Democrats Will Soon Control Congress, and This Year’s Bipartisan Bills Are the Best Clues to the Frontier Economy’s Future Rules

Democrats will soon chair the House and Senate committees that write the rules for energy, AI, labor, finance, and space. Their recent Election Day sweep took both chambers of Congress and many governorships and legislatures. Worries about power bills and AI drove much of that vote: more than half of voters told NBC’s exit poll that AI and data centers were a factor, and several races in which AI and crypto groups spent heavily went the other way, including Ohio, where former Sen. Sherrod Brown (D-Ohio) returns to the Senate.

As far as new rules for the frontier economy go, President Trump can still veto anything hyperpartisan, so the new majorities in Washington are likely to work through subpoenas and the hearing calendar and through bipartisan deals that need his signature. Companies are already moving to answer voters’ concerns; OpenAI, for example, has asked policymakers at every level for clear rules on how the industry builds. In our view, the frontier economy would grow fastest under clear national rules set early. The election kept those rules within reach but raised what companies are likely to need to give up to get them, such as paying full grid costs in exchange for faster permits and accepting binding safety testing in exchange for one national AI law.

The Senate could vote soon on a permitting bill that would make data centers pay their full grid costs

Senate leaders have teed up votes as soon as November 9 on the Bipartisan American Affordability and Jobs Act, the bill that matters most this year for anyone with money in the data center buildout. Sens. Shelley Moore Capito (R-W.Va.) and Mike Lee (R-Utah), who chair the Senate environment and energy committees, wrote it with the committees’ top Democrats, Sheldon Whitehouse (D-R.I.) and Martin Heinrich (D-N.M.), after a deal with the White House in September. It would shorten federal environmental reviews, narrow the window for lawsuits against energy projects, and make data centers of 20 megawatts or more pay both for the existing grid they use and for new transmission built for them. For developers, utilities, the tenants that lease capacity, and the investors that finance it, the trade is higher grid costs per project in exchange for faster approvals and one national rule.

The main fight over data center power is now about what counts as the “full cost” that companies have promised to pay. Amazon, Google, Meta, Microsoft, OpenAI, Oracle, and xAI signed a White House pledge in March to pay for the power and grid upgrades their AI projects need. This week OpenAI reaffirmed that it will pay the full cost of powering the data centers it owns and operates, and urged policymakers to require large electricity users to pay the incremental costs they create. But an October report from Sen. Elizabeth Warren (D-Mass.), the top Democrat on the Banking Committee, argues companies should also pay for shared grid upgrades their projects trigger, and the Senate bill likewise goes beyond incremental costs by charging data centers for the existing grid they use. Meanwhile, in June the Federal Energy Regulatory Commission (FERC) ordered the six regional grid operators to justify or revise their rules for connecting data centers and other large users, including who pays for upgrades, and state utility commissions set the rates data centers pay within each state, so without a national rule the answer is likely to vary by region.

At the moment, Democrats are split over whether to take this deal now or wait for more leverage next year. Heinrich wants to finish it in the lame-duck session, calling it the closest Congress has come to a permitting bill that can be signed into law, while Rep. Jared Huffman (D-Calif.), in line to chair House Natural Resources, has argued that Democrats will have more leverage next year. After the election, TD Cowen cut its odds of passage from about 40 percent to about 25 percent, saying the Democratic win is likely to embolden critics who think the bill concedes too much to oil and gas. If the bill fails before January, some version is likely to return in 2027 on terms set by the new Democratic chairs.

Democrats could also use their newfound committee power to challenge the rest of Trump’s energy agenda, with each fight framed around household power bills. They plan to push to restore the wind and solar tax credits Republicans cut last year and to investigate cancelled offshore wind projects and Energy Department funding cuts. (We note that restoring the credits would need Trump’s signature or a veto override.) In addition, the new Senate majority will control confirmations to FERC, which currently has a Republican majority.

Democrats are likely to demand AI safety testing and incident reporting in exchange for a national law that overrides state AI laws

The midterm election effectively turned the industry’s push for one national AI law into a negotiation over federal safety standards. This term, Congress has twice tried to block state AI laws without writing federal rules to replace them, and both attempts failed: the Senate voted 99 to 1 in July 2025 to strip a 10-year moratorium from the tax bill after opposition from both parties, and Republican leaders dropped a similar provision from the defense bill that December. The push has continued through Trump’s executive order directing the Justice Department to challenge state AI laws and the White House’s March legislative framework, but neither overrides state laws on its own.

The likeliest path to a national standard in the new Congress is a trade, with companies accepting binding safety rules in exchange for one set of rules across the country. However, Democratic proposals for federal AI legislation generally treat federal rules as a floor that states can build on, and Sen. Maria Cantwell (D-Wash.), the top Democrat on the Commerce Committee, released a framework in October calling for federal safety standards, independent audits before frontier models are released, and mandatory reporting of serious failures, including AI agents escaping secure testing environments. The bipartisan FRONTIER Act, a bill in the current Congress from Reps. Jay Obernolte (R-Calif.) and Lori Trahan (D-Mass.), is a likely starting text next year. The main fight is likely to be over how much state law a federal standard would override.

House Democrats’ request for AI incident reports could become the first practical AI safety rule of 2027, and an under-the-radar deadline is next week. On October 28, Reps. Frank Pallone (D-N.J.), Zoe Lofgren (D-Calif.), and Jamie Raskin (D-Md.), the top Democrats on the Energy and Commerce, Science, and Judiciary committees, asked five frontier AI developers to report misalignment and safety incidents within 48 hours of discovery, or within 24 hours when critical infrastructure appears to be involved, and to account for all past incidents by November 11. Responses are voluntary for now, but in January the three are expected to chair those committees, which would probably make a 48-hour reporting clock the practical standard for frontier labs.

China chip policy may be where a Democratic-controlled Congress, along with Republican hawks, confronts the White House most directly. Trump’s decision to allow sales of advanced U.S. AI chips to China drew bipartisan criticism, and Senate Democratic Leader Chuck Schumer (D-N.Y.) has pushed three bills to restrict sales of chips and chipmaking equipment. The House passed the Remote Access Security Act, which would extend export controls to chips rented through the cloud, 369 to 22, far more than the two-thirds needed to override a veto, but the bill sits in Senate Banking, which Warren is expected to chair next year. Tighter rules would add customer-screening duties for American cloud providers serving foreign clients.

Unions will have more leverage over data center construction, self-driving trucks, and AI-related layoffs

Unions are likely to gain more say over how data centers are built, mostly through governors and state legislatures. In Ohio, Democratic Governor-elect Amy Acton says she would allow new data centers only if they cover all their utility costs and build exclusively with union labor, and in Texas, Democratic Governor-elect Gina Hinojosa campaigned on requiring union labor on data center projects. Building trades unions have also been among data centers’ most visible local defenders, which gives developers natural allies.

Meanwhile, in Congress, the most concrete labor fight is likely to be over self-driving trucks. The House highway bill, which carries the first federal framework for autonomous trucks and cleared the House Transportation Committee 61 to 2, has stalled and now rolls into 2027, when Democratic chairs would write the next version. The Teamsters praised the bill in May for creating an autonomous vehicle framework that states and localities can build on, and the union’s federal policy principles call for a human operator in every autonomous vehicle.

We expect AI’s effect on jobs and the workforce to be another major topic of hearings, and populists in both parties already agree on a first step. Sen. Bernie Sanders (I-Vt.), in line to chair the Health, Education, Labor and Pensions (HELP) Committee, has warned that AI and automation could replace close to 100 million U.S. jobs within a decade. In the current Congress, Sens. Josh Hawley (R-Mo.) and Mark Warner (D-Va.) introduced a bill requiring large companies to report AI-related layoffs to the Labor Department every quarter, and Sen. Ron Wyden (D-Ore.), the top Democrat on Finance, has proposed transition wages for displaced workers. Neither proposal is likely to become law before this Congress ends, but both show where a new labor bill could start. Employers that can document retraining and new rungs on the career ladder are likely to have the better story to tell Congress and the public.

Democrats are likely to increase scrutiny of AI financing, data center tax breaks, and crypto legislation

The new majorities are likely to examine the financing behind the AI buildout as closely as AI itself. Rep. Greg Casar (D-Texas), chair of the Congressional Progressive Caucus, and Rep. Maxine Waters (D-Calif.), the top Democrat on House Financial Services, introduced a resolution on October 28 opposing any bailout of AI companies or their financial backers, and its text, which previews how Democrats may frame the issue next year, faults regulators for failing to scrutinize the industry’s complex debt deals and circular financing. Investors appear to be pricing in that scrutiny already: AI and chip stocks led a sharp selloff on November 5 as traders reassessed the data center buildout, and the Nasdaq fell to 11 percent below its high amid concern that higher borrowing costs could slow construction.

Don’t sleep on the tax code, which may be the biggest risk getting the least attention. Sen. Wyden’s October draft bill would tax data center operators’ gross receipts and deny data centers bonus depreciation, research credits, and opportunity zone and REIT benefits, and Tax Foundation analysts warn that ending full expensing for data centers could push investment overseas. The draft has little chance of becoming law while Trump holds the veto, but it could set the Democratic opening position for any tax deal in the next two years, and operators may pass the extra cost on to every business or consumer that buys AI services.

Elsewhere, crypto market structure legislation is now likely to restart from the Democrats’ draft. The CLARITY Act, this Congress’s market structure bill, stalled in the Senate in September. Warren, a public critic of the industry, is expected to chair the committee that must approve any rewrite, and House Financial Services Democrats are drafting their own version of CLARITY that puts the Securities and Exchange Commission (SEC) in charge. The industry has long lobbied for the Commodity Futures Trading Commission (CFTC) to oversee most digital assets, so the choice of lead regulator is likely to be the main battle line. The stablecoin law Trump signed last year stays in force as a bipartisan foundation, and the empty Democratic seats at the SEC and the CFTC, already a sticking point in the crypto talks, are likely to be part of any new deal.

The new Congress may push for more competition in launch and satellite services

Senate Democrats have begun scrutinizing SpaceX’s military satellite work, and that oversight could lead to more federal business for competing providers. They have asked SpaceX to preserve records on restrictions placed on Starshield, the military version of Starlink, in Ukraine. The Space Force has already widened its pool of national security launch providers to seven, and Congress is likely to back that effort with more federal work for SpaceX’s competitors in launch and satellite communications. Side note: orbital data centers, which SpaceX founder Elon Musk and other AI executives have pitched partly to avoid fights over earthbound sites, would also fall under Wyden’s draft tax bill as it stands now.

The next two months will show how much gets settled before Democrats take over, starting with the Senate permitting vote and the November 11 deadline for AI incident reports. After January, companies that engage early with the new chairs on costs, safety, and jobs are likely to have the most say in the rules that follow.