Biden Issues Executive Order to Bolster AI Infrastructure in the U.S.

Advancing AI Infrastructure Goals

Biden seeks to strengthen national security and reinforce the United States’ position as a global economic leader in AI. Recognizing that large-scale AI operations demand significant energy resources, the Order emphasizes the opportunity to advance clean energy technologies as a cornerstone of AI infrastructure development. To achieve these objectives, the Order directs the Department of Defense (“DOD”) and the Department of Energy (“DOE”) to:

• Lease federal sites managed by the DOD and DOE for gigawatt-scale AI data centers through a competitive bidding process;
• Require developers to incorporate clean energy generation resources to power AI infrastructure, fostering the growth of renewable energy;
• Streamline and prioritize the permitting process for AI infrastructure on federal sites by allocating dedicated personnel;
• Accelerate the development of transmission systems around federal sites by collaborating closely with developers and producers of grid components;
• Facilitate the integration of AI infrastructure with the electric grid through partnerships with utility companies;
• Protect consumers from increased electricity costs by mandating that developers cover all expenses related to building and operating AI infrastructure; and
• Support the global development of AI infrastructure by engaging and collaborating with allies and partners.

Obligations on Developers

The Order establishes a series of contractual obligations that the DOD and the DOE will require developers to adhere to, ensuring the responsible and sustainable development of AI infrastructure on federal sites. These obligations include:

• Covering the costs associated with constructing, operating, and maintaining AI infrastructure;
• Securing and utilizing clean energy generation resources to meet the energy demands of new data centers;
• Enhancing laboratory security protocols and assessing the national security risks and implications of AI models developed on federal sites;
• Complying with rigorous labor standards and promoting positive labor practices; and
• Purchasing an appropriate share of domestically manufactured semiconductors.

Treatment by Incoming Trump Administration

While the Order is aligned with some views expressed by President-elect Donald Trump, Trump has pledged to repeal Biden’s other major AI-focused directive, Executive Order 14110, which set a regulatory framework with guardrails on AI development and use.  As we previously discussed, President-elect Trump has emphasized an “America First” approach focused on domestic manufacturing and supply chain independence, particularly in semiconductor and AI-related technologies.  Additionally, Trump’s appointment of Chris Wright as Secretary of the Department of Energy, a vocal critic of clean energy and supporter of traditional fossil fuels, signals a shift in policy related to clean energy.

Accordingly, we think it is likely that the incoming Trump administration may repeal the Order entirely or alter components of the Order, particularly those related to clean energy generation. However, elements tied to national security and economic competitiveness may remain, albeit with a reoriented focus that aligns with the Trump administration’s broader agenda. We recommend that stakeholders in the AI and technology sectors closely monitor these developments, as they may have far-reaching implications for the industry’s regulatory and operational landscape.

The Vinson & Elkins Technology Transactions team assists clients in all types of technology transactions and regularly advises on AI-focused matters. If you have questions, please contact your V&E attorney.