On October 7, WilmerHale hosted the webinar, “Powering AI: Legal and Regulatory Issues Shaping Data Center Growth,” examining how the approaching midterms could reshape the political and regulatory landscape for AI data centers. 

With the AI boom driving the rapid expansion of the centers nationwide, a public and political backlash has erupted over the potential impacts on electricity costs, grid capacity, and the use of water and other community resources. The November midterms could raise the stakes further, reshaping the political, regulatory and investigative landscape for data centers at the federal, state and local levels.  

The webinar was moderated by Partner Josh Geltzer and featured Partners Ariel Soiffer, Alyssa DaCunha and Tommy Beaudreau and Senior Counsel Jonathan Davidson. 

The following are key themes to consider: 

1. Data centers have become a kitchen-table political issue 

The politics surrounding data centers are no longer confined to Washington or to debates about AI. Davidson, who has served as chief of staff to two senators and a cabinet member as well as an assistant secretary of the Treasury, said data centers have become “a proxy not just for AI, but for the broader cost and inflation concerns” facing voters. The issue is now reaching gubernatorial and state legislative contests as well as federal races, with campaign spending focused on data centers “up and down each level of government,” he said.  

2. The election may end, but the pressure for restrictions will not 

After the elections, Davidson expects a period of adjustment in which officials in some jurisdictions will move from broad pauses and moratoriums on new data center construction toward more tailored rules that create conditions for development. For developers, generalized promises about the economic benefits of data centers are no longer enough. Companies need “a very concrete, clear narrative” that matches a project’s benefits with the particular needs of the community where it is being built.  

3. Congressional scrutiny is likely to broaden in 2027 

• Congress is considering several bills that could reshape the rules governing data centers: 
• The POWER Up Act would give federal regulators greater authority over connecting large data centers and other major power users to the interstate transmission grid.  
• The Ratepayer Protection Act would seek to ensure that large data centers bear the costs of grid upgrades needed to serve them.  
• The bipartisan GRID Act would seek to protect residential customers from higher utility costs associated with data centers. 
• The Power for the People Act would create new processes and electricity-rate structures specifically for data centers to limit costs to other customers. 

DaCunha, who co-chairs WilmerHale’s Congressional Investigations Practice and its Crisis Management and Strategic Response Group, said she also expects Congress to increase its oversight of data centers and the AI industry. She believes the House Energy and Commerce Committee will be the “center of gravity” for this oversight because its jurisdiction encompasses energy, the grid, telecommunications, consumer and environmental issues.  

The Senate could also focus its scrutiny on data centers. DaCunha noted that senators have already pursued data-center issues through individual inquiries and said those inquiries could be renewed in the next Congress, with one or more Senate committees potentially taking them up. 

DaCunha identified four likely questions for the Senate: Who will pay for infrastructure and electrical grid upgrades? What will communities be told about the projects? What will their energy and water footprint be? And what are the national security and competition implications? 

4. The fight over electricity costs could reshape the rules for development 

At the heart of the debate over electricity costs is a basic question: Who should pay for the grid infrastructure needed to bring data centers online?  

Beaudreau, who served as deputy secretary of the Interior during the Biden administration and now co-chairs WilmerHale’s Energy, Environment and Natural Resources Practice, said state and federal proposals were putting “ratepayer protection upfront,” with growing pressure for data centers to bear more of those costs rather than shifting them to other electricity customers. 

At the same time, state and local efforts to control data center development could come into tension with the federal government’s push to expand the infrastructure. Beaudreau said the US interest in remaining globally competitive raised questions about how the costs of that expansion should be allocated and whether federal regulators should become “much more assertive” in overseeing regional grid operators and utilities. 

5. Companies and general counsel need to prepare for the changes ahead 

DaCunha recommended that companies should view congressional inquiries, state regulatory action and private litigation as “one integrated problem” rather than separate work streams because they can involve the same documents, witnesses and factual questions. She recommended a centralized approach to strategy and talking points and careful coordination over who speaks publicly on an issue.  

Beaudreau cautioned against dismissing opposition to data centers as merely political. Developers need to examine how their cooling systems operate, where their power comes from, and how they can reduce impacts on nearby communities, decisions that can shape both permitting outcomes and future opposition. “The merits really do matter,” he said. 

None of the panelists expected data center development to halt. But after the midterms, developers may face new restrictions and greater scrutiny of who pays for their projects and how they affect nearby communities. Companies will need to prepare for those challenges, not just secure the land and power to build.