Revolutionizing Data: The Executive Order in Leasing Federal Lands for Private AI Data Centers

Client Alert  |  January 15, 2025

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Attorneys from Gibson Dunn are available to aid developers in preparing proposals for the competitive solicitation process or to address inquiries regarding the Executive Order.

On January 14, 2025, President Biden promulgated an executive order[1] that instructed specific federal agencies—primarily the Department of Energy (DOE), the Department of Defense (DOD), and the Department of the Interior (DOI), as well as the Department of State and other agencies—to establish processes whereby non-federal entities, including private companies, can seek to lease particular federal sites for the purpose of building and managing “AI infrastructure.”[2]  A significant portion of the Executive Order concentrates on fostering the growth on federal properties of large data centers capable of developing artificial intelligence (AI) models that meet or exceed present benchmarks, a specific type-and-location pairing that the order refers to as “frontier AI data centers.”[3]

The directive also mandates federal agencies to undertake additional measures aimed at: (1) assisting the agencies in understanding and alleviating the effects of AI infrastructure on consumers’ power rates and the environment;[4] (2) identifying the features of transmission infrastructure situated near potential federal sites[5] and ensuring that adequate transmission infrastructure is available at federal locations;[6] (3) expediting the permitting of AI infrastructure initiatives on federal properties;[7] (4) enhancing the overall permitting and power procurement processes for AI infrastructure;[8] and (5) collaborating with other nations on boosting the worldwide deployment of AI infrastructure.[9]  At its most actionable level, the Executive Order sets a goal to achieve complete permitting and approval for construction to commence for six frontier AI data centers (three located on DOE properties and three on DOD locations) by the conclusion of 2025.[10]

This client alert highlights the leasing program initiated by the Executive Order, which will be accessible to the private sector, and provides an overview of: (1) the methodology through which agencies must select the federal sites to be leased; (2) the information that agencies must acquire from interested developers in the competitive public solicitation process; (3) the standards by which agencies must assess proposals submitted during the competitive public solicitation process; and (4) the categories of provisions required in the lease agreements.

1.   Federal Site Identification

The Executive Order mandates the Secretary of the DOD and the Secretary of the DOE (the “Secretaries”) to pinpoint by February 28, 2025, at least three locations on their respective agency’s territory that may be suitable for the establishment and management of a frontier AI data center as well as clean energy facilities supporting such a data center by the end of 2027.[11]  In selecting these locations, the Secretaries are instructed to prioritize sites that:

1. are geographically sufficient for the AI infrastructure;
2. minimize any potential negative impact of AI infrastructure on the local community, natural and cultural resources, endangered or threatened species, or bodies of water not linked with hydropower;
3. are in close proximity to communities wishing to host AI infrastructure;
4. have access to and are near high-voltage transmission infrastructure that reduces the transmission-related costs of establishing the AI infrastructure;
5. are not at risk of consistently failing to meet National Ambient Air Quality Standards;
6. are not situated close to waters governed by the federal government under the Clean Water Act, 33 U.S.C. 1251 et seq.;
7. do not have severe limitations on land uses associated with constructing and operating AI infrastructure;
8. have access to robust telecommunications networks;
9. are appropriate for the development of temporary infrastructure necessary for the construction of AI infrastructure; and
10. would not jeopardize a competing national security issue if the site were repurposed for AI infrastructure.[12]

The Executive Order additionally requires the Secretary of the DOI, in consultation with other agencies, to (1) identify areas managed by the Bureau of Land Management (BLM) that can be utilized to establish or operate clean energy facilities that are being or could be constructed to support AI infrastructure, giving priority to identifying sites that meet specific criteria outlined in the Executive Order[13] and (2) designate a minimum of five regions consisting of lands or subsurface areas as “Priority Geothermal Zones” based on specific criteria listed in the Executive Order.[14]  The Secretaries must also each make legal determinations affirming their authority to lease each identified site and that the site is available for lease.[15]  Ultimately, the Secretaries must announce the chosen sites and certain attributes of those sites by March 31, 2025.[16]

2.   Project Solicitation

The Executive Order requires that the Secretaries collaborate to design, initiate, and manage competitive public solicitations for proposals from non-federal entities aiming to lease and establish AI infrastructure on the properties identified by the Secretaries.[17]  In the solicitations, the Secretaries must mandate that applicants:

1. identify specific locations on which they plan to construct and operate the AI infrastructure;
2. provide a comprehensive plan detailing proposed timelines, financing strategies, and technical plans for the construction of the AI infrastructure, including a contingency plan for decommissioning the infrastructure;
3. outline the AI training work expected to take place once the site becomes operational;
4. detail plans for adhering to high labor and construction standards; and
5. propose lab-security measures relevant to the operation of the AI infrastructure.[18]

3.   Project Evaluation

During the assessment and selection of proposals, the Secretaries (in coordination with other agencies) generally[19] must take into account the details provided in the applications including, at a minimum:

1. the proposed financing mechanisms and funding sources secured for the endeavor;
2. the plans for AI training operations to be conducted at the site;
3. the strategies for maximizing resource quality;

efficiency;

4. the strategies for safety and security protocols, including cybersecurity strategies;
5. the qualifications of the applicant’s AI researchers, engineers, and other AI infrastructure personnel;
6. the approaches for commercializing or otherwise utilizing the (i) intellectual property and/or (ii) innovation in generation and transmission infrastructure created at the site;
7. the initiatives to ensure that the development and operation of AI infrastructure do not raise electricity or water expenses for other rate payers;
8. the proposals to uphold high labor standards and a strategy to tackle labor-related risks tied to the advancement and utilization of AI;
9. the design attributes, operational regulations, and plans aimed at reducing potential environmental impacts and safeguarding community health, public welfare, and the ecosystem;
10. the advantages to the locality and electrical grid infrastructure in the vicinity of the site;
11. the applicant’s background in completing similar projects;
12. the applicant’s familiarity with federal, state, and local compliance for permits and relevant environmental assessments or, alternatively, other proof of the applicant’s capability to secure and adhere to such permits or evaluations;
13. the applicant’s organizational and managerial frameworks that will facilitate robust governance of work conducted at the site;
14. whether the selection of the applicant will promote the growth of an interoperable, competitive AI ecosystem;
15. whether an applicant has previously been chosen to build or manage AI infrastructure in a venture linked to this Executive Order; and
16. additional national defense, national security, or public interest factors that the Secretaries find pertinent.[20]

4.   Contractual Responsibilities

For initiatives selected to serve as frontier AI data centers, the Executive Order mandates the Secretaries to require lease or contract stipulations that achieve the following:

1. establishing target timelines for the construction of each frontier AI data center by January 1, 2026, and the full-capacity functioning of the AI infrastructure by December 31, 2027;
2. mandating that non-federal stakeholders have secured adequate new clean energy generation resources to fulfill the frontier AI data center’s anticipated energy requirements by ensuring power that aligns with the facility’s hourly energy consumption and is deliverable to the center;
3. clarifying that the non-federal stakeholders are entirely responsible for covering any expenses arising from activities in accordance with the contract or lease regardless of whether they, transmission service providers, transmission organizations, or other entities not party to the contract incur such expenses;[21]
4. requiring compliance with technical criteria and guidelines established by various federal agencies for cybersecurity, supply-chain, and physical security to safeguard and manage the facilities and other property developed, obtained, altered, used, or stored at the site or during work conducted at the site;
5. mandating that non-federal stakeholders owning or operating frontier AI data centers enter into a memorandum of understanding with the Secretary of Commerce “to promote collaborative research and assessments on AI models developed, acquired, modified, run, or stored at the site or during activities performed at the site, for the purpose of evaluating the national-security or other substantial risks of those models;”[22]
6. requiring non-federal stakeholders to (i) report specific information regarding investments or financial resources utilized for the development, ownership, or management of AI infrastructure at the site, including the AI models functioning within the AI infrastructure, to assess risks to national security and (ii) restrict investments or financial resources from any individual designated by the Secretaries on national security grounds;
7. requiring non-federal stakeholders managing AI data centers on federal properties to (i) take suitable measures to promote the goal of leveraging AI for national security purposes and (ii) commit to granting access to such models and their derivatives to the federal government for national-security applications under terms no less favorable than prevailing market rates;
8. requiring that non-federal stakeholders managing AI data centers on federal properties devise plans to provide certain computational resources (including computational resources not already allocated for supporting frontier AI training or otherwise designated under another provision) for commercial usage by startups and small enterprises on nondiscriminatory terms and in a manner that lessens barriers to interoperability, entry, or exit for users;
9. requiring non-federal stakeholders managing AI infrastructure on federal properties to investigate the accessibility of various clean energy resources (including geothermal energy, long-duration storage paired with clean energy, and others) at appropriate locations leased for AI data centers or generation capacity supporting those centers; and
10. requiring AI developers owning and operating frontier AI data centers on federal properties to either (a) procure an “appropriate share” of advanced logic semiconductors manufactured in the United States to the greatest extent feasible or (b) formulate and execute a plan to qualify advanced logic semiconductors produced in the United States for use in the developer’s data centers as soon as practicable, subject to approval by the relevant Secretary.[23]

Key Points and Timelines

The Executive Order establishes an ambitious timeline for the solicitation of substantial infrastructure projects, types of projects that typically require years to successfully permit and initiate construction. Nonetheless, the Executive Order arises from bipartisan calls to safeguard and enhance U.S. AI data center infrastructure and may signify a domain where the Biden and Trump administrations find common ground. The Executive Order addresses extensive infrastructure requirements for data centers, especially in the energy sector, but leaves several critical issues unaddressed, potentially due to jurisdictional constraints of federal and executive authority. For instance, the Executive Order tackles transmission grid interconnection matters but remains silent regarding coordination with owners and operators of the nation’s distribution grids, which are generally regulated at the state level. The order, as ambitious as it is, also does not create a pathway for expediting the acquisition of the numerous non-federal permits likely necessary to construct transmission facilities serving frontier AI data centers.

The Secretary of the DOI, in collaboration with the Secretaries, must announce the sites they have chosen for clean energy generator leases by March 31, 2025, at the latest, and the Secretaries are obligated to release solicitations for frontier AI infrastructure proposals by March 31, 2025, at the latest, with a closure of solicitations within 30 days of their release.[24]  The Executive Order mandates the DOE and DOD to declare successful proposals by June 30, 2025, aiming for complete permitting of winning proposals by the end of 2025 to allow for construction to commence.  Considering the swift pace of these timelines, and assuming the incoming administration does not revoke or amend the Executive Order, entities interested in engaging in this initiative may wish to closely observe the DOE, DOD, and DOI websites for the DOI’s announcement of selected sites and the DOE’s and DOD’s issuance.“`html
of requests for proposals.

Moreover, considering the relatively brief period organizations will have to organize their proposals and the volume of details that will be necessary within their submissions, organizations might want to think about gathering information that they anticipate will be essential in their proposals based on the Executive Order as soon as the DOI declares the chosen locations. Attorneys from Gibson Dunn are on hand to support developers in crafting proposals for the competitive bidding process or to address inquiries concerning the Executive Order. Please reach out to your designated attorney at Gibson Dunn or one of the lawyers who contributed to this article with any inquiries you may have regarding the Executive Order.

[1] Executive Order on Promoting United States Leadership in Artificial Intelligence Infrastructure, The White House (Jan. 14, 2025), (“Executive Order”).

[2] Id. at Sections 3(c), 4 (“The term ‘AI infrastructure’ includes collectively AI data centers, generation and storage resources acquired to provide electrical power to data centers, and transmission facilities that are developed or enhanced for the same objective.”).

[3] Id. at Section 3(m) (A “frontier AI data center” is described as “an AI data center able to be utilized to develop, within a reasonable timeframe, an AI model with attributes associated either with performance or with the computational resources employed in its creation that approximately meet or exceed the current standards at the time the AI model is developed.”).

[4] Id. at Section 5.

[5] Id. at Section 6.

[6] Id. at Section 8.

[7] Id. at Section 7.

[8] Id. at Section 9.

[9] Id. at Section 10.

[10] Id. at Section 4.

[11] Id. at Section 4(a).

[12] Id. at Section 4(a).

[13] Id. at Section 4(b) (specifically, the Secretary of the DOI must prioritize the identification of locations used to build or operate clean energy facilities based on the same criteria which the Secretaries of the DOD and DOE must prioritize sites (mentioned above) and must also endorse locations that: (1) include completed, permitted, or planned clean generation projects that (i) can supply electricity to the data centers and (ii) have a signed interconnection agreement with a transmission provider; (2) have been designated as available for clean-energy applications in a BLM resource management plan; and (3) have reasonable access to existing high-voltage transmission lines that possess at least one gigawatt of available additional capacity or for which such capacity can be reasonably developed).

[14] Id. at Section 4(c) (“The Secretary of the Interior shall identify those areas based on their potential for geothermal energy generation resources, encompassing hydrothermal and next-generation geothermal power and thermal storage; variability of geological features; and fulfilling the criteria specified in subsections (a)(i)-(x) and (b)(i)-(v) of this section.”)

[15] Id. at Section 4(d).

[16] Id. at Section 4(f).

[17] Id. at Section 4(e).

[18] Id.

[19] Interestingly, the Executive Order also necessitates that the Secretaries “select at least one proposal developed and submitted collaboratively by a consortium of two or more small- or medium-sized organizations — as determined by those organizations’ market capitalization, revenues, or similar characteristics — provided that the Secretaries receive at least one such proposal that meets the requisite qualifications” to the extent consistent with applicable law and the Secretaries’ evaluation that the requirement advances national defense, national security, or the public benefit.  Id. at Section 4(g).

[20] Id. at Section 4(g).

[21] Be aware that these expenses clearly encompass the “costs of work performed by agencies to fulfill necessary environmental assessments, any costs associated with procuring clean power generation resources and capacity in accordance with [AI training operations described in Id. at Section 4(g)(ii)], any costs related to decommissioning AI infrastructure on Federal sites, any costs associated with developing transmission infrastructure needed to serve a frontier AI data center on a Federal site, and the fair market value of leasing and utilizing relevant Federal lands.”  Id. at Section 4(h)(iii).

[22] Id. at Section 4(h)(v).

[23] Id. at Section 4(h).

[24] Id. at Section 4(f)-(g).

Attorneys from Gibson Dunn’s Data Center Task Force are ready to support clients by providing strategic advice; drafting comments for agencies; organizing and preparing for high-level executive branch and congressional meetings; and assisting clients in capitalizing on potential opportunities arising from the swiftly evolving regulatory landscape.

The following Gibson Dunn attorneys composed this update: F. Joseph Warin, William R. Hollaway, Ph.D., Tory Lauterbach, Emily Naughton, Evan D’Amico, Whitney Smith, Jess Rollinson, and Simon Moskovitz.

Lawyers from Gibson Dunn are available to address any inquiries you may have regarding these matters. For further details on how we may assist you, please contact the Gibson Dunn lawyer with whom you typically collaborate, any leader or member of the firm’s Artificial Intelligence, Energy Regulation & Litigation, Mergers & Acquisitions, National Security, Public Policy, Real Estate, or White Collar Defense & Investigations practice groups, or the following authors:

William R. Hollaway, Ph.D. – Chair, Energy Regulation & Litigation Practice Group,
Washington, D.C. (+1 202.955.8592, [email protected])

Tory Lauterbach – Partner, Energy Regulation & Litigation Practice Group,
Washington, D.C. (+1 202.955.8519, [email protected])

Vivek Mohan – Co-Chair, Artificial Intelligence Practice Group,
Palo Alto (+1 650.849.5345, [email protected])

Evan M. D’Amico – Partner, Mergers & Acquisitions Practice Group,
Washington, D.C. (+1 202.887.3613, [email protected])

Stephenie Gosnell Handler – Partner, National Security Practice Group,
Washington, D.C. (+1 202.955.8510, [email protected])

Michael D. Bopp – Co-Chair, Public Policy Practice Group,
Washington, D.C. (+1 202.955.8256, Amanda H. Neely – Of Counsel, Public Policy Practice Group,
Washington, D.C. (+1 202.777.9566, [email protected])

Eric M. Feuerstein – Co-Chair, Real Estate Practice Group,
New York (+1 212.351.2323, [email protected])

Emily Naughton – Partner, Real Estate Practice Group,
Washington, D.C. (+1 202.955.8509, [email protected])

F. Joseph Warin – Co-Chair, White Collar Defense & Investigations Practice Group,
Washington, D.C. (+1 202.887.3609, [email protected])

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