Colorado lawmakers kill bid to regulate data center industry
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Colorado lawmakers jettisoned a high-profile effort to rein in data centers, shelving dueling bills in a debate that exposed deep tensions over artificial intelligence, climate goals and economic development.
Why it matters: The legislation's collapse leaves Colorado without new guardrails on one of the fastest-growing — and most power-intensive — industries tied to the AI boom.
Driving the news: A Democratic-backed proposal to put new environmental and energy rules on the development of large data centers died in a Senate committee Monday.
- Days earlier, a competing bill offering incentives for data centers failed to win support in a House committee.
The big picture: Colorado is wrestling with the same dilemma facing other states: how to cash in on the AI infrastructure boom without overwhelming power grids and undermining environmental goals. Currently, there are 56 data center warehouses in Colorado.
The two proposals — tougher regulations versus incentives — split Democratic lawmakers all session.
- The industry argued the proposed rules on energy and water usage were so restrictive that it would scare away development
- Environmental leaders warned that incentives and weaker regulations would spike electricity demand, increase utility bills, drain water resources and undercut the state's climate targets.
The intrigue: A compromise floated just days before Wednesday's adjournment sought to pair the bills by tying incentives to environmental benchmarks.
- The bill's main sponsors, Sen. Cathy Kipp (D-Fort Collins) and Rep. Kyle Brown (D-Louisville), decided not to introduce it, citing lackluster interest.
What she's saying: "We really thought we were threading the needle," she told colleagues just before the bill was killed. "We worked diligently to design a competitive, limited incentive with real guardrails, one that would bring the best actors to Colorado without putting Colorado taxpayers on the hook."
What's next: Kipp vowed to keep pressing for tougher regulations next year.
- "Colorado is willing to work with data centers to accommodate them and yes, even to offer them an incentive, but these companies need to come to the table understanding the harms their operations can cause [to] communities and to our grid, and be accountable for that," she said.