The Nickel Report

Demand for data center capacity is rewriting the rules of site selection. With interconnection queues stretching for years, power has become the scarcest input, and properties once discounted because of known or suspected contamination can offer infrastructure support that greenfield sites often cannot. This includes large tracts of industrially zoned land that already have transmission, substations, water, and transportation access. Additionally, federal, state, and local funding and tax benefits may be available to encourage development of these brownfield sites. For many developers, the question is no longer whether to consider a brownfield, but how to do it without inheriting its problems.

On October 13, the US Environmental Protection Agency published the final rule authorizing Colorado’s Energy and Carbon Management Commission to regulate all underground injection of carbon dioxide for long-term geological sequestration within the state. The final rule followed a comprehensive technical and legal review to ensure the state’s Underground Injection Control program met all requirements under the Safe Drinking Water Act section 1422.

Across the country, municipalities are reassessing how existing zoning rules apply to large-scale data centers, including facilities designed to support artificial intelligence and other computing-intensive applications. As developers move to secure suitable sites, adequate power capacity, and necessary approvals, cities and towns are considering whether current ordinances adequately address the scale, infrastructure demands, and operational features of these projects. In some jurisdictions, that process has led to the enactment of moratoriums, zoning amendments, or use restrictions. In others, it has prompted litigation. For practitioners advising developers, municipalities, and landowners, this is a space worth watching closely. Many of the issues surfacing now are familiar land-use questions in a new setting: how local governments classify emerging uses, when they may revise zoning rules in response to new development pressures, and what process is required when those changes affect pending or anticipated projects.

On September 15, 2026, the US Court of Appeals for the Fifth Circuit vacated the US Environmental Protection Agency’s risk management rule for methylene chloride, a widely used solvent, under the Toxic Substances Control Act. East Fork Enterprises, Inc. v. EPA, Nos. 24-60227 & 24-60256 (5th Cir. 2026). The rule prohibited 40 uses of methylene chloride and imposed numerous workplace requirements on the remaining 13 industrial and commercial uses, including exposure monitoring and an existing chemical exposure limit roughly ten times more stringent than OSHA’s standards. After a ten-year process of EPA evaluating extensive data on methylene chloride, publishing and then revising a determination that the substance presents an unreasonable risk to human health, and imposing bans on a majority of uses of the substance, including industrial uses and uses in finished products, the Fifth Circuit scrapped the rule, finding EPA exceeded its statutory authority and lacked sufficient evidence to support its rule.

Many environmental statutes have narrowed as streamlined permitting and efficient project development are prioritized. Rather than shrinking alongside the other major environmental statutes, the jurisdictional reach of the Endangered Species Act has continued to expand as more species are listed and more critical habitats are designated each year.

The definition of “waters of the United States” (WOTUS) establishes the geographic reach of the Clean Water Act (CWA), including the Section 404 permitting program. The Supreme Court set the parameters within which the agencies may treat aquatic features as WOTUS when it decided Sackett v. EPA. In November 2025, the US Environmental Protection Agency and US Army Corps of Engineers issued a WOTUS proposed rule to implement Sackett. Last month, the agencies issued a supplemental proposed rule “to supplement and seek additional comment on certain aspects” of the 2025 proposal. In this post, we examine how the 2025 Proposed Rule and 2026 Supplemental Proposed Rule line up with the findings of Sackett.

The Endangered Species Act (ESA) prohibits “take,” which the Act defines to include (among other things) “harm,” “harass,” “shoot,” “wound,” “capture,” and “kill.” A violation of the take prohibition can result in civil or criminal enforcement or an ESA citizen suit for an injunction and litigation costs. For decades, regulations issued by the US Fish and Wildlife Service and National Marine Fisheries Service defined one form of take—“harm”—to include significant habitat modification that actually kills or injures wildlife. The Services repealed the harm definition in July, and on September 14 issued internal memos addressing the scope of the ESA “take” prohibition. The July rule and September memos raise questions that extend well beyond removal of the regulatory definition of harm. Agencies still need to evaluate the effects of agency actions on listed species and designated critical habitat during ESA section 7 consultation—even if none of those effects constitute “take” under the Services’ current interpretation. But the critical question for project proponents and federal agencies going forward is whether incidental take coverage is available through an ESA section 7 incidental take statement or an ESA section 10 incidental take permit under the Services’ new reading.