Data center regulations elude Colorado lawmakers — again — as state grapples with booming industry
Colorado lawmakers have failed for the third consecutive year to pass statewide legislation regulating or incentivizing data center development, leaving the state without uniform policies. This legislative vacuum has prompted several local governments, including Denver and Jefferson County, to enact their own moratoriums or update ordinances to address concerns over data center power and water consumption.
Colorado lawmakers failed for the third year in a row to pass any statewide legislation concerning data centers, leaving the booming industry without uniform regulations or incentives. Two bills, one offering tax breaks and another imposing guardrails on the industry, did not progress past committee before the legislative session ended May 13. This outcome has left both industry boosters and environmental advocates dissatisfied.
Alana Miller, Colorado policy director for the Natural Resources Defense Council, described the failure as "an unfortunate outcome." Data center lobbyists, including Dan Diorio of the Data Center Coalition, argued that state sales tax incentives are crucial for attracting new development and jobs, asserting that Colorado is currently not a competitive marketplace. Environmental groups, conversely, pushed for regulations requiring renewable energy use and efficient water consumption, while community groups raised concerns about noise and air impacts.
Sen. Cathy Kipp, prime sponsor of one of the failed regulatory bills, noted the complexity of finding consensus among diverse stakeholders. In the absence of statewide rules, local governments across Colorado are taking matters into their own hands. Denver City Council unanimously approved a one-year moratorium on new data center development, spurred by the construction of a large Coresite facility that is projected to use significant power and water.
Following Denver's action, Jefferson County commissioners imposed a 10-month moratorium, and the Longmont City Council preliminarily voted to advance a ban on hyperscale data centers. Logan and Saguache counties also imposed moratoriums, though Logan County has since lifted its pause after creating new rules. Weld County updated its ordinances to require developers to prove adequate power and water supplies and prohibit construction on agricultural land, demonstrating a growing trend of localized regulatory action.