Denver is poised to halt the approval of novel data centers as city officials grapple with the escalating demands these facilities place on land, energy, and water resources. Mayor Mike Johnston announced plans for a temporary moratorium this week, pending City Council approval, to allow for the development of more stringent regulations. The move reflects a growing national debate over the sustainability and societal impact of the rapidly expanding data center industry, fueled by the boom in artificial intelligence.
The proposed moratorium, expected to last “several months,” won’t affect existing data centers or projects already permitted, but will pause new construction although the city reviews data center-specific rules. These regulations will focus on “responsible land, energy, and water use as well as zoning and affordability for ratepayers,” according to a city press release. Mayor Johnston stated that the pause is necessary to “put clear and consistent guardrails in place while protecting our most precious resources and preserving our quality of life.”
The decision comes as data centers face increasing scrutiny for their substantial energy consumption and potential environmental consequences. Residents near these facilities have voiced concerns about water shortages, rising electricity bills, and air pollution. The industry’s reliance on natural gas, a carbon-intensive energy source, is similarly drawing criticism. Beyond environmental concerns, the rapid growth of data centers is linked to broader anxieties surrounding the development of artificial intelligence and its potential societal disruptions.
Rising Concerns Over AI and Data Center Demand
The surge in data center construction is directly tied to the increasing computational power needed to train and operate large AI models. However, the long-term implications of this technology remain uncertain, prompting calls for greater oversight. Some economists are warning that the anticipated productivity gains from AI may not materialize as quickly as predicted, potentially leading to an economic bubble.
Activists have been advocating for a national moratorium on data center development for months. In December, over 250 environmental organizations urged Congress to halt approvals for new facilities, citing unsustainable resource consumption. While a federal moratorium appears unlikely under the current administration, which views AI as crucial for national security and economic competitiveness, local governments are taking action. The Trump administration has reportedly threatened states with lawsuits if they attempt to regulate AI in ways deemed anti-innovation, according to reporting from Gizmodo.
State-Level Action Gains Momentum
Denver isn’t alone in considering a pause on data center development. New York State senators have introduced a bill proposing a three-year moratorium, and legislatures in Maryland, Oklahoma, Vermont, Georgia, Maine, and Virginia are evaluating similar measures ranging from two to four years.
Federal-level support for a more cautious approach is also emerging. Senator Bernie Sanders, who first called for a moratorium in December, applauded Denver’s decision, stating, “A few months ago, when I proposed a moratorium on AI data centers, it was perceived as a radical, fringe, and Luddite idea. Well, not anymore.” He reiterated his call for a federal moratorium, emphasizing the need for public debate and democratic oversight over the technology’s development.
Data Transparency and Regulatory Gaps
A key issue highlighted by policymakers and experts is the lack of transparency surrounding data center operations. During a House Investigations and Oversight Subcommittee hearing on Tuesday, UC Santa Barbara professor Eric Masanet testified that the U.S. Lacks crucial data on data center energy and water usage. “In fact, no other major U.S. Sector…suffers from as many public data blind spots,” Masanet stated. He noted that much of the available data is outdated, and real-time infrastructure requirements are often concealed through non-disclosure agreements (NDAs).
California Representative Zoe Lofgren echoed these concerns, criticizing the administration’s focus on rapid data center expansion without adequate data collection, and analysis. “All we hear from the administration is that the best thing for America is more data centers built as quickly as possible…That strikes me as foolish and short-sighted,” she said.
The lack of comprehensive data hinders informed decision-making and effective regulation. Policymakers need reliable information to assess the true environmental and economic impacts of data centers and to develop policies that balance innovation with sustainability and community needs.
As Denver moves forward with its proposed moratorium, other cities and states are likely to follow suit, signaling a growing recognition of the need to carefully manage the expansion of this critical infrastructure. The coming months will be crucial in shaping the future of data center regulation and ensuring that the benefits of AI are realized responsibly.
What happens next will depend on the Denver City Council’s vote and the outcome of similar legislative efforts across the country. The debate over data center regulation is far from over, and the need for transparent data and thoughtful policymaking will only develop into more pressing as AI continues to evolve.
Share your thoughts on the Denver moratorium and the future of data center regulation in the comments below.
