After nearly a year of negotiations, intensive lobbying activity, and hours of public hearings, Colorado lawmakers adjourned the 2026 legislative session without making any changes to how the state regulates the data center industry.

Two competing bills, one backed by business groups and the other by consumer and environmental advocates, both failed to advance from committee in the final days of the 120-day session, and a last-ditch effort to forge a compromise measure fell short.

A Compromise That Couldn't Cross the Finish Line

The proposed compromise would have paired economic development incentives sought by data center developers with regulations on the facilities' locations, energy needs, and water use.

Sen. Cathy Kipp, a Fort Collins Democrat and sponsor of Senate Bill 26-102, described the approach to members of the Senate Transportation and Energy Committee as an attempt to thread a difficult needle between competing interests.

"What we came up with was a limited, competitive tax incentive, so that if data centers are developed in Colorado, they are developed in a way that will be the most beneficial to Coloradans," Kipp said.

The compromise would have been introduced through a so-called strike-below amendment, a procedural maneuver that would have rewritten the entire bill, but with the Legislature's adjournment, Kipp said her fellow lawmakers were not willing to consider such a sweeping late change.

At Kipp's request, the Senate Transportation and Energy Committee voted unanimously to postpone SB-102 indefinitely.

The bill had carried a mandate that data centers source up to 100% of their electricity from renewable energy, alongside other protections for utility customers and communities affected by development.

The Two Bills and Their Fates

SB-102 had the support of a coalition of Colorado's leading progressive and environmental groups. Its demise followed a similar outcome for House Bill 26-1030, which was postponed indefinitely when the House Energy and Environment Committee voted 11 to 2 against it.

HB-1030 was sponsored by Rep.

Alex Valdez and House Majority Leader Monica Duran, both Denver Democrats. That bill centered on a 100% sales and use tax exemption for data center development, accompanied by a less stringent set of renewable energy requirements, and had the backing of a wide range of technology industry groups.

Industry representatives argued that such tax breaks are a prerequisite for substantial data center investment, particularly for so-called hyperscale facilities that serve the largest artificial intelligence and cloud-computing companies.

Valdez expressed frustration at the outcome before his committee's vote. "Unfortunately, we have to continue with the status quo," Valdez said.

"That's not good for us, because that means Wyoming wins, and Texas wins."

An Intensely Lobbied Session

HB-1030 and SB-102 were among the most heavily lobbied measures of the 2026 lawmaking session. According to data from the Colorado Secretary of State's office, 196 individual lobbyists registered positions on one or both bills on behalf of 150 clients, underscoring the scale of competing interests at play in the debate.

The legislative fight unfolded against the backdrop of a nationwide boom in data center construction, largely driven by investment in artificial intelligence.

Polling shows a growing number of Americans are concerned about the energy-intensive facilities' environmental impact and the effect surging energy demand could have on utility rates paid by consumers. That trend has translated into legislative action across the country.

Lawmakers in at least 28 of the 38 states that previously adopted sales-tax incentives for data center companies took up legislation this year to roll those incentives back, according to an analysis by the National Conference of State Legislatures.

Overwhelming Public Sentiment and Unanswered Questions

Kipp pointed to public opinion data as evidence that the issue will not fade from the legislative agenda.

A recent poll conducted on behalf of the environmental group Conservation Colorado found that 91% of Coloradans support policies to protect ratepayers, communities, and natural resources such as air and water from what the poll described as unrestricted data center growth.

"The people who commissioned the poll thought that they got the wrong numbers when they heard about this poll, because they're like, 'Nothing gets 91%,'" Kipp said.

"That's an amazing number. And I don't think it's a stretch to say that 91% of Coloradans also don't want to write a blank check to some of the richest companies in the world, companies that have reported record profits in recent quarters."

Sen. Lisa Cutter, an Evergreen Democrat who chairs the Transportation and Energy Committee, praised Kipp's efforts to reach a compromise even as she acknowledged the troubling nature of the outcome.

Cutter said the volume of constituent correspondence on the issue had been extraordinary.

"I have received so many emails about this, it's bordering on the most emails of any issue I've ever received, and people are overwhelmingly against any kind of incentives," Cutter said.

She acknowledged credit was due to Kipp and others who had tried to construct an incentive structure despite that pressure.

Cutter was direct about what the session's failure to act means in practice. "So now no one gets incentives for data centers, but we also don't have any guardrails for data centers," she said.

"Which is really, really troubling," Kipp said she expects legislative efforts to better regulate the data center industry to return in the next session.