As Drought Deepens, Colorado Still Has No Rules For Data Center Water Use

By Shaina Cole | Contributing Writer, Rocky Mountain Voice

In Aurora, data center proposals run through a simple filter. City officials compare total water use against how much of that water won’t come back—lost to evaporation.

If either number gets too high, the project doesn’t move forward.

When a developer wants to build in Denver, there is no matrix.

That gap—two cities, two standards, nothing statewide connecting them—is the center of a question Colorado has avoided answering: who is responsible for knowing how much water AI data centers use, and when does that become too much?

The question got harder to ignore this spring. On March 16, Governor Jared Polis activated Phase 2 of the state’s Drought Response Plan—the first activation in nearly six years—after federal water managers ranked this year’s snowpack 45th out of 46 years on record.

Nine days later, Denver Water took its own step, declaring a Stage 1 drought and imposing mandatory watering restrictions on 1.5 million customers for the first time since 2013. Board President Tyrone Gant said, “We are dealing with conditions that we have never seen before.”

Two days before that vote, the only bill that would have required statewide water reporting from large data centers died in a Colorado Senate committee.

Two Cities, Two Approaches to Water Use

Shonnie Cline is the deputy director of Aurora Water. In a response to RMV, she described how Aurora handles data center water requests: the city built a tiered framework in 2023 and put it into city code in 2025. The framework measures both how much water a facility will use and how much of that water will be lost permanently to evaporation rather than returned to the system. Facilities that rely on evaporative cooling fall into the highest restriction categories. The answer for new ones is no.

“New facilities that would rely on evaporative cooling are not permitted in Aurora,” Cline wrote.

The QTS hyperscale campus now under construction east of Denver—set to become Colorado’s largest data center by a significant margin—qualified to build in Aurora because it uses non-evaporative cooling. Denver’s framework for the same question is one rule: cooling water must be recycled at least once before discharge. That’s it.

Todd Hartman, a spokesperson for Denver Water, confirmed the utility’s approach to RMV. No tiered matrix, no threshold based on evaporation, no prohibition on evaporative cooling. CoreSite’s DE3 campus, rising in Denver’s Elyria-Swansea neighborhood, met that single standard. Then, according to Hartman, it “elected not to cover the infrastructure costs necessary to extend recycled water delivery to the facility location.” That connection would have removed DE3’s draw on Denver’s drinking water supply entirely. CoreSite declined—the cost was too high.

Phase 1 of DE3 is estimated at approximately 235,000 gallons of water per day. For comparison, other data centers in Denver Water’s service area use roughly 10,000 gallons a day. Hartman flagged the difference himself, describing DE3’s water volume as “significantly higher than our estimated use of other data centers in our service area.”

Asked what percentage of those 235,000 gallons will evaporate—the portion that leaves the water cycle permanently—Hartman was candid: “We don’t know.”

Cline noted that outdoor irrigation accounts for roughly 40% of Aurora’s annual water demand—consistent with most Front Range cities—and that Aurora has addressed it directly through landscaping standards in city code that limit traditional turf in new development. The Large Water User Guide for data centers follows the same approach: if a facility’s water use can’t be returned to the system, Aurora requires that to be addressed before approval.

The Question of Scale

Right now, data centers are less than 1% of Denver Water’s daily use and about 0.25% of Aurora’s annual demand. No one is arguing that the industry is straining supplies today. The concern is where it’s headed.

At a March committee hearing for SB26-102, a Colorado Springs resident laid out what potential demand could look like. Her utility, she said, had already fielded ten data center inquiries—together seeking between 66,000 and 117,000 acre-feet of water each year.

That’s against a system with roughly 95,000 acre-feet of total water access. “If all of those data centers were to come to fruition,” Jane Ard Smith told the committee, “we would need to essentially double our water access.” None have been built.

Sen. Cathy Kipp, who sponsored the accountability bill, framed the growth trajectory at the same hearing: “The QTS plant is not the ceiling. It’s the floor of what’s coming.”

Nina Waters, a Summit County commissioner representing headwaters counties where most of Colorado’s water originates, testified to what that trajectory means upstream. 

“Data center development and operations, especially on the Front Range, will increase water demands from our Colorado headwaters communities,” she said, noting the Fraser River already has roughly 60% of its flows diverted. “Any additional water use in Colorado, especially on the eastern side of the divide, must be heavily scrutinized.”

The Bill That Stalled

Senate Bill 26-102 was straightforward: require large data centers to report their annual water use to state health officials by June 2028. Not a ban. Not a moratorium. A disclosure requirement.

After six hours of testimony, Sen. Kipp laid the bill over voluntarily on March 18—two days after the governor activated the drought response—citing an unresolved fiscal note and opposition from construction unions who argued the rules would push projects to Wyoming. “Our plan is to lay the bill over and return with amendments,” she said. The legislature’s session ends May 13.

“The bill could include measures to hold facilities accountable for reducing water usage, in addition to simply requiring reporting of water usage,” said Aaron Ray, Director of Policy for the Colorado Department of Natural Resources. The state’s own natural resources agency wanted more than disclosure, but the bill didn’t get that far. It was the second consecutive year a Colorado data center accountability measure collapsed. Colorado has no data center water reporting law.

What Denver Water Does and Doesn’t Regulate

Hartman’s follow-up email described one more mechanism: a system development charge. New large water users pay an upfront fee and receive a water budget. Exceed it, and a penalty kicks in—one that goes toward purchasing additional system capacity, not toward stopping the overuse. A data center that goes over its budget keeps drawing water. There is no hard limit, no efficiency requirement, and still no answer to what percentage of the water consumed evaporates.

Hartman noted that Denver Water and the City of Denver operate separately, even as the city moves toward a moratorium on new data center construction in certain neighborhoods. Denver Water, he said, would continue working with the city “while the moratorium is in place.”

What that means beyond city limits, and what standard applies statewide, remains unclear.

Looking Downstream at the Impact

Colorado draws roughly 40% of its water from the Colorado River Basin. Denver Water pulls about half its supply from there; Aurora Water draws about 25%. Both basins ranked worst on record this year. “We are 7 to 8 feet of snow short of where we need to be,” Nathan Elder, Denver Water’s manager of water supply, told the board, “It would take a tremendous amount of snow to recover at this point, so it’s time to turn our attention to preserving what we have.”

Denver Water is projecting $30 to $70 million in lost revenue from conservation this year. The board is set to vote on drought surcharge pricing April 8. If approved, all customers—including data centers—face higher rates for high-volume water use.

“We always thought that 2002 was the worst possible year, but we are expecting something worse this year,” Cline said.

The projects moving forward under today’s rules aren’t temporary—they’ll still be running well into the next decade.

What’s missing is a way to track their water use—and what happens to it once it’s used.

Sen. Dylan Roberts, whose district covers the Eagle, Garfield, Grand, Routt and Summit counties that feed the Colorado River, said earlier this year: “Any type of legislation, if it’s going to pass, needs to have very strict and clear protections for our water.”

So far, none have.