On November 9, 2026, the U.S. Senate cleared a major procedural hurdle toward a floor vote on the Bipartisan American Affordability and Jobs Act of 2026 (BAAJA).1 The vote on cloture followed the November 7, 2026 release of the Manager’s Substitute Amendment, incorporating changes from negotiations with the House of Representatives, the Trump administration, Tribal nations, electric utilities, industry stakeholders, and advocacy organizations.
Executive Summary
BAAJA proposes to overhaul federal statutory provisions governing data center and large load cost causation, corporate governance jurisdiction of the Federal Energy Regulatory Commission (FERC), interstate transmission planning and cost allocation, federal backstop siting authority, and environmental permitting certainty. The proposed legislation passed cloture this week, with a potential final Senate vote scheduled for the week of November 16, 2026.
While BAAJA is often referred to as the Senate permitting bill, its provisions go far beyond permitting. Significant elements of the proposed legislation include:
- Data centers. The proposed legislation establishes a national policy on data centers, requiring them to pay their full costs; creates a DOE Data Center Community Assistance Program; requires FERC to issue a policy statement within 90 days; and applies the proposed legislation’s provisions to all data centers with no minimum size threshold.
- Transmission planning, competition and cost allocation. The proposed legislation mandates consolidated generation and transmission planning processes in all RTO/ISOs; and all regions must run long-term interregional transmission planning starting within a year, though municipal utilities and rural electric cooperatives are exempted. The proposed legislation also clarifies the federal ban on a right of first refusal for transmission planning. On cost allocation, the bill proposes a federal cost allocation methodology and creates a pathway for merchant transmission to sell capacity to voluntary offtakers and also recover a portion of costs from ratepayers for reliability benefits.
- RTO/ISO corporate governance. In a provision targeted at PJM Interconnection, LLC, the proposed legislation adds a new section to the Federal Power Act making RTO/ISO corporate governance explicitly subject to FERC’s jurisdiction.
- Backstop siting. The proposed legislation expands and clarifies existing FERC authority for backstop siting, based on the voltage level of the proposed transmission line.
Legislative background
Introduced on September 30, 2026 by two Republican and two Democratic Senators, BAAJA promulgates statutory reforms across foundational federal energy and environmental laws, including the Federal Power Act (FPA), the Natural Gas Act (NGA), the National Environmental Policy Act (NEPA), the Clean Air Act (CAA), and the Clean Water Act. Drafted in light of transmission planning process reforms implemented by FERC Order No. 19202 and the stalled Energy Permitting Reform Act of 2024 (EPRA),3 BAAJA expands FERC's statutory authority to address structural bottlenecks in interstate electric transmission amid substantial nationwide load growth. Following the October congressional recess and the early November midterm elections, the Senate sponsors negotiated the Manager’s Substitute Amendment to reorient the balance among FERC, state public utility commissions (PUCs), electric utilities, and regional transmission organizations (RTOs) and independent system operators (ISOs).
Although a bipartisan majority supported cloture to initiate floor consideration, several Democratic Senators stated that their votes to proceed are not yet votes approving BAAJA, citing continuing reservations regarding Tribal sovereignty, environmental protections, and state jurisdictional authority. Pursuant to Senate rules, the chamber will consider proposed amendments, with a vote on final passage likely scheduled for the week of November 16, 2026.
Data centers and large loads
The proposed legislation establishes a formal national policy requiring data centers and computational loads to bear their full incremental grid infrastructure and embedded transmission service costs. Under the proposal, transmission service costs must be fully assigned to computational load owners and operators so that those entities incur the full cost of the transmission service (i.e., without cross-subsidization by other retail or wholesale customers through cost allocation or rate recovery). While the prior version of the proposed legislation limited the definition of “computational loads” to data centers and computing facilities of 20 megawatts (MW) or greater, the substitute amendment eliminates the threshold altogether.
To implement this mandate, the proposed legislation directs FERC to issue a Policy Statement within 90 days of bill passage. The provision encompasses both prospective large load interconnections and existing transmission customers by requiring revisions to existing transmission service rates, revising the transmission pricing policy instituted in 1994.4 This directive expands upon the federal regulatory baseline established in FERC's show cause orders on large load interconnections,5 which targeted single-site loads above 50 MW interconnecting at voltages exceeding 69 kilovolts (kV) across the six jurisdictional RTOs and ISOs.
The proposed legislation also establishes the U.S. Department of Energy (DOE) Data Center Community Assistance Program. Through this program, DOE will provide state, local, and Tribal governments with independent technical analyses evaluating how a proposed data center facility would affect local electric power systems, water resources, physical infrastructure, retail utility rates, tax abatement structures, and regional economies. DOE also must publish a standardized toolkit of due diligence questions for local officials to pose to electric utilities and data center project sponsors.
With respect to grid automation and behind-the-meter (BTM) generation, BAAJA carves out enhanced wholesale market access for advanced transmission technologies and aggregated dispatchable BTM resources while directing FERC to initiate a rulemaking governing the deployment of artificial intelligence and machine learning in generator interconnection study processes. The amended bill pairs those market access provisions with a 5 MW individual capacity cap on distributed energy resources participating in a virtual power plant (VPP).
Transmission planning and cost allocation
Prior to BAAJA, FERC's backstop siting authority to approve interstate electric transmission facilities following more than one year of state review was confined to projects located within a DOE-designated National Interest Electric Transmission Corridor, and has not been utilized. BAAJA revises Section 216 of the FPA to authorize FERC to issue construction permits directly to interstate transmission facilities operating at 230 kV or higher, contingent on satisfying three statutory criteria: (1) the project must be consistent with the public interest, (2) protect ratepayers and consumers while bolstering bulk-power system reliability, and (3) maximize existing rights-of-way. BAAJA also designates FERC as the lead federal agency for administering NEPA environmental reviews for covered interstate transmission projects.
The Manager’s Substitute Amendment strikes the “simultaneous processing” provision that would have permitted transmission project sponsors proposing facilities rated at 345 kV or higher to initiate the FERC permitting process concurrently with state PUC siting reviews. It also specifies that sub-230 kV transmission lines utilizing advanced conductors qualify for federal backstop permitting only if FERC determines that the facilities deliver transfer throughput comparable to a conventional 230 kV line. Concurrently, the revised bill strengthens federal backstop authority in two ways: (1) it extends federal permitting and eminent domain authority to state-owned land so that transmission project sponsors can route facilities along state rights-of-way and reduce condemnation disputes with private landowners; and (2) where a new high-voltage interstate line requires associated lower-voltage system modifications or network upgrades, the statute brings those lower-voltage components within FERC's permitting authority.
BAAJA also establishes a federal cost allocation methodology, requiring that new transmission project costs be assigned exclusively to customers that receive quantifiable benefits across six statutory criteria: (1) improved grid reliability; (2) reduced congestion; (3) reduced power losses; (4) greater carrying capacity; (5) reduced operating reserve requirements; and (6) improved access to lower-cost generation. An interstate transmission line may utilize this federal six-factor cost allocation methodology even if it secures siting approval through the state PUC permitting route rather than applying for a federal backstop permit. In addition, the provision authorizes a hybrid cost recovery model for merchant transmission facilities, enabling them to contract capacity to voluntary commercial offtakers while recovering an allocated share of project costs from regional ratepayers where the facilities provide demonstrable benefits to grid reliability.
On regional and interregional planning, BAAJA directs FERC to require transmission providers to establish long-term interregional transmission planning processes utilizing a unified timeline, common modeling assumptions, and a joint process to identify and select interregional transmission facilities. These provisions impose no statutory deadline compelling final project selection; RTOs and ISOs may request a six-month compliance extension, and the statute contains no mechanism requiring that specific projects be selected.
Drawing from the Southwest Power Pool's Consolidated Planning Process,6 BAAJA adds a new Section 318 to the FPA requiring the consolidation of generator interconnection and regional transmission planning processes across a 20-year demand forecast horizon, backed by non-refundable security deposits and withdrawal penalties for generation project sponsors. The substitute narrows the requirement to apply exclusively to RTOs and ISOs. The amended bill also excludes municipal utilities and rural electric cooperatives from regional and interregional transmission planning and permitting requirements.
Finally, building on the competitive solicitation principles of FERC Order No. 1000, BAAJA amends the FPA to eliminate any federal right of first refusal (ROFR) for incumbent utilities with respect to new transmission facilities selected through regional and interregional planning processes, while retaining state and/or local ROFR.
FERC governance and state-local oversight
The Manager’s Substitute Amendment inserts a provision to codify that FERC has jurisdiction over the corporate governance of a Transmission Organization. This amendment should resolve federal appellate disputes contesting the scope of FERC authority over RTO/ISO board governance as well as providing clear direction amid ongoing stakeholder governance reform proceedings in PJM Interconnection, L.L.C.
BAAJA also establishes a joint state-federal oversight mechanism governing local utility transmission spending. If an electric utility has failed to invest in cost-effective transmission facilities (or improperly approves local transmission lines that interfere with regional planning processes), joint state-FERC investigative teams may audit local planning procedures, mandate process modifications, reduce the utility's return on equity or rates on local facilities, and assess civil fines. While preserving these remedial powers, the substitute clarifies that a state referral to FERC must originate specifically from a state PUC (rather than an unspecified state entity) and grants the FERC Chairman more discretion over how referred investigations proceed.
In addition, BAAJA aligns FERC's civil penalty assessment procedures under the NGA with its existing civil penalty authority under the FPA, while Section 1110 vests exclusive appellate jurisdiction in the U.S. Court of Appeals for the District of Columbia Circuit for all NEPA judicial challenges to infrastructure projects authorized pursuant to either the FPA or the NGA.
Permitting certainty and review
BAAJA’s project certainty provisions seek to make a permit granted to an energy project under development more certain and difficult to revoke once it passes certain milestones. Under these provisions, subsequent federal agency action against a permit or infrastructure project is authorized when undertaken pursuant to any applicable federal law or regulation, and codifies harms to human health and the environment as independent statutory grounds justifying post-issuance agency action. NEPA-based challenges are also limited to a narrower window of time following permit issuance.
A “covered project” eligible for protection under the Project Certainty provisions is an infrastructure project that holds all requisite federal construction or operating permits. To recover the statutory liquidated payout of 25 percent to 50 percent of incurred development and construction costs, the project must provide demonstrable proof of agency bad faith. For projects such as offshore wind facilities where a federal court has enjoined an agency stop work order within the one-year period preceding enactment of BAAJA, the provision prohibits federal agencies from interfering with project approvals, construction execution, or normal commercial operation without prior federal court approval.
Implications and outlook
If enacted, BAAJA carries immediate commercial and tariff implications for large load interconnections and power supply arrangements. Eliminating the 20 MW threshold and requiring revisions to existing transmission rates will obligate data center owners and project finance lenders (across all facility sizes) to account for direct cost assignment for both embedded and incremental costs associated with required transmission upgrades. For transmission and generation developers, allowing state-permitted lines to access the FPA Section 216 federal cost allocation methodology (and enabling merchant transmission projects to recover reliability-related costs from regional ratepayers) expands the financing available for new interstate lines. Many other contractual arrangements, existing and prospective, as well as the deployment of capital toward the construction of new data centers and large loads may be accelerated if BAAJA is passed into law.
BAAJA’s future remains unclear, as several Senators noted that their cloture votes are not a guarantee of their support of the final bill. That said, the level of bipartisan cooperation achieved to get this proposed legislation to the current point is a significant achievement and bodes well for final passage.
1 S.5653 - BIPARTISAN AMERICAN AFFORDABILITY AND JOBS ACT OF 2026, 119th Congress (2025-2026). Full bill text available at: https://www.energy.senate.gov/wp-content/uploads/2026/11/KAT26764.pdf.
2 Please refer to our previous article for more information on FERC Order No. 1920: https://www.whitecase.com/insight-alert/transmission-planning-reforms-finalized-ferc-order-no-1920.
3 S.4753 - ENERGY PERMITTING REFORM ACT OF 2024, 118th Congress (2023-2024).
4 Inquiry Concerning the Commission’s Pricing Policy for Transmission Services Provide by Public Utilities Under the Federal Power Act; Policy Statement. Final Rule in FERC Docket No. RM93-19-000 (Issued on October 26, 1994).
5 Please refer to our previous article for more information on the show cause orders issued by FERC: https://www.whitecase.com/insight-alert/ferc-orders-grid-operators-promptly-revise-or-justify-interconnection-rules-data.
6 Please refer to our previous article for more information on SPP’s CPP: https://www.whitecase.com/insight-alert/ferc-approves-spp-consolidated-generator-interconnection-and-transmission-planning.
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