainment status of an area refers to how the ambient pollutant concentrations in that area compare to the applicable National Ambient Air Quality Standards (NAAQS). Many
locations across the United States are considered “nonattainment” (NA) for ozone and particulate matter (PM
10 and PM
2.5). As a result, air quality regulations for ozone precursors (i.e., nitrogen oxides (NO
X) and volatile organic compounds (VOC)), PM
10, and PM
2.5 in these areas are stricter relative to attainment areas. For example, greenfield data centers in attainment areas have allowable emissions up to 250 tons per year (tpy) of the regulated pollutant before triggering major New Source Review (major NSR). However, in nonattainment areas, the NSR major source threshold can be 100 tpy or less depending on the severity of nonattainment status. For new data centers with emissions exceeding the major source threshold in nonattainment areas, or for existing data centers wishing to execute projects with emissions exceeding certain thresholds, applicants are required to purchase Emission Reduction Credits (ERCs) which are expensive and unavailable in many locations.
Data center developers should review the attainment status and background concentrations for potential site locations during the due diligence phase of the project to avoid significant permitting hurdles during the application phase.
Equipment Runtime
A common goal during development of an air permit application is to maximize allowable runtime of the site’s emergency generators and ensure continuous runtime of prime power equipment while avoiding Title V and/or major NSR thresholds. The first step in planning for this goal is to understand the limiting pollutants at the site’s location and which thresholds apply. For example, a site located in a serious nonattainment area for Ozone will have a Nonattainment New Source Review (NNSR) major source threshold of 50 tpy. Therefore, keeping potential NOX emissions below 50 tpy will be the limiting factor in determining maximum runtime for the emergency and prime power technologies while avoiding major NSR and purchase of ERCs. Conversely, a site located in an attainment area will be subject to a major source threshold of 250 tpy for all regulated pollutants and will be allowed a higher runtime before triggering major NSR.
There are certain strategies that can be employed to maximize operational flexibility for the data center regardless of the applicable emission thresholds. For example, applicants can request operational restrictions in the form of fuel usage limitations instead of runtime hours. Doing so often results in higher overall allowable runtime since fuel usage during routine periods of operation (e.g., maintenance and testing) is lower relative to operational capacity. Additionally, facilities may elect to install Tier 4 engines or add-on air pollution control devices (e.g., selective catalytic reduction (SCR), diesel particulate filter (DPF)) to lower pollutant emission rates and increase runtime hours before triggering applicable thresholds.
Data center operators can maximize the operational flexibility of their facility by having a clear understanding of the limiting pollutants and thresholds at their location and crafting a permitting strategy as early as possible in the project.
Air Dispersion Modeling Challenges
Prevention of Significant Deterioration (PSD) permitting and many state air permitting programs require air dispersion modeling evaluations for criteria and/or toxic air pollutants. Depending on the level of emissions of the project and the air permitting authority under which it will reside, applicants may be required to demonstrate compliance with certain ambient standards, including but not limited to:
- NAAQS and local AAQS;
- Class I and Class II Prevention of Significant Deterioration (PSD) Increments;
- State-specific incremental standards; and
- State-specific air toxic standards.
Data centers often face unique challenges in demonstrating compliance with relevant ambient air pollutant standards. Such challenges may include:
- Short stacks associated with emergency generators located near taller data center structures (e.g., server storage buildings), rain caps, and horizontal stacks can result in high modeled ground-level concentrations due to dispersion characteristics and building downwash effects.
- Given that applicants are required to model compliance with ambient standards at the fence line of the facility, data centers with smaller footprints often face additional challenges demonstrating compliance with these standards.
- Depending on the location of the project, the local authority may require that the data center include emissions from emergency operations in their modeling demonstrations, resulting in a highly conservative analysis.
- The intermittent nature of emergency generators at data centers presents unique challenges when utilizing steady-state air dispersion models (i.e., AERMOD) which are designed for modeling continuous emissions.
The inclusion of a prime power facility at a data center often introduces additional challenges related to air dispersion modeling. For example, modeling of turbines often requires complex load analyses with consideration of ambient meteorological conditions to determine worst-case scenarios. Additionally, higher overall project emissions may trigger major NSR, which requires a more robust air quality analysis.
Air dispersion modeling requirements for data center projects have the potential to significantly impact application preparation and agency review timelines which in turn affects the overall project schedule. Additionally, changes to the facility design with significant capital expenditure impacts may be required to demonstrate compliance with ambient air pollutant standards for some projects. It is therefore critical that data center applicants have a complete understanding of the air dispersion modeling requirements of each local jurisdiction during the site selection process and engage in the required modeling as early as possible during development of the air permit application.
Data Center Prime Power Considerations
Data centers with collocated prime power generation face additional regulatory requirements and permitting considerations. Prime power plants at data centers commonly include technologies that are potentially subject to a unique set of federal air regulatory requirements (e.g., NSPS KKKK and NESHAP YYYY for simple cycle turbines) that do not apply to traditional backup diesel engine-only data centers. Additionally, applicants must consider whether the prime power plant and data center should be aggregated when determining Title V and/or major NSR applicability, as discussed in the following sections.
Single Source Determination
For collocated data centers and prime power facilities, an assessment must be conducted to determine whether the operations must be considered a single site under federal and local regulations or can be authorized as separate sites. Potential emissions from the operations must be aggregated if the following criteria from Federal NSR and Title V operating permit regulations outlined in
40 CFR 51.165 and
40 CFR 70.2, respectively, are met:
- Same Industrial Grouping: Pollutant-emitting activities are considered to be part of the same industrial grouping if they have the same first two-digit Standard Industrial Classification (SIC) code. Collocated prime power is classified as a support facility if supplying more than 50% of its power to the data center and therefore part of the same industrial grouping.
- Common Control: EPA’s Meadowbrook memo established the federal interpretation of common control to mean “power or authority of one entity to dictate decisions of the other that could affect the application of, or compliance with, relevant air pollution regulatory requirements.” If the assets of the data center and power plant will be owned by separate business entities with no corporate affiliation and the data center does not have a contractual arrangement with the power plant that dictates the terms and means of compliance with air permit requirements, the operations may not be deemed to be under common control.
- Located on Contiguous or Adjacent Property: EPA’s interpretation of adjacent also includes properties that are in physical proximity to one another, even if they are separated by a right of way, do not share a common boundary, or are otherwise not physically touching.
List of 28 and Nesting
For the purposes of the PSD program, as outlined in
40 CFR 52.21 or equivalent state implementation plan (SIP)-approved program, a major stationary source is defined as either of the following:
- The facility belongs to one of the 28 named source categories in 40 CFR 51.166(b)(1) (“List of 28”) and has the potential to emit 100 tpy or more of any regulated pollutant; or
- The facility has the potential to emit 250 tpy or more of any regulated pollutant and does not belong to one of the 28 named source categories in the regulation.
Data centers are not classified as one of the 28 named source categories. Combined cycle turbines used for power generation at a data center are included under the “fossil fuel-fired steam electric plants of more than 250 million British thermal units per hour (MMBtu/hr) heat input” named source category under
40 CFR 52.21(b)(1)(i)(A).
Source nesting applies when a facility has both operations that are part of a listed source category and operations that are not part of a listed source category. If a parent source whose primary activity is not part of a named source category (e.g., data center) is supported by operations that are part of the same stationary source but would, when considered alone, be part of a named source category (e.g., combined cycle turbines for power generation), the more restrictive source category applies to the support operations. Therefore, the combined cycle power plant at a data center meeting the List of 28 criteria would be subject to a major NSR threshold of 100 tpy of any regulated pollutant, while the same power plant and data center combined would be subject to an overall major NSR threshold of 250 tpy.
Recommendations
Given the considerations and challenges discussed in this article, the following best practices are recommended to minimize risk in the development and permitting of data center and associated prime power facilities:
1. Evaluate each site specifically in the due diligence and site section process for potential differences in regulatory requirements based on proposed site equipment and state and local jurisdiction requirements.
2. Consider local air permitting requirements and challenges in the due diligence process. This process should be conducted on a site-by-site basis, but the following criteria typically indicate a more challenging or time-consuming air permitting process for data centers with onsite power generation.
- Ozone, PM10, or PM2.5 non-attainment areas.
- Areas with limited PSD increment available, particularly those under rapid development.
- States that regulate the use of fossil fuels or greenhouse gases.
- States with state toxic air pollutant programs, state Best Available Control Technology requirements, and state air dispersion modeling requirements.
3. Begin the due diligence process early to allow for evaluation of different scenarios in emission calculations and air dispersion modeling (e.g., SCR, multiple site configurations, or alternative stack parameters).
4. Evaluate permit applicability and type of permit required (e.g., permit by rule, minor NSR, major NA NSR, or major PSD).
5. Engage local experts to identify requirements and challenges specific to the local agency or site location (e.g., attainment status, state toxics evaluations, inclusion of emergency hours in potential to emit, and/or permit issuance timeline).
If you have any questions or need assistance with environmental due diligence or permitting for data centers, please contact Jennifer McCrohan or Mike Burr.
