Colorado lawmakers abandoned a last-minute effort Monday to pass environmental regulations for data center development in the state.
After rewriting the environmentalist-backed legislation, Senate Bill 102, to add a tax incentive for data centers, state Sen. Cathy Kipp, D-Fort Collins, proposed her bill be postponed indefinitely. The Senate Transportation and Energy committee voted down the legislation unanimously, putting an end to the measure Kipp has been working on for about a year.
The bill, also sponsored by Rep. Kyle Brown, D-Louisville, would have required data center companies to pay the full cost for the power needed to run their facilities. It also would have ensured that data centers don’t blow the state’s greenhouse gas emission reductions targets, intended to stave off the worst effects of climate change.
Data center companies would have had to compete for two available 15-year sales and use tax exemptions per year, on criteria like clean energy and participation in grid resiliency programs. They would have also been judged on the quality of jobs created, community benefits and investments and water efficiency.
Kipp added the tax incentive to the draft of the bill distributed to lawmakers over the weekend, but it was ultimately not sufficient to sway enough of them in the last three days of the legislative session.
Kipp vowed to reintroduce the legislation next session.
“We will bring this bill back next session, but the industry needs to understand the moment,” Kipp said. “These companies need to come to the table understanding the harms their operations can cause the communities and to our grid and be accountable for that,” she said.
“Colorado communities are deeply worried about what this unrestrained development means for their water, their air quality, their electricity bills, their farmland and their neighborhoods,” she added.
A dueling data center bill backed by the industry would have offered 20- to 30-year sales and use tax exemptions to data center companies that invest $250 million in infrastructure in the first five years and create an unspecified number of jobs that pay at least 110% of the average local wage.
That bill, sponsored by state Rep. Alex Valdez, D-Denver, and Sen. Kyle Mullica, D-Thornton, met a similar demise in a committee hearing last week.
The failure of both bills leaves Colorado without any data center incentives or industry-specific state environmental protections.
It also marks another year when Colorado lawmakers have failed to agree on regulations for data centers amid mounting public opposition to them. Concerns over the facilities’ massive demands on natural resources, rising utility bills and limited job creation have cost some lawmakers in other states their seats over their support for the industry.
There are 56 data centers in Colorado, according to Data Center Map. Industry experts say the state does not have many of the large-scale facilities seen in neighboring states, projects they say could boost local property tax revenue and generate construction jobs.
In recent months, Colorado communities have pushed back against data center development.
Senate Bill 102 bill would have required data center companies to hold public hearings and enter into community benefit agreements with their neighbors, steps that were not required of a data center under construction in the Elyria-Swansea neighborhood in northern Denver.
There, the data center company CoreSite is building the first of three buildings less than a block from a park, a recreation center, a community health clinic and an affordable housing complex for seniors. Residents have voiced concerns about the massive amount of energy and water needed to power the data center and the plans for 14 backup diesel generators on the site. They are urging CoreSite to make changes to its plans.
Because the plot of land where CoreSite’s data center campus is located was already zoned for industrial use, the Denver City Council did not vote to approve the data center. In February, Denver Mayor Mike Johnston announced the city will consider a moratorium on data center development so that officials can come up with guardrails for the industry.
Efforts to put environmental guardrails around data centers also aren’t limited to states controlled by Democrats, like Colorado. In Florida, Gov. Ron Destantis signed a bill last week designed to conserve water resources and protect ratepayers against rising energy bills.
This is a developing story and will be updated.
This story was produced by the Capitol News Alliance, a collaboration between KUNC News, Colorado Public Radio, Rocky Mountain PBS, and The Colorado Sun, with support from news outlets throughout the state. Startup funding for the Alliance was provided in part by the Corporation for Public Broadcasting.
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