States have the means to stop data center developers from skirting EPA energy regulations.
Data center developers are building their own gas-fired power plants on-site, behind the electric meter, where regulations are lax and no clean energy mandates apply. I ran a health screening model designed by the U.S. Environmental Protection Agency (EPA) on every proposed plant with available emissions data—67 plants totaling 134 gigawatts. The result? The model estimated 450 to 812 premature deaths and $7.5 billion to $13.2 billion in health damages every year once the fleet is fully operational and running. The county suffering the most damage does not contain a single one of these plants. In addition, regulators have not assessed the cumulative health impact of this fleet, because individual plants are permitted below the thresholds that would trigger a more rigorous review. The good news is that the analysis took a week, the tools are free, and states can require it before another permit is issued.
For context, the Environmental Integrity Project has identified at least 74 proposed behind-the-meter gas plants, adding up to a total of 143 gigawatts. That amount of energy requires the equivalent of around two-thirds of all the solar energy produced in the United States. None of that gas capacity is operating today. As of April 30, four plants were under construction and half had not yet applied for an air permit, while the rest are moving through permitting right now. That means that the most significant decisions are being made this year, mostly at the state and local levels.
Every tool that this country uses to clean up its power supply—renewable portfolio standards, utility resource plans, corporate clean power contracts, renewable energy certificates—governs electricity that is bought from the grid. A power plant behind the meter never sells to the grid. As such, none of those tools reach it. When Nicholas Muller, an economist at Carnegie Mellon University, calculated that data centers cost the country $25 billion a year in pollution and health damages, he worked from grid electricity.
According to the results of EPA’s model, the behind-the-meter fleet adds 30 to 53 percent on top of that figure. The model also estimates 222 nonfatal heart attacks, 1,591 new asthma cases, 556 respiratory emergency room visits, roughly 38,000 lost workdays, and roughly 77,000 lost school days every year. A separate air quality model from the Center for Air, Climate, & Energy Solutions, run on the same plants, produced a lower estimate of roughly 230 deaths, putting the cross-model range at 230 to 810.
The county carrying the most damage is Allegheny County, Pennsylvania, home to Pittsburgh. Dallas, Fort Worth, Columbus, Cleveland, San Antonio, and Houston all rank in the top ten. In Reeves County, Texas, where four of these plants are proposed, 79 percent of residents are people of color and more than a third live below 150 percent of the federal poverty line, according to the Center for Disease Control’s Social Vulnerability Index. Health reviews were not required before the permit applications were filed.
And the current rules are not immune to gaming. Project Jupiter, a gas complex in New Mexico built to serve OpenAI’s Stargate data centers, was permitted to generate up to 2,880 megawatts—since revised to 2.45 gigawatts—of natural gas fuel cells. The complex is classified as a “microgrid,” a term that usually describes a self-contained power system serving a single site or campus, even though it rivals the generation capacity of the state’s largest utility. Its developers initially split the air quality permit application in two. They submitted applications for an “east” and “west” microgrid, estimated to generate 249.97 tons and 248.9 tons of nitrogen oxides per year, respectively—each half landing just under the 250 ton threshold that would have triggered stricter review. The developers later submitted a revised application for the fuel-cell design.
Texas shows the same permit-splitting at scale. Since 2024, at least 38 data centers there have taken minor permits for on-site power, covering more than 2,100 diesel generators permitted for nearly 2,500 tons of nitrogen oxides a year, more than triple the state’s newest coal plant, according to Floodlight. More than half of these centers filed emissions estimates just under the thresholds that trigger public review, including one Vantage site permitted at 99.8 tons against a 100 ton threshold. EPA’s own draft training materials have used the term “sham permits” in the past to describe permits whose operating limits do not reflect how the applicant actually intends to run the source or that divide one source into pieces that each stay below the major-source threshold.
Nor is Federal help coming: In June, the Federal Energy Regulatory Commission ordered the six regional grid operators to revise, or justify, their rules for connecting “large load” customers such as data centers. But these orders covered only loads connecting to the grid, which behind-the-meter plants never do.
In May, EPA moved to redefine the phrase “begin actual construction” so that buildings, foundations, concrete pads, and the wiring and piping supplying power and water to a site can go up before an air quality permit is issued. The agency has proposed abandoning its own long-standing reasoning that letting developers put “equity in the ground” first compromises a permitting authority’s discretion. A second proposal in July would drop federal public participation requirements for minor sources and leave the level of public notice to states.
These changes naturally raise a question: What can be done without requiring the U.S. Congress to act?
First, state air and siting authorities should require behind-the-meter generation above 20 megawatts to pass two tests before receiving permits. These tests would include a health impact screening using EPA’s freely available CO-Benefits Risk Assessment model—the same analysis I ran—and a showing of compatibility with the host state’s clean energy commitments. Homes, farms, and small businesses would be unaffected by these changes.
Second, states should close the loophole of splitting permits by aggregating co-located units under common ownership when measuring against major-source thresholds. In other words, a 2,880-megawatt complex would not be allowed to file as numerous minor sources.
Finally, the review should run on a clock. What pushes developers behind the meter is the years-long delay to connect to the grid, and some states already approve on-site gas in about 60 days. Ninety days is enough for a screening model that takes a week.
The Federal Energy Regulatory Commission has also left open a broader rulemaking on how data centers and other large loads connect to the interstate grid, which gives the Commission the potential ability to at least require disclosure. Any large load served by on-site generation should have to report its capacity and emissions to the same authorities that oversee grid-connected plants.
There is still time to get this right. Most of the proposed 143 gigawatts exist only on paper or are still being decided over the next 18 months, and the screening tools are sitting on EPA’s website, free, waiting to be used. I do not believe the states that move first will harm their local economic situation. What they will do is decide, for their own residents, whether these plants arrive with the health costs counted or ignored.
