Why It Matters

Congress is examining how to protect drinking water systems from growing cybersecurity threats while preventing infrastructure costs associated with data centers from being passed on to ratepayers.

Water and wastewater utilities in at least seven states reported cybersecurity incidents to the FBI beginning July 27, and some of that activity degraded water operations, including flooding and drops in water pressure. The House Energy and Commerce Subcommittee on Environment will hold a Sept. 3 hearing titled "Reliable Water In The Digital Age: Examining Legislation To Strengthen Drinking Water Systems And Protect Ratepayers." The hearing will address how Congress can shore up drinking water systems against cyber threats while protecting households from costs associated with growing infrastructure demands.

The Big Picture

The timing reflects an urgent problem. Water and wastewater utilities in at least seven states reported cybersecurity incidents to the FBI beginning July 27, with some attacks degrading water operations through flooding and pressure drops.

Industry researchers and U.S. officials have suggested the technical profile aligns with campaigns previously attributed to Iranian-affiliated groups such as CyberAv3ngers, which U.S. officials have linked to Iran's Islamic Revolutionary Guard Corps. CyberAv3ngers has claimed responsibility for the attacks, but the U.S. government has not publicly attributed them to the group.

Beyond cybersecurity, water utilities are raising rates in parts of the country. On Aug. 13, new water and wastewater rates took effect for Pennsylvania American Water customers following approval of a $74.9 million annual revenue increase by the Pennsylvania Public Utility Commission.

Liberty Utilities is also seeking another water rate increase for customers on Long Island. The company's May filing with the New York Public Service Commission seeks revenue increases of 21.87 percent in Service Area 1 and 30.14 percent in Service Area 2, with the proposed rates taking effect in May 2027 if approved. The proposal would affect customers in Nassau County communities including Merrick, where the company estimates the average residential bill would increase by 36.99 percent.

Broader Context

Congress is moving on multiple fronts. Rep. Henry Cuellar (D-TX) introduced the Ratepayer Bill of Rights Act on Aug. 24. The legislation would require public disclosure of electricity and water use, infrastructure costs, rate impacts and public financial assistance associated with large data centers while establishing protections intended to prevent project-related infrastructure costs from being shifted to existing ratepayers.

The Senate Environment and Public Works Committee also unanimously advanced the bipartisan Water Resources Development Act in July. The legislation would reauthorize Environmental Protection Agency drinking water and wastewater infrastructure programs and expand assistance available to small water systems to address cybersecurity vulnerabilities.

At the state level, lawmakers in more than 30 states have introduced over 300 bills addressing data centers and related issues including energy and water use, utility costs, tax incentives and environmental impacts.

The Bottom Line

The House Energy and Commerce Subcommittee on Environment will hold the Sept. 3 hearing titled "Reliable Water in the Digital Age: Examining Legislation to Strengthen Drinking Water Systems and Protect Ratepayers." Rep. Gary Palmer (R-AL) chairs the subcommittee, while Rep. Brett Guthrie (R-KY) chairs the full committee.

The subcommittee will consider draft versions of the Safe Drinking Water Infrastructure Improvement Act and the Water Cost Accountability Act. According to the committee, the proposals are intended to strengthen drinking water infrastructure against cyber threats and other risks while ensuring that data center builders, rather than households, bear costs associated with their water infrastructure needs.

The Water Quality Association lobbied on drinking water quality legislation and regulation in the first and second quarters, while the City of Roseville, California, spent $50,000 on lobbying related to water legislation, PFAS liability protection, and EPA clean and drinking water funding across the first two quarters.

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