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Private Infrastructure, Public Permission

The federal government is becoming the gatekeeper for a privately owned AI infrastructure system. That combination concentrates power—and creates structural incentives for corruption.

Mark Howard

— 7 min read
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The federal government has selected Brookfield Asset Management and NextEra Energy to develop a massive AI data-center and energy campus at the former Paducah Gaseous Diffusion Plant in Kentucky.

The proposed campus would include more than 1.2 gigawatts of computing capacity, large amounts of gas generation and battery storage, and a network of public, cooperative and private utilities. The federal government owns the land. The former enrichment complex already offers transmission capacity, water infrastructure, fiber connectivity, roads and land that can accelerate development. The Department of Energy selected the developers and will negotiate the terms under which the site is converted from a Cold War uranium-enrichment complex into privately controlled AI infrastructure.

Most of the new construction is supposed to be privately financed. But this is not an ordinary private development.

The federal government is supplying the site, choosing the private partners and helping assemble the institutional environment in which the project can proceed. The compute, power and commercial value will largely be privately owned. Access to the underlying opportunity depends on public permission.

That arrangement may become one of the most important concentration mechanisms emerging in the AI race.

Paducah has company

Two other former federal nuclear sites show that Paducah is part of an emerging broader development model.

At the former Portsmouth Gaseous Diffusion Plant in Ohio, the Department of Energy, SoftBank, SB Energy and AEP Ohio have announced a project that could eventually reach 10 gigawatts of data-center capacity, supported by as much as 10 gigawatts of new generation and approximately $4.2 billion in transmission infrastructure. The project also includes $33.3 billion in Japanese funding under a government-directed bilateral investment agreement, although the overall division among public finance, guarantees and private capital has not been disclosed.

At the Savannah River Site in South Carolina, the National Nuclear Security Administration has selected Amentum to negotiate a phased lease for a 1-gigawatt AI data center and approximately 2 gigawatts of on-site generation. Natural gas is expected to provide the initial power, with advanced nuclear generation named as a power source in a possible later stage. The project's overall lease, financing, customers, generation partners and final public obligations remain under negotiation.

The projects differ in scale, financing and maturity. Their institutional structure is recognizably similar.

Former national-security sites offer federal land, roads, water systems, transmission access, secure locations, extensive site knowledge and workforces accustomed to operating large industrial facilities. Private companies are expected to finance, own and operate most of the new compute and energy assets. Federal agencies choose the developers, negotiate the leases, coordinate the reviews and present the projects as part of a national strategy for AI capacity.

In the public record reviewed for this article, substantial participation in the specific AI projects has come only after the federal government selected the site, the private partner and the basic development direction. Later proceedings may (and likely should) address utility rates, environmental permits, site cleanup, road maintenance or other local services. They do not necessarily reopen the foundational decisions about who should control the site, what scale is appropriate or what public rights should attach to the resulting infrastructure.

The federal government controls more than the land

The federal sites establish one gate: access to scarce public land and inherited infrastructure.

Two other recent federal actions establish gates around the power systems and equipment needed to operate large AI campuses.

  1. The Environmental Protection Agency has issued nonbinding guidance clarifying that power plants serving only physically islanded private consumers generally fall outside the federal Acid Rain Program. A data center with a completely separate power system may therefore operate outside that program’s standardized emissions-allowance and monitoring requirements.
  2. The Federal Communications Commission has added new foreign-produced power inverters and advanced robotic devices to its national-security Covered List. Covered equipment generally cannot receive the authorization needed to enter the U.S. market unless the Department of War grants Conditional Approval—or, for power inverters, the Department of Homeland Security does so. The FCC published application guidance describing what producers must submit, but approval ultimately turns on whether DoW or DHS determines that a device does not pose an unacceptable national-security risk.

Together, these actions extend federal gatekeeping across three critical layers of AI infrastructure:

  • access to federal land and inherited public assets;
  • access to a favorable regulatory classification for dedicated power;
  • and access to strategically important equipment suppliers.

The three federal-site projects have not been shown to rely on the EPA interpretation or the FCC approval process. But the governing logic is converging. Federal agencies increasingly control access to the sites, regulatory pathways and suppliers needed to build privately owned AI infrastructure.

Two concentrations are forming at once

The most obvious concentration is private.

Only a small number of technology companies, infrastructure funds, energy developers and utilities can assemble the capital, equipment, power, security and specialized expertise required for a gigawatt-scale AI campus. The companies capable of building these projects will gain control over extraordinarily scarce compute and energy capacity.

A second concentration is occurring inside government.

Federal agencies are acquiring greater authority over site access, developer selection, lease conditions, regulatory classification, equipment eligibility and security approvals. Even when ownership remains private, entry into the market may increasingly depend on federal decisions.

The two concentrations reinforce one another.

Large companies are better able to manage confidential negotiations, satisfy security requirements, absorb approval delays and maintain relationships across several agencies. Federal officials, meanwhile, become dependent on the limited number of firms capable of delivering infrastructure at the scale and speed the government wants.

This is neither a competitive private market operating at arm’s length from government nor a publicly owned infrastructure system accountable through ordinary public institutions.

It is a federally gated private market: government controls entry, while a narrow group of companies captures much of the resulting economic and operational power.

The structure creates incentives for corruption

There is no public evidence that the Paducah, Portsmouth or Savannah River decisions were purchased, or that any official involved has acted corruptly.

But the structure creates two clear corruption risks.

Buying the gatekeeper

Federal officials and other decision-makers may influence who receives a valuable public site, which lease conditions apply, whether a supplier receives Conditional Approval and how quickly a project advances.

As the value of those decisions rises, so does the incentive to improperly reward the people who make them. The benefit could take the form of direct cash, future employment, consulting work, investment opportunities, political support or payments routed through an intermediary.

The decisions are also dispersed across land leases, security reviews, environmental classifications, utility arrangements, supplier approvals and financing relationships. Each decision can appear narrow or technical while contributing to a combined outcome worth billions of dollars.

A system with many gates does not necessarily reduce corruption risk. It may simply create more gatekeepers.

Hiding the transfer

The second risk does not require a personal payment.

Public value can be transferred to private companies through relationships whose complete terms are difficult for the public to see—without a clear accounting of what the public receives in return.

That value can include federal land, existing roads and water systems, environmental cleanup, security, emergency services, expedited agency coordination, transmission access, government-supported financing and the strategic advantage of being selected for a national AI project.

Without a complete public accounting, it is difficult to determine whether the government is receiving fair value in return. A lease can require rent while still transferring land below its economic value. A developer can pay for its buildings and power while relying on publicly maintained infrastructure or leaving the government responsible for long-term environmental, service or decommissioning risks.

The concern is not merely that some terms remain confidential. It is that the public may never see the combined bargain clearly enough to know whether public assets are producing public benefits or primarily enlarging private fortunes.

Public permission should produce public leverage

The answer is not to prohibit private development on federal sites. Former nuclear and industrial facilities may offer land, transmission access, security, infrastructure and redevelopment opportunities that are difficult to reproduce elsewhere.

But public assets and federal gatekeeping should produce public leverage, not merely private access.

At minimum, the government should do three things.

First, it should publish a complete public accounting of the bargain. That means disclosing selection criteria, lease valuations, public financing or guarantees, infrastructure contributions, service arrangements and enforceable public benefits. Legitimately protected commercial or national-security details may require redaction, but confidentiality should not prevent publication of meaningful and substantive summaries.

Second, it should subject the full project to integrated review before the principal commitments become irreversible. Land, electricity, generation, water, wastewater, roads, emergency response, environmental effects, security conditions and decommissioning obligations should be assembled into one visible public account. A collection of separate approvals is not the same as review of the combined bargain.

Third, federal gatekeeping decisions need rules. Conditional Approvals, supplier restrictions, site selections and major regulatory classifications should have published criteria, conflict-of-interest protections, recorded reasons, predictable timelines and avenues for independent review.

The goal is not to create one federal super-agency for AI infrastructure. It is to ensure that the institutions holding different pieces of the decision can evaluate the cumulative bargain before the developer has assembled commitments that are too expensive and politically important to reconsider.

The federal government is not building a public AI utility at Paducah, Portsmouth or Savannah River. It is creating valuable pathways through which private firms can build and control strategic AI infrastructure.

That makes the government more than a regulator. It becomes the landlord, selector, sponsor and gatekeeper.

The question is whether that involvement gives the public lasting power over the infrastructure being created—or mainly gives a small number of private actors access to public sites, regulatory advantages and protected market positions.

When public permission determines who can build the future, the public should be able to see who received that permission, why they received it and what they promised in return.

Sources and further reading

Paducah

Portsmouth

Savannah River

Federal AI-infrastructure strategy

EPA islanded-power guidance

FCC Covered List and Conditional Approvals

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