The rapid expansion of artificial intelligence infrastructure has created a new political fault line in the United States. As hyperscale data center projects multiply across the country, lawmakers are increasingly debating who should bear the financial burden of the power grids, transmission upgrades, and water systems required to support them. Congressman Michael Baumgartner is now attempting to reshape that conversation with legislation that places those costs squarely on the largest industrial users.
The newly introduced Power and Water for Families Act of 2026 (H.R. 9419) seeks to establish a framework ensuring AI data centers and other high-load facilities fully finance the infrastructure needed to support their operations. Rather than shifting those expenses onto households or existing businesses, the proposal would require large customers to directly fund the generation, transmission, distribution, and water investments their projects demand. The legislation reflects a growing national debate over balancing AI expansion with local affordability and infrastructure resilience. “America must win the AI race, but working families should not be forced to subsidize it,” said Baumgartner. “No data center should be forced on a local community. And if a massive new data center needs new power plants, transmission lines, grid upgrades, or water infrastructure, it should pay its own way. This bill protects ratepayers, encourages new generation, and helps communities conserve local water resources.”
AI Growth Intensifies Pressure on Local Utilities
Artificial intelligence has become a strategic priority for governments and technology companies alike. However, the enormous computing capacity required to train and operate advanced AI models continues driving unprecedented electricity and water demand. Many of the latest hyperscale facilities consume power comparable to small cities while placing additional strain on regional transmission networks and municipal water supplies. Baumgartner argues that these infrastructure requirements should remain the responsibility of the organizations creating the demand rather than existing utility customers. The proposal positions responsible infrastructure financing as a prerequisite for continued AI expansion while attempting to prevent residential consumers from absorbing costs associated with large industrial developments.
At the center of the legislation is a regulatory framework directing state and regional authorities to establish cost recovery mechanisms specifically targeting large-load customers. Utilities would recover the full incremental costs associated with new electricity generation, transmission expansion, and distribution upgrades from facilities whose demand triggers those investments. The proposal also calls for financial safeguards before major infrastructure projects begin. Under the legislation, large-load customers would provide deposits, guarantees, or other financial assurances before utilities undertake significant infrastructure upgrades. The framework also encourages these customers to build, purchase, finance, dedicate, or otherwise secure new electricity generation resources capable of serving their own growing energy requirements. Consequently, utilities would gain stronger financial certainty while communities could reduce the risk of stranded infrastructure investments.
Tax Credits Encourage Power Generation and Water Reuse
Beyond regulatory reforms, the legislation introduces financial incentives designed to encourage more sustainable infrastructure development. The proposal includes tax credits for qualifying power generation projects that produce surplus electricity made available to other customers on the grid. This approach seeks to reward investments that increase overall system capacity rather than serving only private demand. The bill also supports improved water management through dedicated tax incentives for qualifying water reuse initiatives. Eligible projects include onsite recycling systems and developments replacing freshwater consumption with recycled municipal water supplies. These provisions recognize that future AI infrastructure planning increasingly depends on long-term water availability alongside reliable electricity.
Baumgartner framed the proposal around the need to protect communities hosting major industrial developments. He pointed to Eastern Washington’s abundant hydropower resources as a competitive advantage for attracting investment while emphasizing that existing residents should not experience higher utility costs because of expanding AI infrastructure. “Eastern Washington has abundant, reliable hydropower, and that makes our region attractive for major new investments,” Baumgartner said. “But families, farmers, and small businesses should not pay higher bills because a massive new industrial user wants to plug into the grid. Communities that welcome these projects deserve clear protections, and communities that are concerned deserve to know Washington is listening.”
AI Expansion Faces Increasing Infrastructure Accountability
The legislation arrives as policymakers continue examining the long-term infrastructure consequences of the accelerating AI economy. Large-scale computing campuses increasingly require dedicated energy resources, expanded transmission capacity, and stronger water management strategies before construction can move forward. Those infrastructure requirements have become a defining consideration for both regulators and communities evaluating future projects. “AI should serve people, families, and communities — not the other way around,” Baumgartner said. “The Power and Water for Families Act makes sure America can build the infrastructure needed to compete with China while protecting the communities being asked to host it.”
For the AI infrastructure industry, the proposal signals that future growth may depend not only on securing electricity and land but also on demonstrating greater financial responsibility for the public infrastructure supporting next-generation computing. As federal and state governments continue refining AI policy, debates over infrastructure cost allocation are likely to become just as important as discussions surrounding semiconductor supply, energy availability, and national competitiveness.
