DATA Act of 2026
- Sponsor
- Sen. Cotton, Tom [R-AR]
- Committees
- Energy and Natural Resources Committee (primary)
- Last action
- Jan 7, 2026
Bottom line
The bill aims to foster independent, localized electric grids by removing federal regulatory burdens, potentially increasing energy choice and innovation for new developments but raising questions about oversight and grid fragmentation.
What it actually does
This bill creates a new category of "consumer-regulated electric utilities" (CREUs) that are established after the bill's enactment, exclusively serve new electric loads, and are physically islanded from the main power grid. It exempts these CREUs from most federal energy regulations, including those under the Federal Power Act, PURPA, and PUHCA. It also grants CREUs access to public rights-of-way for facility construction, subject to limited local review for restoration and storm-response planning.
Proponents argue
Supporters argue the bill promotes energy independence, innovation, and consumer choice by removing burdensome federal regulations that stifle the development of new, localized electric systems. They believe it will reduce costs for new developments and allow communities to tailor their energy solutions without being tied to the existing, often slow-moving, bulk power system.
Opponents contend
Opponents might argue that exempting these utilities from federal oversight, particularly reliability standards, could create significant risks for consumers and local communities, potentially leading to less reliable service or safety concerns. They may also raise concerns about the potential for regulatory arbitrage and the fragmentation of the national grid, even if physically islanded.
The bill is concise and relatively easy to read, allowing for a quick understanding of its core provisions.
Section 2
Definition of "Consumer-Regulated Electric Utility" (CREU)
This section defines a "Consumer-Regulated Electric Utility" (CREU) as a new electric generation and supply system established after the bill's enactment, exclusively serving new electric loads. A CREU can own and operate all necessary facilities (generation, storage, transmission, distribution, retail supply) but must be physically isolated from all regulated utilities, the bulk-power system, and the Bulk Electric System.
Supporters argue
Supporters argue this definition creates a clear pathway for innovative, decentralized energy solutions without interfering with the existing grid, promoting competition and tailored energy services for new developments.
Critics contend
Critics might argue that the strict "physically islanded" requirement could limit the scalability and resilience of these systems, preventing them from benefiting from grid interconnections during emergencies.
Tradeoffs
Balances the desire for regulatory freedom and innovation for new energy systems against the need to maintain the integrity and reliability of the existing national grid by mandating physical separation.
Section 3
Exemption from Federal Power Act (FPA) Regulations
This section explicitly exempts CREUs from nearly all Federal Power Act regulations, including rate regulation, corporate oversight, transmission/distribution rules, reliability standards (Section 215), interconnection requirements, regional planning, and merger approvals (Section 203). It also clarifies that CREUs are not considered public utilities or part of the bulk-power system, and are not required to register with the Electric Reliability Organization unless they voluntarily connect to the bulk-power system.
Section 4
Broad Exemption from Federal Energy Regulation and Termination Clause
This section reinforces the exemption of CREUs from all federal regulations under the jurisdiction of FERC or the Secretary of Energy, including all reliability standards and other requirements under the Federal Power Act or any other federal law. Crucially, it states that if a CREU ever connects to the bulk-power system or any other electric transmission/distribution system, it immediately ceases to be a CREU and becomes subject to all previously exempted federal regulations.
Section 5
Exemption from Public Utility Regulatory Policies Act of 1978 (PURPA)
This section amends the Public Utility Regulatory Policies Act of 1978 (PURPA) to explicitly state that its provisions do not apply to CREUs. Specifically, CREUs are not required to interconnect with, purchase from, or sell to existing electric utilities under PURPA.
Section 6
Exemption from Public Utility Holding Company Act of 2005 (PUHCA)
This section amends the Public Utility Holding Company Act of 2005 (PUHCA) to exempt holding companies solely by reason of their ownership or control of a CREU. This means that owning a CREU would not subject a company to the federal regulations and oversight typically applied to public utility holding companies.
Section 7
Access to Public Rights-of-Way and Limited Local Review
This section allows CREUs to construct and operate facilities within existing public rights-of-way, subject to the same permitting, restoration, and public-safety requirements as public utilities. However, it explicitly limits the review of such applications to only the adequacy of right-of-way restoration and storm-response planning, preventing local authorities from imposing broader regulatory requirements.
CREUs and their customers must be physically islanded from the bulk-power system and any other electric transmission or distribution system. If a CREU connects, it immediately loses all federal exemptions.
Section 2(2)(C), 2(2)(E), 2(4)(C), 4(c)
Why it matters:This is a critical definitional and operational constraint, likely placed to ensure a clear distinction between regulated and unregulated entities, preventing regulatory arbitrage. It's standard legislative practice to define terms precisely.
Case for: Supporters argue this strict separation is necessary to prevent CREUs from benefiting from the reliability and infrastructure of the regulated grid without contributing to its costs or adhering to its standards. It ensures true independence.
Case against: Critics might argue this creates an artificial barrier, preventing CREUs from leveraging grid connections for emergency backup or efficiency gains, potentially making them less resilient or cost-effective in the long run.
Estimated impact: Defines the operational model for all future CREUs, impacting their design, resilience, and cost structures.
Local review of CREU facilities in public rights-of-way is confined exclusively to right-of-way restoration and storm-response planning.
Section 7(b)
Why it matters:This is a preemption of local authority, often placed in specific subsections to limit the scope of local government involvement in federally favored projects. It's a common legislative tactic to streamline development.
Case for: Proponents argue this prevents local governments from imposing excessive or subjective requirements that could delay or halt CREU development, ensuring a consistent and predictable regulatory environment.
Case against: Opponents (local government groups) would argue this undermines local control over public infrastructure and public safety, potentially leading to less comprehensive oversight of new utility construction.
Estimated impact: Streamlines permitting for CREU infrastructure but reduces local government discretion.