In the San Luis Valley, agriculture remains a foundational employer and economic engine, yet producers face increasing water constraints, rising energy costs, and aging irrigation systems. Qualified modernization projects stall for lack of affordable financing and skilled local labor. Closing that gap does not require a new state grant program or a broad new appropriation, because Colorado already has the building blocks in place: San Luis Valley Rural Electric Cooperative, Tri-State, and the Collective Clean Energy Fund (formerly the Colorado Clean Energy Fund) launched the Electrify and Save On-Bill Repayment Program in 2024, and rebates already cover eligible measures. What is missing is state recognition, credit support, and trained local capacity to move qualified projects forward at scale. The Colorado State Legislature should advance enabling legislation for a focused three-year San Luis Valley pilot that builds on existing on-bill repayment and rebates with three additions: a state-qualified credit support program, a workforce pathway through Adams State University, and a regional performance dashboard. Done well, the pilot would help producers lower energy use, cut operating costs, and manage water better, while giving other rural agricultural regions a model they can adapt.

Challenge and Opportunity

The San Luis Valley illustrates a broader challenge confronting rural agricultural regions across Colorado: the systems that produce crops, move water, deliver electricity, and train the workforce needed to maintain those systems are tightly linked, but policy responses are often fragmented. 

This is not a new problem. Producers have long managed groundwater limits, high pumping demands, and large capital costs, but the urgency has grown as drought conditions, aquifer decline, equipment age, and farm operating margins have converged. Producers need irrigation reliability, efficient pumping systems, affordable capital, and a local workforce capable of installing and maintaining modern equipment at the same time. Cooperatives and local utilities need stable load, cost recovery, and healthier distribution systems. The state needs to sustain rural economies, protect Interstate Compact compliance, support water management goals, and ensure that rural communities outside the urban Front Range can participate in modernization efforts rather than fall behind them.

The Colorado Department of Agriculture emphasizes that the state is facing a significantly dry year in 2026, with the Governor activating Phase 2 of the Drought Response Plan in March 2026. The Upper Rio Grande is expected to see poor spring runoff (roughly 25% of average) alongside declining aquifers, adding continued stress on producers who already operate under strict groundwater management requirements. 

At the same time, San Luis Valley agriculture remains too important to ignore. Colorado’s potato economy is heavily concentrated in the Valley, and regional economic analysis has shown that agribusiness is a major share of local employment. The scale of irrigation infrastructure is substantial: the Valley operates up to 3,000 center pivots and more than 14,000 wells, and replacing or reconstructing a single center pivot can be costly. In 2019, estimates found that building a well-irrigated, single center pivot could cost approximately $170,000. Even incremental modernization represents a major capital demand for individual producers.  The workforce challenge is just as central as the financing challenge. Even when a project is technically sound and financially attractive, it can stall if the Valley lacks enough trained engineers who understand irrigation systems, pumps, controls, motors, rural electric infrastructure, and local water conditions. If producers cannot access both affordable modernization pathways and the local talent needed to deliver them, the likely results are a continued squeeze on farm margins, reduced competitiveness, delayed capital upgrades, and added pressure on the local electric system and workforce base.

Colorado Leadership Opportunities

This challenge also creates a concrete opportunity for state leadership. Colorado does not need to build a policy response from scratch or commit to a large new spending program. The Electrify and Save On-Bill Repayment Program and existing rebates already provide a practical deployment platform for rural consumers and small businesses, with repayment tied to the utility bill rather than conventional credit underwriting. The remaining barrier is that some qualified agricultural projects still need additional credit support, implementation capacity, or capital flexibility to pencil out. 

A targeted state-qualified credit support program would strengthen the existing system by backing the financing gap that remains above on-bill repayment. It would also enable qualified projects to secure additional capital at lower rates without replacing local program delivery. The more flexible financing options available will increase accessibility and help reduce barriers and motivate improvements. 

Meanwhile, the Adams State University and Colorado State University mechanical engineering partnership has now produced its first graduating class in Alamosa, proving that the Valley can grow technical talent locally rather than relying entirely on outside labor. The workforce component is not secondary; it is what makes the financing strategy deployable. Together, these developments create the foundation for a place-based initiative that links financing support, local technical talent, deployment, and measurement in one coordinated effort.

If Colorado acts now, it can accelerate qualified irrigation and farm energy projects that are already close to viable but remain constrained by financing gaps and limited implementation capacity. Benefits include lower energy use, lower water waste, stronger farm balance sheets, more resilient rural electric infrastructure, and a stronger local workforce trained to install, maintain, and improve these systems. The state would also gain a replicable framework for other agricultural basins by demonstrating how limited public credit support and existing programs can unlock more private and cooperative financing. If Colorado does not act, many producers will continue to navigate a fragmented capital stack in which even well-designed projects stall despite existing rebates and on-bill repayment options. That delay raises the odds of slower adoption, missed savings, and weaker long-term outcomes for both communities and the state.

Plan of Action

Here are the recommendations to construct a pilot program that will help producers lower energy use, reduce operating costs, and support better water management.

Recommendation 1. Create a state-qualified credit support program for agricultural water and energy projects. 

The Colorado State Legislature should direct the Colorado Energy Office, in partnership with the Colorado Clean Energy Fund and participating utilities, to establish a state-qualified credit support program for irrigation and farm energy projects in the San Luis Valley. This should be structured as an enabling credit support tool, not as a request for a new state grant program for individual projects. The state should reinforce the existing Electrify and Save On-Bill Repayment Program and available rebates by backing the financing gap that remains above on-bill repayment, so eligible projects can secure additional capital at lower rates to proceed. Eligible measures could include irrigation pump upgrades, variable frequency drives, control systems, motor replacements, and related efficiency investments. The purpose is to expand financing options for producers whose projects are operationally sound and policy-aligned but still need added assurance or structured capital support.

The Colorado Energy Office should serve as the lead state coordinating entity, with the Colorado Clean Energy Fund administering or supporting financing mechanics in partnership with San Luis Valley Rural Electric Cooperative, Tri-State Generation and Transmission Association, and other participating distribution cooperatives. Participating utilities would identify eligible customers, support on-bill repayment coordination, and help verify utility-related project performance. The Colorado Department of Agriculture and Colorado Water Conservation Board should advise on project qualification criteria so the program aligns with agricultural resilience, groundwater management, and state water goals. Local water entities, irrigation districts, and producer organizations should provide field-level input on whether proposed measures are practical under Valley conditions.

Because this request centers on agricultural water resilience, rural energy financing, and state credit support, it would likely be best supported through the Colorado General Assembly’s Agriculture, Water and Natural Resources committees. The  Energy and Environment and Appropriations committees could coordinate as needed. Framing the request as an agricultural water and energy resilience pilot gives it the strongest policy fit while recognizing that the financing structure and any reserve funding would also require energy and fiscal review.

The state could operationalize the program through a reserve, guarantee structure, or other credit support mechanism that is only available for projects meeting defined technical and repayment standards. Because credit support leverages private and cooperative capital rather than spending it, the program can be seeded with $25 million from the state’s Unclaimed Property Trust Fund rather than a new general-fund appropriation, with each dollar of reserve backing several dollars of producer and cooperative financing. The Colorado Unclaimed Property Trust Fund holds abandoned or forgotten property in trust until rightful owners make valid claims, and its funds do not revert to the state general fund at the end of the fiscal year. Because this proposal would use the fund as a credit support reserve rather than as direct grants, it fits the fund’s structure by preserving principal, supporting claims obligations, and recycling public backing to leverage private, cooperative, and producer investment.

To keep the program practical, participating entities should use simple application standards, approved equipment lists, and contractor or vendor pathways that reduce transaction costs for producers. The state should require annual reporting on supported project counts, financing leverage, repayment performance, estimated energy savings, and water-related operational benefits.

Recommendation 2. Build a workforce pathway focused on agricultural energy and water systems. 

Colorado should make workforce development a core feature of this policy by supporting Adams State University as the regional training hub for agricultural energy and water systems. Rather than creating an entirely new degree from scratch, the state can build on the existing mechanical engineering and water program partnerships in Alamosa. The university should  add coursework, internships, and applied projects focused on water resource, irrigation systems, pumps, controls, motors, rural electrification, and farm equipment optimization. Students who complete the pathway should receive an Adams State University Agricultural Water and Energy Engineering Certification that demonstrates applied engineering competency in agricultural energy and water systems. This approach would help retain local students, support employers in the Valley, and reduce the need to import specialized labor for every installation or retrofit. It also ensures that financing support leads to completed projects, not just approved applications. Because this pathway builds on an existing program rather than a new one, the most direct way for Colorado to support it is to prioritize existing state higher-education funding toward the Adams State University certification program, consistent with this proposal’s broader approach of using existing resources rather than new appropriations.

Adams State University should serve as the regional training hub, in coordination with support from the Colorado Commission on Higher Education and the Colorado Office of Economic Development and International Trade. Local cooperatives, irrigation districts, contractors, equipment vendors, and regional employers should help define applied skills; host paid internships, provide capstone project opportunities, and connect students with real infrastructure needs. The goal is to create a local pipeline of certified engineers who understand Valley conditions and can help farmers adopt modern irrigation and energy technologies more affordably.

Recommendation 3. Launch a regional performance dashboard to measure outcomes and support replication. 

The Colorado Energy Office should lead the regional performance dashboard and publish annual pilot updates. The dashboard would feature project and program data transmitted by participating utilities, the Colorado Clean Energy Fund, Adams State University, Colorado State University, contractors, and state agency partners. The dashboard should track projects completed, estimated energy savings, water-related operational improvements, repayment performance, financing leverage, workforce participation, internships, capstone projects, and local economic impacts where feasible. This does not need to be a burdensome reporting regime. The purpose is to give policymakers and implementing partners an evidence base that shows how well the model works, how well the local workforce pipeline is growing, and which elements should be expanded to other rural communities. California offers a useful precedent: the California State Treasurer’s Office publishes periodic public reports on its credit enhancement financing programs, covering participation, capital leveraged, and portfolio performance in a format Colorado could adapt for the Valley pilot. 

The pilot should run for three years, followed by a formal evaluation report prepared by the Colorado Energy Office in consultation with the Colorado Department of Agriculture, the Colorado Water Conservation Board, participating utilities, financing partners, and higher-education partners. That report should assess project performance, repayment results, producer participation, workforce outcomes, administrative burden, and regional benefits. Ultimately, these reports would reveal whether Colorado should expand the model, maintain it as a targeted Valley program, modify it, or sunset it based on performance.

The three recommendations should be implemented as one coordinated pilot rather than as separate programs. The Colorado Energy Office should convene the implementing partners, set reporting expectations, and coordinate annual updates. Senator Cleave Simpson and other rural legislators could play a pivotal role by advancing enabling legislation, securing any needed budget direction, and convening cross-agency alignment. A three-year pilot timeline would allow Colorado to move quickly, learn from implementation, and determine whether a broader statewide model is warranted.

The foundation for this effort is already in place. The Valley has producers who understand the challenges of managing water and operating costs, water leaders focused on long-term sustainability, colleges and universities training future engineers, and energy and financing partners with programs that are already delivering results. Rural economic development organizations and other local stakeholders bring additional experience and support. Rather than creating a new system from scratch, this proposal builds on existing relationships, programs, and local expertise. That makes it a practical candidate for state support and positions the Valley to move quickly from policy to implementation.

Conclusion

Colorado should act now to create a state-qualified credit support program for San Luis Valley agricultural water and energy projects while making workforce development a central part of implementation. 

This is not a request for a broad new state spending program. It is a practical pathway that uses existing programs, available rebates, targeted credit support, and regional higher-education capacity to help qualified projects move forward. Doing so would respond directly to drought pressure, rising operating costs, and the need to preserve the Valley’s agricultural base while modernizing critical infrastructure. If implemented well, the San Luis Valley can become a state-tested model for using limited public credit support and locally trained talent to unlock more rural investment, conserve resources, and build long-term community resilience.

Colorado faces a projected shortage of more than 2,400 physicians by 2030, alongside the growing shortage nationwide, particularly in rural and certain underserved urban communities. Meanwhile, as of 2017, there were an estimated 3,000 immigrants in Colorado with healthcare-related degrees in jobs that do not utilize their training, 2,000 of whom received their training outside the United States. Many immigrants, including physicians with extensive experience in their countries of origin, are unable to practice without policy changes and/or support in navigating licensing requirements. Colorado has already invested in solutions. HB22-1050, enacted in 2022, created two pathways for internationally trained physicians — a clinical readiness program (CRP) that prepares international medical graduates (IMGs) for U.S. residency and an expanded re-entry license for internationally trained physicians (ITPs) — individuals who have completed postgraduate training and hold a foreign medical license. The CRP has produced real results, including a 100% residency match rate, all in rural and underserved communities. But CRP grant funding is expiring, the re-entry pathway has not yet been utilized, and a critical third pathway — supervised provisional licensure — remains absent from Colorado statute despite having been enacted in 24 states and two territories.¹ This memo calls on the incoming Governor to complete the architecture that HB22-1050 began and strengthen implementation of all three pathways through data assessment, interagency coordination, private funding, and outreach to ITPs and employers. Together, these actions can help close documented gaps in health services for communities with the greatest need.  This is an opportunity for the Colorado government to deliver by maintaining rigorous physician standards while eliminating unnecessary barriers to practice.

Challenge and Opportunity

Colorado is entering a healthcare workforce crisis decades in the making, at a moment when the state’s capacity to respond through traditional pipelines is shrinking. Colorado faces an estimated shortfall of 2,400 physicians by 2030, consistent with national projections of a shortage of 86,000 physicians by 2036.² The needs align with the state’s most vulnerable communities: rural counties, primary care, mental health, and obstetrics face the deepest gaps, with some eastern regions reporting ratios as high as 5,600 residents per primary care provider; and the vast majority of Colorado’s 64 counties contain at least one federally designated health professional shortage area. Colorado’s residency pipeline is insufficient to meet statewide needs. 

Meanwhile, demand is accelerating, especially for older adults who require more care. For the first time, more Coloradans are over 60 than under 18, and by 2030, roughly 20 percent of the population will be 65 and over, with many living in the rural communities where physician access is most acute.

HB22-1050, enacted in 2022, established a framework for activating the state’s immigrant physician workforce by creating a program to help IMGs enter a U.S. residency and a pathway to gain licensure through a competency assessment. The bill envisioned that IMGs needing additional training and assistance, such as provided through a residency, could access the CRP program. Those that did not need additional training could access a streamlined path to full and unqualified licensure through the re-entry pathway. However, the bill did not provide a pathway for those who may benefit from additional supervision but who do not need a full residency. Since HB22-1050 became law, other states have enacted a provisional pathway for this purpose. This path does not lower standards — it creates a supervised, employment-linked route to demonstrate equivalency. It is the missing piece in Colorado’s framework to ensure pathways to licensure for all incoming international talent. It is also the piece with the most potential to scale, since it is employer-driven. (See Table 1.)

Navigation and Support — IMG Assistance Program. Threading across all three pathways listed above³ is the IMG Assistance Program, which connects individual IMGs to whichever pathway they are best positioned to enter through career coaching, credential evaluation, and USMLE preparation support. Without this connective tissue and support structure, even a broader set of pathways will be inaccessible to immigrants with underutilized healthcare credentials currently living in Colorado and even more in the region.

Research by More in Common found that healthcare workers are among the most broadly supported immigration categories among Americans across the political spectrum⁴. This proposal is a workforce competitiveness initiative: it addresses a documented shortage with a tested, supervised pathway. New policy that translates into lifesaving services for Colorado communities would be a clear win for the new governor.

Plan of Action

Recommendation 1. Commission an assessment of physician and policy gaps and crosswalk with information on international medical graduates in Colorado.

Colorado’s physician shortage data exists, but is incomplete for policymaking. Aggregate shortage statistics — doctor-to-patient ratios, HRSA Health Professional Shortage Area designations — tell us where gaps exist in general terms, but do not tell the incoming administration which specific locations and specialties face the most acute near-term hiring needs, or which segments of the IMG population in Colorado are closest to practice-readiness. Without this crosswalk, it is difficult to effectively target efforts to fill physician workforce gaps.

The incoming Governor should direct Colorado’s Department of Public Health & Environment (CDPHE) and Department of Labor & Employment (CDLE), in coordination with the Office of New Americans (ONA), the Colorado Rural Health Center, the Department of Health Care Policy and Financing (HCPF), and the Department of Regulatory Agencies (DORA) to publish a physician workforce gap assessment within 90 days. Building on existing data, the assessment should map shortage areas by county, specialty, and care setting; document unfilled physician positions by metrics such as time-to-fill and applicants-per-posting; and identify and prioritize rural and frontier counties with the most acute needs. Simultaneously, CDLE’s Global Talent Survey and other data sources should be used to produce an updated estimate of the IMG and ITP populations in Colorado, their degree of practice-readiness, and which licensing pathway — CRP, re-entry, or provisional — each segment is best positioned to enter. 

The assessment should also analyze the ITP evaluation criteria for the provisional pathway, including by reviewing and building upon the existing evaluation criteria used in the re-entry pathway. Prior outreach generated interest in assisting Colorado to build out this specific pathway for ITPs (rather than having the same criteria used for evaluations of U.S.-trained doctors seeking re-entry), but the assessment plan should ground-truth the viability, costs, and potential scale.  

This assessment will serve as the evidentiary backbone for the action plan and will allow the administration to set measurable targets and create a monitoring and evaluation framework: how many IMGs and ITPs to activate, in which specialties, and in which communities, over a defined timeline. The assessment should be conducted with input from health systems, rural hospital associations, the Colorado Medical Society, and others, and should be completed in time to inform the 2027 legislative session.

Recommendation 2. Build on HB22-1050 by amending Article 87 of the CO Revised Statutes to authorize the Colorado Medical Board to grant provisional licenses to qualified international medical graduates.

Colorado is one of fewer than half the states in the country that do not yet authorize a supervised provisional licensure pathway for ITPs. 24 states and two territories — including Arkansas, Illinois, Florida, Louisiana, Massachusetts, Washington, and Wisconsin — have enacted versions of this pathway, and the list is growing. Colorado’s current framework requires both IMGs and ITPs to either complete a U.S. residency program (highly competitive, with very few slots successfully allocated to them) or navigate the re-entry license, which has not yet been underutilized in part due to the high cost in time and dollars. The result is that many qualified physicians already living in Colorado cannot practice.⁵

The incoming Governor should work with legislative champions to amend HB22-1050 in the 2027 session to authorize the Colorado Medical Board to issue provisional licenses to qualified ITPs. To be eligible, an applicant would need to: hold a current or recently active foreign medical license in good standing; demonstrate substantially equivalent postgraduate training; hold ECFMG certification; have passed USMLE Steps 1 and 2; demonstrate English proficiency; and secure a full-time offer of employment from a sponsoring healthcare entity — including hospitals, Federally Qualified Health Centers (FQHCs), rural health clinics, or medical practices — that agrees to provide supervision and periodic competency evaluation. The provisional license would be valid for two to four years. Upon passing USMLE Step 3, receiving a positive evaluation from the supervising physician or medical director, and maintaining good standing, the license would convert to a full, unrestricted license.

A new provisional pathway would maintain current standards by ensuring strict eligibility criteria followed by an extended evaluation period — it creates supervised, assessment-based routes to demonstrate equivalency. The provisional license increases the pool of potential applicants because it allows physicians to earn income while practicing under supervision, while they work toward a full license. The bill should explicitly prioritize placement and retention in rural counties, primary care shortage areas, and/or facilities serving Medicaid populations, and also include guidance on supervision, employer eligibility, malpractice coverage, reporting, discipline, patient safety, and conversion to the full license. Placement in rural and underserved areas could be incentivized by prioritizing the assessment of provisional license applications for those with job offers in rural and underserved areas, among other measures. 

Recommendation 3. Collaborate with healthcare employers, philanthropies, and impact investors to create revolving fund, loan, and scholarship programs that sustain alternative licensure pathways for physicians across all three pathways, with incentives for doctors to work in rural and underserved areas.

Given Colorado’s budget challenges and competing funding priorities, support for alternative pathways must be sustainable with philanthropic and private support, rather than relying on ongoing state appropriations. The CRP and IMG Assistance Program created by HB22-1050 were funded through state appropriations that are now expiring. Without a durable, privately capitalized financing mechanism, programs that have produced strong results will fail. The costs IMGs face on the path to licensure are substantial and prohibitive for many candidates: ECFMG certification, USMLE preparation and testing fees, credential evaluation, and living costs during non- or low-income training periods.

The Governor should direct a senior advisor (see Recommendation 5) to convene a working group in the first 90 days of the initiative, including health systems, rural hospitals, philanthropic funders, assessment providers, and impact investors, to design a revolving and loan fund structure. The blended-capital revolving fund — seeded with public and philanthropic dollars and replenished by loan repayments and employer contributions so it needs no recurring appropriations — should build on past lessons from successful models of State Revolving Funds and CDFIs, including the in-state precedent of the Denver Regional TOD Fund, and Minnesota’s grants for IMG residencies, which apply the concept directly to internationally trained physicians. The fund could include an allocation for grants and incentives for ITPs to serve in rural and underserved areas; where there are persistent physician gaps, incentives could also be offered to ITPs from other states who commit to working in an underserved area in Colorado for a specific term. The fund should draw on three primary sources of private and non-state capital.

Healthcare employer co-investment. Hospitals, health systems, rural health clinics, and FQHCs that hire ITPs through the provisional licensure pathway — and that currently spend significantly on temporary (locum tenens) coverage — are the natural anchor funders. The per-year cost of a locum tenens physician routinely exceeds $150,000; co-investment in the talent pipeline is substantially cheaper and produces a permanent hire rather than a temporary fill. Employers who place ITPs through the provisional licensure pathway should contribute a defined amount per placement back into the fund, creating a self-reinforcing cycle as the pipeline scales.

Philanthropic capital. Colorado philanthropies with missions aligned to health equity, workforce development, and immigrant integration are natural partners: the Colorado Health Foundation, the Denver Foundation, the Denver Health Foundation, the Rose Community Foundation, and national health funders such as the Milbank Memorial Fund and the Commonwealth Fund.

Impact investment and loan programs. Loan programs that allow individuals to finance their own path to licensure — with repayment structured around physician income once practicing — can support candidates who have the credential profile but lack upfront capital. Loan repayment and/or other financial incentives tied to rural or shortage-area service commitments can further align individual financial incentives with community needs.

A note on the Rural Health Transformation Program (RHTP). Colorado has secured up to $1 billion in federal RHTP funding over five years to strengthen health systems across the state’s 52 rural and frontier counties. While this initiative does not require RHTP funds, it can help Colorado meet the workforce goals RHTP is designed to achieve. The administration should engage the CO Department of Public Health and Environment to explore whether rural placement of ITPs can be recognized within Colorado’s RHTP implementation plan as a workforce strategy. This is not simply a funding ask: it is an opportunity to demonstrate to the Centers for Medicare and Medicaid Services that Colorado has an implementation-ready plan for activating the physician workforce in rural communities.

Recommendation 4. Launch employer outreach to build a pipeline of sponsoring institutions and connect IMGs and ITPs to available pathways.

A provisional licensure pathway is only as effective as the employer network ready to use it. The incoming administration should start building that network as soon as possible, so that willing sponsors are identified and the business case is established to support the bill and its implementation.

The Governor should direct a senior advisor (see Recommendation 5) to launch a targeted employer engagement campaign, working through the Colorado Hospital Association and the Colorado Rural Health Center as primary conveners. The campaign should identify health systems, rural hospitals, rural health clinics, and FQHCs willing to serve as sponsoring employers and make the business case directly; someone who becomes a permanent hire is substantially cheaper than a temporary physician and produces durable workforce gains. The shortage assessment commissioned under Recommendation 1 should drive targeting, concentrating outreach in the specialties and geographies where employer gaps are most acute.

In parallel, Colorado’s Office of New Americans, in partnership with stakeholders, should reach IMGs and ITPs through trusted community channels — immigrant-serving organizations, refugee resettlement networks, and professional associations — to map the eligible population and connect candidates to whichever pathway they are best positioned to enter.⁶ A single state-maintained landing page consolidating all pathway options, eligibility criteria, and contact points should be established to simplify navigation for both applicants and employers. Progress should be reported annually on the number of employer sponsors identified, individuals contacted, and candidates who entered each pathway.

Recommendation 5. Direct a senior advisor in the Governor’s office to sustain momentum through the 2027 legislative session and work with the legislature to create a statutory position in CDLE to coordinate longer-term implementation across agencies.

The four recommendations above require sustained coordination across at least five state agencies — CDPHE, CDLE, ONA, HCPF, and DORA/the Medical Board — as well as ongoing engagement with the legislature, health systems, immigrant-serving organizations, and philanthropic funders. Colorado’s current institutional arrangement has no single point of accountability for this work. Without a named senior official in the incoming Governor’s office with explicit responsibility for the health workforce (whose larger portfolio could be broader health or workforce issues), implementation could fragment across agencies and lose momentum.

The senior advisor should have explicit authority to coordinate across CDPHE, CDLE, ONA, HCPF, and DORA;⁷ convene the medical workforce coalition described above; and serve as the administration’s lead point of contact for legislative champions on the provisional licensure bill. The Governor and legislature should evaluate whether a more durable governance structure — a statutory position in CDLE that liaises with the Governor’s office, a permanent medical workforce function within CDPHE,⁸ and/or a statutory health workforce commission — is warranted to carry the initiative beyond a single administration.⁹

Conclusion

Colorado does not need to wait for the next generation of medical school graduates to begin closing its physician shortage. The workforce is already here — trained, experienced, and ready to serve the communities that need them most. The five recommendations in this memo build on the foundation Colorado established with HB22-1050, completing the architecture the legislature began with a provisional licensure pathway, a durable financing model, and the institutional leadership to drive it across the finish line.

The 2027 legislative session opens January 11. The incoming Governor has a narrow and favorable window to act — with cross-partisan support, a ready coalition, and peer states that have already proven the model works. A successful physician pathway also lays the groundwork for extending provisional licensure to nurses, behavioral health professionals, and others facing similar barriers. The race for talent is here and this initiative is a win that can jumpstart the Governor’s workforce leadership.

By 2031, 73% of Colorado jobs will require postsecondary training, yet fewer than 30% of Colorado graduates go on to earn any postsecondary credential. The state’s high educational attainment is a result of credentialed adults moving in, rather than the development of homegrown talent. Colorado is already investing in multiple pathways to improve workforce readiness, but Colorado is spending public money on credentials, course credits, work-based learning, and a data system without a common way to determine whether those investments develop skills that secure jobs. Colorado’s investments demand urgent and meaningful coordination to function as a coherent system.

To address this, the state should establish a Colorado Skills Map developed and validated by a cross-agency and stakeholder working group. The Colorado Skills Map would define the technical and durable skills employers expect by sector and occupation, then attach a common skill identifier to ensure that credentials, courses, and work-based learning experiences are recognized as equivalent and portable across the state. 

The timing is urgent, as the Statewide Longitudinal Data System (SLDS) is actively being developed and postsecondary and workforce programs are being consolidated under the recently passed Unified Postsecondary Talent Development System Act (HB26-1317). The Colorado Skills Map will build the interconnection needed across the education and workforce systems. As a result students can see clear pathways to a career, employers can trust credentials, and the state can make data-informed decisions and investments for a stronger talent pipeline.

Challenge and Opportunity

Colorado’s college-going rate trails the national average of 61% at just under 50%. While Colorado ranks among the most educated states on paper, that attainment comes from adults moving to the state already credentialed, not from Colorado’s own graduates finishing a pathway. This is known as the “Colorado Paradox.” Colorado needs to equip a homegrown workforce to meet the demands of a shifting and growing economy, especially if the state wants to remain competitive, continue attracting business, and provide Coloradans with pathways for economic mobility.

In 2023, the Colorado Workforce Development Council (CWDC) in partnership with the Colorado Department of Higher Education (CDHE), Colorado Community College System (CCCS), Colorado Department of Education (CDE), and Colorado Succeeds released a framework for quality non-degree pathways into the workforce. In 2025, SB25-315 established “The Big Three,” creating a postsecondary and workforce readiness funding model and setting a goal for every student to achieve one of three milestones: earn 12 college credits, earn an industry-recognized credential, or complete a work-based learning experience upon high school graduation. Today Colorado is actively consolidating and expanding its Postsecondary and Workforce Readiness programs, implementing quality standards for nondegree credentials, developing stackable credential pathways, and building the aforementioned Statewide Longitudinal Data System (SLDS) to connect K-12, postsecondary, and workforce data to inform decisions and investments.

Yet, there remains a number of challenges that need to be addressed.

• Credentials Not Leading to Employment: In 2025, Colorado’s Workforce Development Council reduced the List of Qualified Credentials by nearly a third because previously approved credentials did not offer a clear pathway to employment and economic mobility.
  
• Lack of Portability: Colorado’s 1215 Task Force, established to fix fragmentations between K-12, postsecondary, and workforce readiness programs, found in its 2023 report that students often lose their credit and work-based learning experience records when they change high schools, or move to between the K-12 and Postsecondary systems.
  
• Outcomes Not Reproducible: Most notably, there is not a common framework to connect these programs (i.e., The Big Three and non-degree pathways) and measure outcomes for the state in context of the new SLDS. Without a common basis for assessing portability and comparability, Colorado may know which program worked but lack the understanding of why it worked and therefore how to reproduce it.

The definition and tracking of skills across these programs is a critical gap. The Big Three tracks credits, credentials, and work-based learning, but does not include the skills earned through these experiences. The non-degree pathways framework identifies evidence of skills and competencies learned as a requirement, but does not define what skills matter for particular occupation. Without a standard attaching validated skills to programs or courses, the state cannot determine how experiences transfer across programs, how K-12 connects to the workforce, or what skills lead to employment. No individual school district, college, workforce board, or employer can create statewide interoperability on its own. Only the state can establish a common framework across K–12, postsecondary education, workforce programs, public funding, and statewide data infrastructure. 

A Colorado Skills Map, or a shared set of skills validated by employers, educators, workforce boards, and workers, tied to specific occupations and sectors, could close this gap. Each skill would carry a common identifier (i.e., similar to a standardized course number) that courses, credentials, and work-based learning experiences would use, creating a recognizable standard of equivalency across the system. This would allow the state to validate credentials before they’re funded, enable a “validated skill” to travel with a student across schools and institutions, and provide a common language to connect existing programs across the state for measurement in the SLDS. If successful, the Colorado Skills Map would allow students to make informed decisions about their career by showing the different pathways to an occupation, prevent employers from having to vet every program individually, and empower the state to make data informed decisions and investments for a stronger talent pipeline.  

The Colorado legislature passed HB26-1317 in 2026 to support the creation of a unified system of postsecondary talent development and Executive Order 2025-006 calls for an audit of Colorado’s postsecondary talent development system to reimagine a future unified system that meets the needs of learners, job seekers, and employers. Yet, this consolidation does not extend to the K-12 and PWR system, meaning the state is on track to create two individually, well-organized systems that lack a shared language. Building the Colorado Skills Map bridges this gap and integrates the system from kindergarten through employment.

Plan of Action

Recommendation 1. A Cross-agency Working Group to Define the Colorado Skills Map

Building on Executive order 2025-006’s direction to unify Colorado’s postsecondary and talent system, the governor’s office should issue an executive directive creating a cross-agency working group to define and build the first Colorado Skills Map. The working group should be led by CDE’s office of Postsecondary and Workforce Readiness (PWR), with CDHE, CCCS, CWDC, the Office of Information and Technology (OIT) and other relevant agencies and entities as participants. It should establish an advisory committee composed of small- and medium-sized businesses (including rural employers), education institutions, labor organizations, parent-student advocacy organizations, regional workforce development councils, and other relevant stakeholders. The advisory committee should be meaningfully consulted to inform how the working group develops and tests the skills maps for their respective sectors. Within 180 days, this group should define a skills map that provides a common framework linking education programs, workforce expectations, and outcomes data. 

The working group should determine three priority sectors for the initial Colorado Skills Map. Examples could include healthcare certification, a skilled trade, and an emerging tech credential. . The Colorado Skills Map should define the entry-level and mid-level occupations in that sector, the technical and durable skills required at each level, and a skill identifier for each to link them back to the education or training required to attain them.The working group should consider how skills stack (i.e., build on each other in a sequence) and design the map to illustrate how skills earned today for entry level occupations can lead to potential mid-level and advanced positions.

CDE’s office of PWR should be responsible for maintaining and updating the developed skills map. Using SLDS data, CDE’s office of PWR should evaluate the Colorado Skills Map against wages and outcomes every three years and report to the State Board of Education (SBE). The CDE should update the Skills Map every three years.

Recommendation 2. Feasibility and Readiness Assessment for Colorado Skills Map Application 

Before asking schools, workforce programs, and employers to adopt the Colorado Skills Map, PWR and CCCS should conduct a feasibility and readiness assessment within 180 days of defining the priority sectors. This assessment should determine whether the Colorado Skills Map can be reliably applied to existing education and workforce programs, what resources implementation would require, and whether there are regions with the institutional capacity and willing partners necessary to conduct a meaningful real-world pilot. 

The feasibility assessment should:

1. Select and catalog sample regions for all their existing courses, credentials, and work-based learning experiences to map them against the skills and identifiers; 

2. Estimate the resources and system changes required for implementation such as changes to curriculum design or capacity for data collection, and
   
3. Identify regions with sufficient readiness to participate in a limited pilot. 

Particular attention should be paid to differences in implementation capacity between large and small districts, urban and rural communities, workforce providers, and work-based learning partners. The assessment should determine whether implementation requirements would create barriers that could unintentionally exclude lower-capacity institutions or regions from participating.

After the feasibility assessment, the working group should conduct a readiness assessment to identify regions that meet a defined set of minimum requirements necessary for a meaningful pilot of the Colorado Skills Map across the education-to-workforce continuum. 

The readiness assessment should produce a short implementation plan for each prospective region identifying participating organizations, the occupations and programs to be tested, anticipated costs, technical-assistance needs, data requirements, and any remaining barriers to implementation. The implementation plan should be presented to solicit interest from those regions willing to participate in an implementation pilot.

Recommendation 3. Pilot the Colorado Skills Map

If there is agreement between the working group and the region on the implementation plan, they should proceed with up to three regions for an implementation pilot within 270 days. The pilot should measure whether:

1. Institutions can reliably document learner attainment;
    
2. Validated skills are portable, i.e., can be recognized across participating programs and institutions;
   
3. The Colorado Skills Map can effectively be incorporated into existing CDE and CCCS reporting, enrollment, and labor data;
   
4. Employers find the information useful and trustworthy, and
   
5. Implementation costs and administrative burdens remain manageable in real-world conditions.

CDE’s office of PWR and CCCS should report findings and make recommendations for either scaling or sunsetting this effort to the working group, the Governor’s Office, the General Assembly’s committees on education, and the State Board of Education.

Should the pilot’s findings support an expansion of moving forward with the Colorado Skills Map implementation, the Governor should reconvene the working group within 90 days to expand the map for major Colorado sectors, beyond the first three following the same sector-partnership validation process.

Recommendation 4. Publish a Public Registry for the Colorado Skills Map 

Within 12 months of pilot completion, CDE and CCCS should publish the validated Colorado Skills Map in a public registry for both learners and educators. This should be modeled after CDE’s Colorado Academic Standard Online, which allows users to create customized views of state academic standards by subject and grade level, showing grade level expectations, evidence outcomes, and academic context for each. Similarly, a Colorado Skills Map public registry should allow users to navigate by sector and occupation level, viewing each sector’s entry, mid and advanced career levels along with the technical and durable skills expected at each.

The public registry should also include resources with an implementation checklist inspired by the learnings from the pilot and guidance on tagging existing courses and credentials with skills identifiers for reporting. This will provide a comprehensible and evidence-based playbook for adoption for both learners and educators.

Recommendation 5. Incentivize Adoption of the Colorado Skills Map

The State Board of Education should use its existing authority to align PWR Sustain Funding to the Colorado Skills Map. SB25-315 created the PWR Sustain funding, which is outcomes-based funding designed to incentivize schools and districts to offer postsecondary credits, credentials from the list of qualified credentials, and work-based learning experiences. PWR Sustain Funding is Colorado’s recurring financial incentive that provides reimbursements for student outcomes, which is essential in a local-control state, where districts cannot be mandated to adopt new programs. SB25-315 directs the State Board of Education to adopt rules and establish the “criteria that constitutes successful satisfaction” of the postsecondary, workforce, and work-based learning requirements.  As such, the SBE should use their existing authority to revise the funding criteria to include alignment with the Colorado Skills Map after the public registry has been published for one year. With this revision, PWR funding would incentivize schools and districts to offer postsecondary credits, credentials from the list of qualified credentials, and work-based learning experiences that build the skills outlined in the Colorado Skills Map.

This will not increase costs to the state, or reinvent the program; it simply adapts it to better serve students by ensuring offerings are aligned to skills employers demand.

Recommendation 6. Build Skills Map identifiers into the Statewide Longitudinal Data System

The Governor’s Office of Information and Technology, in partnership with CDE, CDHE, and CDLE is currently building Colorado’s SLDS under HB24-1364, a cross-agency data infrastructure to connect student information to their workforce experience. If Colorado’s SLDS is to be useful to stakeholders, it needs to meaningfully compare programs. The Colorado Skills Map gives the SLDS a common comparable unit of analysis, allowing it to produce insights the state can act on. As such, the standard skill identifiers should be integrated into the SLDS. Given that the SLDS’s governing structure already includes OIT, CDE, CDHE, and CDLE, the board is positioned to decide how and when identifiers should be incorporated.  

With the integration of the identifiers, the state would be able to track student and employment outcomes at the skill level, across programs. This allows the state to answer: (1) what wages are associated with a specific skill, (2) how quickly does a skill lead to employment, and (3) how often does earning a skill lead to further education, higher credentials, or higher pay. 

Conclusion

Colorado has already made significant investments to build a skilled, homegrown workforce through funding models, data infrastructure, and frameworks. A Colorado Skills Map is a comprehensive solution that enables multiple  investments to work together. Without  shared data and language, Colorado’s consolidation efforts will result in disconnected systems unable to drive at ambitious workforce goals. The Colorado Skills Map helps  Colorado close its talent gap by translating its rising credentials numbers into skills that employers trust, leading to careers and economic mobility for Coloradans. Ultimately, building a pipeline of homegrown talent to drive the future of Colorado.

A lack of monitoring, reporting, and transparency of data centers’ impacts have led to a near-complete loss in public support and trust in the development of data centers in Colorado and across the U.S.

And no wonder: Data centers require irrevocable amounts of electricity and water, can increase air and noise pollution, and become permanent heat islands for surrounding communities. 

In this memo we recommend steps Colorado should take now to build an essential foundation for responsible data center development. We believe most Coloradans want data center development to be stewards of natural resources and deliver public benefits. To this end, we recommend the reporting of electricity usage and water usage, as well as fenceline monitoring of air quality and temperature. We also advocate for an independent investigation into infrasound noise pollution for data centers near residences and schools. To start, we must improve our fundamental understanding of data centers’ impacts on Colorado communities so that we can enable more evidence-informed decisionmaking for policymakers, utility companies, and people living near existing or proposed data centers. This is an important time for action.

Challenge and Opportunity

Recent advancements in artificial intelligence (AI) have catalyzed the fastest and broadest U.S. infrastructure buildout since World War II. AI advancement is only accelerating, with companies expected to invest up to $7 trillion by 2030 in the development of data centers, the physical infrastructure of AI. As of June 2026, Colorado has 68 operating data centers, with an additional 17 proposed or under development. Table 1 below shows the eight largest proposed, under construction, and operating data centers in the state. 

Data centers vary in size, with AI advancement requiring large hyperscale data centers, which consume 100 megawatts (MW) or more. For reference, 100 MW could power over 105,000 Colorado households. Colorado currently has no operational hyperscale data centers, but there are five proposed or under construction. These five hyperscale data centers could consume approximately as much electricity as 84% of all households in Colorado and as much water as all households in Fort Collins and Grand Junction combined, as shown in Table 1.

This growth is outpacing the state’s ability to assess and manage the environmental and health impacts that data centers could have on local Colorado communities, raising concerns among local residents as development expands. Evidence suggests that data centers have the following environmental impacts.

Yet, there is a lack of transparency and public input on data center development and the potential impacts to diminishing water resources, aging electricity infrastructure, and surrounding communities. This has resulted in broad public opposition. Recent polling shows that 7 in 10 Americans oppose data center construction, with opposition spanning across political parties. In Colorado, 9 in 10 residents support commonsense rules to protect ratepayers, communities, and natural resources from unrestricted data center growth. A poll in Larimer County found that 94% of respondents opposed construction of new data centers. Despite strong public support for data center legislation, both Colorado bills on data centers failed in the previous legislative session: SB26-102 proposed investigating the technical and economic feasibility of large data centers and requiring use of renewable energy, and HB26-1030 proposed tax exemptions to data center development that fulfill specific requirements. One explanation for why these bills failed is because of a lack of understanding on environmental and community impacts of data centers. As a result, local opposition across the U.S. has blocked or delayed at least $64 billion worth of data center projects, including projects in the nearby states of Arizona and Texas. In response, governors in Texas and New York have signed executive orders halting data center development throughout their states to audit data centers’ impacts on electricity and water infrastructure, rate payers, and local communities. In Colorado, half of the 12 most populated counties have imposed moratoriums on data center development (Denver, Jefferson, Larimer, Weld, Boulder, Broomfield), impacting the largest proposed data center in the state and two other proposed data centers (see Map  1 for more information on local data center policies in Colorado). These moratoriums reflect an urgency and need to address gaps in our understanding of data centers’ impacts which have eroded public trust and stymied legislation on future data center development.

To rebuild public trust, promote public health, and improve data center development outcomes for the state’s economy, there needs to be more transparency with the public through clear, accessible data on data centers. Bills and legislation in other states (e.g., Nebraska LB1111, New York Senate Bill S9144A, Florida House Bill 1007, Oklahoma SB1488, Vermont S.205, Wisconsin LRB-6377/LRB-6391 as described in Appendix 1) offer models for Colorado. These examples highlight the need to monitor, report, and investigate key environmental and public health factors: electricity usage, electricity generation, water usage, fenceline temperature, air pollution, and noise pollution. This memo focuses in particular on data centers that consume an average of 10 MW or more to avoid undue burden on smaller enterprise data centers which are not used for AI purposes. This threshold is consistent with those used by the city of Broomfield and the state of South Dakota. The Colorado Department of Public Health & Environment (CDPHE) is well-positioned to facilitate these efforts given their existing work and expertise in industrial and environmental monitoring, reporting, and investigations. Ultimately, this solution can support Colorado in meeting the growing demand for data infrastructure, while still promoting responsible land stewardship and public health. 

Plan of Action

Recommendation 1. Existing and new data centers must regularly report electricity usage, electricity generation, and water usage.

To inform government agencies, utilities, and the public, we recommend having all operating, under construction, planned, and future data center sites consuming 10 MW or more to report: (1) monthly electricity usage (average and peak), (2) amount of on-site electricity generation and from what sources, and (3) the amount of water used and discharged. Such reporting requirements are included in Nebraska LB1010, which was unanimously passed in the legislature and signed into law in April 2026. This usage data should be reported to the Colorado Department of Public Health and the Environment (CDPHE). The CDPHE should share relevant information with the Public Utilities Commission (PUC), Xcel Energy, Blackhills Energy, and investor-owned utilities, as well as the Colorado Energy Office (CEO) which develops programs and promotes energy policies to address climate change. The CDPHE should also conduct annual evaluations of reported metrics and revise their reporting requirements as needed to improve their assessment of data centers’ environmental impacts.

Penalties for non-compliance should be a fine of up to $10,000 per violation (consistent with Illinois SB2181), with collected fees going towards CDPHE activities to monitor and investigate data centers. Failure to report across three consecutive months, or four or more months a year, will lead to a notification from CDPHE and the PUC, and developers who fail to respond to these inquiries within 90 days are ineligible for future connection requests from the electric grid as determined by the CDPHE and PUC. This penalty is intended to deter data center operators from choosing not to disclose data during demanding seasons or weather events (e.g. during the summer, drought, or wildfires) when this information is most important. Funding for this monitoring and reporting should come from a fee associated with proposals for future data center development. For example, Nebraska LB1010 has a study fee of $50,000 or $1,000 per megawatt, whichever amount is greater, for data center developers.

Monitoring and reporting of electricity use, water use, and on-site electricity generation will enable PUC and utilities to understand demands on infrastructure and better prepare for future improvements and environmental risks, such as drought preparations. Furthermore, local and state governments can use these data to understand potential community health impacts and inform proposed development of future data centers.

Recommendation 2. Existing and new data centers within three miles of residential, educational, or agricultural areas must have continuous monitoring of air quality and temperature.

Data centers are often placed near residential areas, resulting in potential harm to nearby residents. For example, the under construction CoreSite DE3 Data Center is in the disproportionately impacted community of Elyria-Swansea and across the street from an elder care facility, affordable housing complex, park, and community health center. The CDPHE should conduct additional fenceline monitoring of any existing and future data center sites that meet two criteria: (1) provide a capacity of 10+ MW and (2) are located within three miles of residential, educational, or agricultural areas, which is the regulatory boundary set by Oklahoma SB1488. 

Data centers’ operations, specifically the regular testing and/or usage of their on-site generators produce exhaust emissions, which will worsen nearby air quality. The CDPHE is required to conduct fenceline monitoring to control airborne emissions from oil and gas operations. Given this, the CDPHE should establish at least one reference or near-reference air quality monitor and maintain this  fenceline monitoring consistent with existing CDPHE regulations and policies on fenceline monitoring (e.g. Regulation 7).

Data centers also generate exhaust heat, becoming a permanent heat island that heats up the surrounding area day and night. The CDPHE should monitor temperature with at least two reference or near-reference thermometers recording fenceline temperature upwind and downwind of the data center site and/or between the site and any concentration of people. 

To fund fenceline monitoring, the CDPHE should establish a schedule of fees payable by the owners or operators of data centers (as consistent with Virginia SB 1448). This fee should scale according to the size of the data center sites (as measured by MW).

Recommendation 3. Investigate the impacts of data centers’ noise on people and agriculture.

Existing Colorado laws do not effectively regulate data center noise because of their low frequencies. Colorado’s maximum permissible noise levels (§ 25-12-103) are measured according to db(A). This measure biases towards audible, higher frequencies, as shown by the curved red line in the figure below. This method of measurement under-reports lower frequency noises associated with data centers by over 10 db. Therefore, existing laws do not effectively regulate low hums which come from data centers. In response to this, Weld County added a db(C) noise limit of 65 dB(C) at the property line, although it is unclear if this threshold is appropriate.

When compared to db(Z) and db(C) weightings, db(A) underreports low frequency hums which data centers emit (INVC)

To better understand how data center noise may impact local residences, schools, and livestock, the CDPHE should conduct an investigation of select data centers of varying sizes which are within three miles of any residential, school, or agricultural zones. This investigation may include use of infrasound microphones which meet industry standards (e.g. IEC) and include narrow band frequency analysis and target area analysis, as well as surveys and interviews with local residents and domain experts.

We expect this study to require one full time employee across two years. In the first year, this can be funded through a new one-time fee for all data centers owners and operators of a site of at least 10 MW of capacity. In the second year, this can be funded through fees associated with permits for generators, which CDPHE already requires, and for fines from non-compliance from data centers and industrial sites (as consistent with New York A09086). This application of fines is similar to Colorado’s Impact Cash Fund (§ 25-7-129). Future funding can also come from CDPHE annual emission fees.

Recommendation 4. Disclose data reporting and monitoring findings publicly

Rebuilding public trust requires transparent and independent disclosure. Therefore, we recommend the CDPHE collaborate with the Colorado Energy Office (CEO) to disseminate energy and water reports (Recommendation 1) and the CDPHE integrate fenceline monitoring data into existing platforms (Recommendation 2). 

For monthly reporting of data centers’ energy generation, energy usage, and water usage, the CDPHE and CEO should conduct anonymization or aggregation (e.g. by county) required to protect industry secrets and make this data publicly available within 60 days through Colorado’s existing Open Data Portal. This data should be in a format which supports searching, filtering, data analysis, and downloading (e.g. a spreadsheet). Data should be publicly available for at least 10 years from reporting.

Fenceline air quality and temperature data should be made publicly available in approximately real-time through websites such as Colorado’s EnviroScreen and Love My Air. Historical data of at least 36 months should be available for download through public request to the CDPHE. 

Regarding the noise pollution investigation (Recommendation 3), the CDPHE should produce publicly available updates every 4-6 months, and a final report within 24 months of receiving funding. This report can inform future standards for data center development and monitoring to mitigate negative impacts of noise pollution on residents, schools, wildlife and livestock. Specifically, local and municipal planning and zoning departments should use this data to inform decisions on data center sites (e.g. minimum distance from communities, farms, open spaces), resource allocation (e.g., grid power allocation, water allocation), and environmental impact mitigation requirements for new data center development.

Recommendation 5. Share data for Economic Development, Planning, and Research

The CDPHE should transmit this reporting and monitoring data to the Colorado Office of Economic Development & International Trade (OEDIT). Doing so will inform state research and development priorities for reducing the environmental impacts of data center operations while advancing economic opportunities. This data should be transmitted at regular intervals, jointly determined by CDPHE and OEDIT.  

Conclusion

Data centers are crucial to advance AI innovation in the United States and an incredible opportunity for Colorado. Colorado could see an estimated $144 million in tax revenue and 28,000+ construction jobs and hundreds of permanent jobs across the next decade from 17 currently proposed data center projects. 

However, these projects could also exhaust our water resources, compromise aging electricity infrastructure, increase utility rates, harm communities, wildlife and livestock, and violate the will of Coloradans. Monitoring and reporting managed by the CDPHE will ensure more transparency and build public trust, as opposed to asking data centers to voluntarily report or self-regulate. Through independent monitoring, reporting, and investigation on data centers’ environmental impacts, we can promote public trust, inform the allocation of natural resources, and enable responsible governance on future data center development.

Appendix 1. Relevant Legislation, Bills, and Memos on Monitoring and Reporting for Data Centers from other states

New York Senate Bill S9144A: Requires environmental impact reports for new data centers. This includes reporting current and maximum GW capacities and how energy is generated; total and daily water usage and how much water is lost; impact on farmland and prime farming soil; estimates on greenhouse gas and general air pollution emission, water and thermal pollution; noise pollution at half mile intervals from the property line; and health and general impacts on data centers.

Florida House Bill 1007:  Any proposed large-scale data center within a 5 mile radius of a residential property or school would need to submit an independent study to ensure state and local law compliance, which may also include “low-frequency noise attenuation measures.” Any data center with an average daily usage of 100,000 gallons or more must report anticipated sources, amounts, and losses of water and a plan that incorporates water recycling.

Wisconsin LRB-6377/LRB-6391: Co-sponsorship memorandum calling for mandatory public reporting of electrical and water use, ensuring data centers do not invest in fossil fuels.

Vermont S0205: Requires the public utilities commission to investigate impacts of data center construction and operation on the state and report to legislative committees. Environmental impacts include “water quality and availability, air quality, local ecosystems, noise emissions, and the availability of surrounding land for other purposes, including farming, conservation, recreation, and housing.” Electrical reporting includes increases to electrical load, ways to strengthen grid reliability and security, ways to promote sustainable and efficient energy usage, and ways to reduce increased electrical costs on other customers. Water reporting include consumption of the cooling of computing equipment used.

Oklahoma SB 1488: Requires regulatory agency to investigate the impacts of data centers on the state’s water supply, utility rates, property rates within a 3 mile radius, and anything else determined necessary by the commission.

Nebraska LB1111: Requires annual reports on data center power usage for data centers using 20+ MW.

Appendix 2. Methodological notes

We assumed the stated energy capacity of data centers were their total facility capacity, not just IT capacity (known as critical megawatts, CMW). If the capacity reported was CMW, you have to multiply by the power usage effectiveness (PUE) ratio to calculate total facility capacity. PUE ≥ 1.0, where 1.0 is ideal and means 100% of power is used for IT. We also assumed facilities operate at their maximum capacity at all times, which AI data centers claim to but may not be true in common scenarios, such as when data centers’ IT usage is below capacity and/or when less cooling capacity is required. Water consumption was estimated based on energy consumption assuming a Water Use Efficiency (WUE) of 1.8L / kWh, a stated average for data centers, and that a data center is running at its stated maximum capacity at all hours. This equates to an annual water consumption of up to 4,165,857 gallons of water per MW (1 MW x 1,000 kW / 1MW x 1.8 L /kW x 1 gallon / 3.78541 L x 24 hrs/day x 365 days/yr). The minimum WUE is 0 (no water usage) which two data centers in Colorado Springs are working towards (Project Taurus and NOVVA). For reference, a three building data center totaling 60MW (CoreSite DE3) has a reported maximum water usage of 805,000 gallons a day. This translates to a WUE of 2.12 L / kWh.

We used 2020-24 census data to assume 2.42 people per CO household and 73 gallons of water used per resident daily (based on data from 15 CO cities in 2022). Therefore, an average CO household uses 64,481 gallons per year. To calculate the equivalent energy usage for Colorado households, we used a 2023 estimate of 8,302 kWh for an average household annually. 

We used census estimates for 2025 to estimate the population. The population estimate for 1 July 2025 is 6,012,561, or 2,484,529 households assuming 2.42 people per household.

The use of AI in the workplace is expanding and outpacing access to applied training, which remains inconsistent or unavailable altogether. Jobseekers, employees at smaller organizations, and local public workers need more than access to a model or a vendor course. They need practice choosing useful tasks, protecting data, testing outputs, and explaining where human judgment remains necessary. The Colorado Applied AI Workforce Initiative would provide 1,000 participants in one metropolitan and one rural region training through real or realistic workplace tasks. Each learner in the two-region pilot would build a bounded agent and receive a portable record of independently assessed skills. The result would be a broader pool of workers who can use AI responsibly, smaller employers better able to adopt useful tools, and public agencies better prepared to improve services without giving up accountability.

Challenge and Opportunity

In Q2 2026, Gallup reported that 52 percent of U.S. employees used AI in their role. That adoption creates an opportunity to improve efficiency, but it also creates risk when employee access to training, approved workflows, and review controls is either inconsistent or not available at all. 

Access to a large language model is not evidence of job-ready skill. A county employee, for example, might use a bounded agent to retrieve policy, draft a sourced resident notice, flag missing facts, and stop for approval. The employee still has to decide whether AI belongs in the task, protect sensitive information, test difficult cases, correct errors, and explain the decision. That is the opportunity and the gap: people can use AI to handle routine work, but they need training to decide when it is appropriate and remain accountable for the result. 

Among Colorado employer businesses that reported using AI in a business function, only an estimated 15.1 percent had trained current staff in the previous six months. While Colorado’s Office of Information Technology (OIT) has published AI guidance and training, it is limited to state employees and contractors. Colorado workforce centers already provide jobseekers with computer and internet access and training, while the state’s Digital Navigator pilot demonstrated how libraries and rural workforce centers can be used to address device, connectivity, and digital-skills barriers. The Colorado Applied AI Workforce Initiative would fill this gap and create a common applied standard for local workers.

Colorado must act before unequal access becomes a durable workforce divide. In the San Luis Valley, 15.5 percent of households lacked home broadband service, so applied training must include accessible, low-bandwidth, and in-person options. Workforce centers, colleges, libraries, and local partners can bring training closer to residents. Connecticut’s Tech Talent Accelerator shows how colleges and employers can develop applied AI programs, while New Jersey’s emerging library network shows how public libraries can serve as community access points. Colorado can adapt both structures while testing one common standard across metropolitan and rural conditions. 

The need is immediate; as of January 1, 2027, SB 26-189 will require developers and deployers of automated decision-making technology to provide documentation for how these tools are used. Developers must provide technical documentation describing the tool’s intended uses, categories of training data, known limitations, and instructions for appropriate use and human review, and deployers will be responsible for providing consumers with a description of the tool’s role within a consequential decision. Yet, this legislation creates no corresponding program to train employees to do this work.

Plan of Action

Recommendation 1. Establish the initiative and make an individually built AI agent the core training artifact.

The next Colorado Governor should establish the Colorado Applied AI Workforce Initiative and direct the Colorado Department of Labor and Employment (CDLE) to develop the applied AI training standard, eligibility requirements, records protections, and evaluation process within 90 days. Eligible training participants should include Workforce Innovation and Opportunity Act (WIOA) adults, youth, and dislocated workers, along with other jobseekers, workers at organizations with fewer than 250 employees and no comparable training, and local government workers. 

During the 90-day design period, CDLE would collaborate with the Office of the Future of Work to bring together workers, small employers, local governments, workforce centers, colleges, libraries, rural partners, and disability-access experts. It would use that group to identify real workplace tasks, surface access barriers, and recruit regional partners. CDLE would retain control of the standard, funding, procurement, provider selection, records, compliance, and evaluation. 

The training should cover six competencies needed to apply AI at work:

• Task selection: Define the user, workflow, baseline, result, and whether the task calls for no AI, a hosted model, or a managed open-weight model.
• Data protection: Classify information, restrict sources and tool permissions, and keep protected data out of the agent.
• Output verification: Test held-out cases, source grounding, repeated runs, abstention, and escalation.
• Error and bias recognition: Find security failures, factual errors, and counterfactual disparities, then correct and retest them.
• Documentation and human review: Record choices, sources, cost, corrections, residual risks, and the human approval point.
• Supervised workplace application: Build and defend a bounded AI agent that performs a real or realistic workplace task under independent assessment.

Each learner would build an AI assistant for one clearly defined workplace task. The provider would supply a secure workspace, approved source materials, and up to three managed tools. The assistant could retrieve information or simulate an action, but it could not change live records or make a decision on its own. The provider would set limits on tool calls and run time. The learner would test the result, explain the design, and obtain human approval before use. Examples could include a hosted service such as ChatGPT or Claude and a provider-managed open-weight model such as Qwen3 running through Ollama. 

The training should consist of six weekly sessions totaling 24 contact hours: 12 hours of instruction, eight hours of guided construction and testing, and four hours of testing, demonstration, defense, and feedback. Sessions would progress from the problem, baseline, data, and deployment approach through configuration, security, reliability, bias, and outcome testing. Learners would be required to submit the artifact package before the final session. 

Possible projects include a resident-notice agent based on county policy, a safety-procedure agent using approved manuals, or an occupation-research agent using workforce sources. Regardless of the task, every artifact package should contain five parts:

1. The problem statement, affected user, baseline workflow, success measures, and a no-AI alternative (e.g., traditional automation).
2. A working bounded agent with approved sources, limited tools, stop conditions, logs, and a human approval point.
3. A comparison of a hosted proprietary environment, a hosted or provider-operated open-weight environment, and the no-AI baseline using the same cases.
4. Functional, security, and fairness tests showing results, failures, corrections, and retests.
5. Measured results and a live demonstration.

To pass, a learner must demonstrate all six competencies in a working artifact. An independent assessor would score the work during a live demonstration and brief oral defense. Providers would give managed access for one revision within five business days, without requiring a personal device, account, or home connection. The portable record would report pass or fail for each competency.

Recommendation 2. Run a two-region pilot and test whether the training standard works under different access and labor-market conditions.

CDLE should launch a pilot to test the training program over 12 months. The pilot should enroll 1,000 people across one metropolitan and one rural region, with at least 300 rural seats. Training should be run with cohorts of 20 to 25 participants, and should be delivered in-person or through an instructor-led hybrid format. Workforce centers, colleges, local governments, libraries, adult educators, and schools should serve as access points. CDLE should select providers based on population reach, task validation, instructional and assessment capacity, accessibility, connectivity, safeguards, and scheduling, without regard to vendor affiliation.

Both regions would use the same case material, rubric, and independent scoring process. Delivery must meet applicable Colorado WCAG 2.1 A and AA requirements and provide low-bandwidth options, assistive technology, accessible documents, and equivalent tool paths.

For procurement, CDLE would compare proprietary hosted, open-weight hosted, and provider-operated configurations under the same performance, security, and accessibility requirements, maintaining a tool-agnostic approach. The state should own publicly financed core training components or hold perpetual rights to reuse and adapt the training, excluding third-party intellectual property. Before pilot launch, CDLE must identify providers with a compliant design within their budget. Cost constraints should not weaken the training competencies, accessibility, security testing, or independent assessment.

Prior to enrollment, CDLE must define evaluation measures for the pilot. These measures should include employment status, wages, career level, opportunity to apply AI in the workplace, and workplace use. Wage and advancement results, measured through changes in career level, would be descriptive rather than continuation conditions. An opportunity must include paid or supervised work, approved tool access, and a pre-mapped task. Documented use requires employer confirmation or evidence that the participant applied a pilot competency to a real task in the workplace. An independent evaluator would collect these measures at enrollment and 120 days after a participant passes every competency, then report them statewide and by region.

Training expansion would require at least 75 percent completion among all enrollees statewide and in each region, usable 120-day follow-up for at least 70 percent of verified completers, an opportunity to apply AI for at least 50 percent of verified completers, and documented workplace use by at least 60 percent of opportunity-qualified completers. Only completers with usable follow-up may count as opportunity-qualified, and nonresponse would not count toward any numerator. An unresolved material safety or privacy incident would independently block expansion.

Before the final evaluation, CDLE would review the first 200 final artifact deadlines, including at least 60 learners in each region. New enrollment should pause if fewer than 150 participants have passed, either region falls below 75 percent completion, or projected spending exceeds the $2.8 million ceiling. 

The pilot would have a $2.8 million spending ceiling. This proposal would cap any Workforce Innovation and Opportunity Act Governor’s Reserve contribution at $1.5 million, subject to available funds, participant and cost eligibility, lawful procurement, and required reporting. Signed nonfederal commitments would cover the balance. 

Recommendation 3. Assign post-pilot training ownership if final evidence supports continuation.

If the pilot meets every continuation condition in Recommendation 2, the Colorado General Assembly should decide whether to authorize and fund statewide expansion. CDLE should lead the pilot unless later law assigns the initiative to another agency. HB 26-1317 directs its transition committee to recommend how specified workforce functions could move to the Department of Higher Education, but the act does not itself transfer CDLE programs or WIOA duties. Any continuation law should name the permanent owner. The designated agency should maintain the training standard, curriculum, rubric, records, model approvals, task and test banks, scaffold, evaluation measures, provider standards, provider roster, reporting, and evaluation. State-agency use would remain subject to Office of Information Technology review.

Timing matters because HB 22-1350’s Opportunity Now is scheduled to be repealed on July 1, 2028. If lawmakers extend it, that legislation could authorize continuation of this initiative and designate its permanent owner. Expansion funding should remain unavailable until final pilot results meet every continuation condition.

Conclusion

Colorado has a chance to shape an AI-enabled workforce before access to applied training becomes another source of inequality. A focused pilot would help workers build evidence they can carry across employers, help smaller businesses adopt useful tools without bearing the full cost alone, and help public agencies improve routine work while keeping human accountability.

It would also give the state a controlled way to learn what works in metropolitan and rural communities. If the evidence is strong, Colorado can expand a standard that workers, employers, and agencies can trust. If it is not, the state can stop before committing to a larger system.

Colorado faces two converging shocks: over 76% of Colorado’s 730,887 small businesses are owned by baby boomers, most without a succession plan and today 92% of small business exits occur through closure. At the same time, Artificial Intelligence (AI) is thinning the entry-level job market Colorado’s college graduates have always counted on. The Colorado Succession Through Apprenticeship (STA) Program turns two problems into one solution: a state-coordinated pipeline that trains graduates to evaluate and operate existing businesses, then connects them to owners ready to show them the ropes and eventually hand over the keys. It builds on assets Colorado already owns — its universities, its small-business density, and the Office of Economic Development and International Trade’s (OEDIT) economic development tools — to keep jobs and wealth in local communities and to position the state as the national model for the Great Ownership Transfer, a term used to signify the largest intergenerational wealth shift.

Challenge and Opportunity

The impact of the Great Ownership Transfer on the U.S. economy could lead to significant job losses. While small businesses account for 99% of all U.S. companies, they employ about half of the nation’s workforce and represent 43.5% of our GDP. “Today, an alarming 92% of small-business market exits occur through closure, while only 5% are completed as sales, and 3% are transferred to new owners”.

Over three-quarters of Colorado’s 730,887 small businesses are boomer-owned, and many have no succession plan. These businesses employ an estimated 1.2 million people. According to the Small Business Administration, the leading types of Colorado small businesses include:

• Professional, Scientific, and Technical Services 
• Real Estate and Rental and Leasing 
• Construction
• Transportation and Warehousing 
• Other Services (except Public Administration) 
• Health Care and Social Assistance 
• Administrative, Support, and Waste Management 
• Retail Trade

According to the Exit Planning Institute, a majority of business owners want to ensure their business remains financially viable, with 70% preferring an internal transfer, 17% seeking an external sale, and 13% unsure of next steps. A willingness to find a reasonable succession is evident, and college graduates open a new bridge for ownership transfer.

College graduates are experiencing a decline in entry-level career opportunities due to AI. A 2025 study found that entry-level job postings declined by 35%. Today, according to the Federal Reserve Bank of New York, about 5.6%–5.7% of recent college graduates are unemployed, up from 3.6% in March 2019. New college graduates are facing a career headwind.

The two trends create an uncommon opportunity to create new entry-level jobs while providing boomer-owned small businesses with a potential succession and ownership path for Generation Z. The window for intervention is open, but every year without a bridge means more businesses close and more value evaporates. Colorado has the university infrastructure, the small business density, and the policy tools to act.

The Colorado STA Program addresses both challenges simultaneously by creating a structured pipeline between university students and boomer-owned small businesses seeking new ownership.The program works in sequence across three components. 

• Working with local chambers of commerce and Small Business Development Centers (SBDC) in coordination with OEDIT, small businesses whose owners are within a decade of exit will be identified. 
• Universities design a dedicated small business curriculum that is distinct from traditional, startup-focused entrepreneurship programs. The STA Program curriculum trains students to evaluate, acquire, finance, and operate an existing small business. 
• Selected universities host an annual STA Summit that brings both groups into the same room, creating a matching marketplace supported by legal, financial, and succession planning advisors. The annual conference can be supported by sponsor and exhibitor fees.

The combination of these components results in the STA Program, in which students begin work in a small business, the small business owner transfers knowledge and gains confidence in the potential new owner, and, in several years, a bridge is formed to begin the shift to a new owner. 

The model is proven with medium-sized businesses with about $8 million in revenue and thirty-plus employees. Elite MBA programs at Wharton, Chicago Booth, and UVA Darden already offer Entrepreneurship Through Acquisition (ETA) programs for mid-market companies. Colorado also has a few emerging ETA programs. However, what doesn’t exist is a version designed for Main Street that is accessible to a broader range of graduates and aimed at continuity of small business rather than closure. The Colorado STA Program builds that model first and creates the opportunity to export it nationally. It creates a new program – Succession Through Apprenticeship.

Colorado STA Program Recommendations

Recommendation 1. The Governor drafts and signs an executive order to start the STA Program pilot, instructing OEDIT to begin the work.

The Governor should launch the Colorado STA Program by executive order, without waiting for legislation. They hold the authority to direct OEDIT’s priorities, convene state agencies, and partner with local SBDCs and chambers of commerce; each having critical stakeholder roles with a full set of responsibilities the pilot requires.

The STA Program overview 

A state-coordinated pipeline in three components: 

1. identify boomer-owned businesses within a decade of exit, working with SBDCs and local chambers of commerce.
2. develop a university curriculum that trains students to evaluate, finance, and operate an existing small business.
3. host an annual STA Summit that matches the two groups. Students enter as apprentices, learn the business over three to five years, and transition into ownership. Small business owners learn succession planning requirements and responsibilities.

The Goal is to have measurable structural change. The fewer small businesses closing, more transfers of ownership, and more graduates on a path to own an existing small business.

The Key players include:

• The Governor’s Office directs; OEDIT implements. 
• The Colorado Economic Development Commission can facilitate funding; the Colorado Employee Ownership Commission can guide design and implementation, building on OEDIT’s existing cooperative and employee-ownership programs. 
• SBDCs, local chambers, and city economic-development offices supply the business pipeline; and pilot universities and community colleges deliver the curriculum and host the Summit.

The Cost would be an estimated $200,000 to $350,000 in seed funding across the three-year pilot, drawn from existing OEDIT economic-development resources rather than a new appropriation. Seed funds cover curriculum development, business identification and outreach, and the STA Summit. No funding is necessary for student tuition or acquisition financing, which are addressed separately. The Summit is designed to become self-sustaining through sponsor and exhibitor fees.

The executive order. Appendix A sets this in motion. It establishes the Program within OEDIT, assigns the three components and the interagency roles above, directs a Request for Proposals to pilot institutions, sets pilot KPIs (100 students, 150 businesses, 25 in-process transitions by Year 3), and calls for a Year-3 evaluation with a recommendation on statutory codification.

Recommendation 2. Identify two higher education institutions (e.g., business schools within universities and community colleges) to design a curriculum, pilot the program, and host a Colorado STA Summit.

The goal is to identify two pilot institutions — one urban, one rural or regional — to launch the STA Program curriculum and host an inaugural Colorado STA Summit. Example candidates include the University of Colorado Denver Business School, Colorado Mesa University, Pueblo Community College, Western Colorado University, and Fort Lewis College. The selected educational institutions should already have a focus on first-generation students, diverse students from Colorado communities, and non-traditional programs that support unconventional career paths.

In many cases, universities and community colleges may have existing small business courses that can be incorporated into the STA Program curriculum (e.g., accounting, marketing). Others may need to be developed, such as an introduction to acquiring a small business, small business strategies, and financing for small businesses (acquisition and operations). The two pilot universities/community colleges would conduct an assessment and return to OEDIT with a proposed curriculum track, including what already exists and the gaps to be filled.

The STA Summit would be a requirement for the selected universities and community colleges. The Summit should be a collaborative effort with key players to determine whether it should be hosted in one city or two as part of the pilot, or held in conjunction with the Rocky Mountain ETA Conference.

Recommendation 3. Map and evaluate the financial resources available to support the new small business owner in the succession plan.

New owners taking over an existing business can generally finance the purchase through a combination of SBA 7(a) debt, seller financing, and outside equity, layered with Colorado’s CDFI lenders (Colorado Enterprise Fund, B:Side), state credit-enhancement programs (Cash Collateral Support, the Colorado Revolving Loan Fund), and community bank and credit union SBA lending. The STA Program should map these resources across the federal, state, CDFI, and depository levels to align them around succession transitions and identify where a targeted state intervention would fill the financing gap.

After the evaluation, if additional tax incentives or financing programs are required, OEDIT should develop recommendations and work with the Colorado House Business, Labor, and Technology Committee. Additionally, funding ideas and recommendations should be coordinated and developed with the Governor’s office.

Recommendation 4. Connect and collaborate with Colorado SBDCs, local chambers of commerce, and city economic development teams.

Working and collaborating with local businesses and development centers is essential during the first year and then ongoing. In Year 1, the Governor directs OEDIT to work in partnership with credible sources (e.g., SBDCs, local chambers of commerce, and city economic development departments) to identify the owner(s) name, business type, location, planned time for succession (e.g., within 12, 24, 36, 48, etc. months), and preferred succession plan (e.g., family member, a general sale and acquisition process, or business ownership transfer through a structured program to a recent college graduate).

A critical objective is to educate local business and economic development centers about the STA Program, identify potential candidates, and host succession-planning seminars. Small business owners attending the seminars become prime targets for the STA program and can serve as key stakeholders in its early development and implementation.

As part of this effort, OEDIT should leverage its existing co-op and employee ownership programs designed to assist with succession planning. The work needs to be complementary and collaborative.

Recommendation 5. Evaluate the STA Program outcomes and recommend next steps for the Governor and state legislature.  

As the three-year pilot program concludes, OEDIT publishes a formal program evaluation with a recommendation to scale, modify, or expand. A successful pilot positions Colorado as the national model for connecting the next generation of business owners with the legacy businesses that need them.

Key metrics for evaluating structural change are simple to measure: fewer businesses closing, more businesses transferring, and more graduates on a path to own an existing small business. Within the three-year pilot, other KPIs include:

• 100 students in the STA Program curriculum across a minimum of two higher education institutions. 
• 150 small businesses interested in learning about STA and connecting with enrolled students.
• Year 3 target: 25 in-process ownership transitions.

At the end of three years, the STA Program should be evaluated, with recommendations for moving forward.

Conclusion

The cost of waiting is concrete: businesses close, jobs disappear, communities weaken, and graduates remain underemployed. Today, 42% of recent college graduates are underemployed, working in jobs that don’t require their degree. At the same time, Colorado’s small businesses generate more than $225 billion in annual economic output, a foundation now at risk as a generation of owners approaches retirement. We cannot afford to lose our young talent to underemployment, nor to let the value small businesses create slip away for want of a succession plan.

The cost of acting is far smaller: a pilot program that connects two assets Colorado already has — its higher-education institutions and its legacy of small businesses — and builds a bridge between them. New undergraduates gain the chance to learn a business and, in time, to own it; aging owners gain a ready-made succession plan and a capable successor. It is an ideal match: one that preserves the state’s economic foundation while keeping our next generation of talent rooted in Colorado’s opportunity.

Among states, Colorado ranks 50^th of 51 states (including Washington, D.C.) as the least affordable housing market, reflecting high purchase prices, construction costs and regulatory friction. Why has housing “suddenly” become so expensive? One known contribution is permitting. For routine residential projects, delays increase the cost of repairs, replacements, panel upgrades, rooftop solar, and other household improvements.They also disrupt contractor scheduling, reduce the productivity of a construction, and repair workforce that is already stretched. Colorado’s permitting system is, as most individuals want, decentralized. Cities and counties administer building permits, while the state regulates selected activities and structures, resulting in different application requirements, review processes, technologies, and timelines across jurisdictions. The most important modernization challenge is not necessarily the technical building code itself, but the administrative fragmentation surrounding routine, standardized projects, such as those for HVAC, water heaters, or roof work.

Colorado is well positioned to modernize permitting for routine, low-risk residential projects by implementing a risk-based scoring system for faster review and approval. Permitting plays an important consumer protection role, so modernization should preserve inspections, documentation, enforcement, and penalties while eliminating avoidable administrative delay. Colorado should pursue three reforms:

1. Private builders, in coordination with DOLA, should develop a risk-based framework that distinguishes projects requiring full review from those eligible for simplified or automated approval. 
2. The state should help and incentivize local governments to adopt fast-track pathways, tools, data standards, and transparent performance measures. 
3. The General Assembly should authorize a thoughtfully considered third-party certification pathway for eligible projects, subject to independence requirements, audits, inspections, and state oversight. Together, these reforms would reduce delays and household costs while preserving local code-enforcement authority and public safety.

Challenge and Opportunity

Colorado’s affordability challenge is characterized by a growing gap between household earnings and the cost of basic services, housing, insurance, transportation, utilities, and home maintenance. The pressure is especially acute for young families, first-time and middle-income homeowners, and employers trying to attract and retain workers in competitive markets. While the Front Range faces the most visible affordability strain, mountain, rural, and Western Slope communities also face rising costs and limited contractor capacity. 

Permitting is not the only driver of these costs, but it is a practical and often overlooked administrative lever. Routine residential projects can be delayed by rules, inconsistent documentation requirements, manual intake processes, and local interpretations of similar project types. These delays increase financing costs, disrupt contractor scheduling, and raise prices for homeowners. They also reduce the productivity of a construction and repair workforce that is already stretched. The impact can be quantified in three ways: 

1.  the number of households/projects affected
2. the number of days added to routine work(
3. the economic value of that delay. 

Recent CSI research in Arizona found that permitting added about 23 days to residential project timelines on average, and each additional day of approval time was associated with roughly four additional days of total project time. Because the affected projects are high-frequency household improvements, HVAC replacements, water heaters, electrical panels, roof work, and rooftop solar, even modest delays can scale quickly across thousands of households. For example, if 25,000 routine residential projects in Colorado experienced only a 10-day avoidable delay, that would equal 250,000 household-days of delayed repairs or upgrades, before accounting for contractor downtime, rescheduling costs, financing costs, or higher consumer prices. 

The opportunity is to distinguish between projects that genuinely require complex review and projects that can be safely processed through standardized pathways. A water heater replacement, like-for-like HVAC replacement, panel upgrade, or standardized rooftop solar installation should not face the procedural friction as complex replacements or developments. 

When jurisdictions treat routine work as a custom administrative process, Colorado households pay for avoidable delay. For example, selected jurisdictions in Colorado already have a partial model in app-enabled permit processing for solar projects, which is available in Denver, several smaller jurisdictions, and through the state electrical permitting process for eligible solar projects. That system uses standardized criteria to move qualifying residential solar permits through faster front-end review while preserving inspection and code-enforcement authority.

Routine projects are a high-return starting point because they are common, standardized, and directly affect household costs. Faster permitting for repairs, replacements, panel upgrades, and rooftop solar can produce immediate benefits while building the infrastructure for broader permitting modernization over time. 

The infrastructure can be built through pragmatic effort because each decision maker has a defined role: local governments run the permitting systems and/or work with a private provider while maintaining authority when it is needed, the Governor’s Office can convene agencies and create public performance pressure, the General Assembly can authorize legislation and one-time implementation funding, and state housing and regulatory agencies can provide model rules, technical assistance, and safety oversight.

Build from Existing Models

Colorado should not treat this proposal as starting from scratch. SB25-002, the 2025 regional building codes legislation for factory built structures, provides a useful template: it creates a state-led framework, accounts for regional conditions, limits inconsistent local treatment of factory built housing, allows third-party review and approval of final design and construction plans, and requires audits of third parties that review plans or conduct inspections. That model is directly relevant because it balances statewide clarity with local implementation and oversight rather than relying on broad preemption alone.

The state can also continue to build on its experience with SolarAPP+, an automated review platform for eligible residential rooftop solar projects. SolarAPP+ has been available to Colorado permitting authorities since its national launch in 2021, although adoption within Colorado has been gradual and remains limited to participating jurisdictions and eligible projects. SolarAPP+ demonstrates how standardized project information and objective eligibility criteria can move routine projects through front-end review quicker while leaving inspections and enforcement with the permitting authority. Its principal lesson for the broader proposal is that automation works best when project categories, required documentation, and code-compliance checks are defined in advance.

Colorado can also glean some insight from California. California’s AB 253, signed in 2025, allows an applicant to retain a private professional provider for residential plan check when the local review timeline exceeds 30 business days or when no applicable reviewer comments or sign-offs occur within 30 business days. San Diego’s implementation guidance illustrates the guardrails Colorado should emphasize: the private provider must be, in some way, credible of the trust offered by purchasers, must not have a financial interest in the permit or plan preparation, must submit an affidavit and plan-check report, and city inspections continue. The lesson is not to outsource safety; it is to offer a pressure release valve for delays while preserving public inspection and enforcement authority. 

These examples suggest three design lessons for Colorado: 

1. start with clear project categories
2. require independence and auditability for any third-party reviewer
3. fund the data infrastructure needed to compare jurisdiction performance. 

Without legislative direction and resources, a performance report may be difficult to implement because local permit data are often inconsistent, unavailable, or not reported in comparable formats. 

Plan of Action

Recommendation 1. Establish a risk-based framework for routine residential permitting.

Before adopting statewide permitting standards, the Governor’s Office should direct DOLA’s Division of Housing to convene an official technical working group to develop a risk-based framework for routine residential improvements. At the same time, an independent private-sector group should develop and publish its own proposed framework using comparable project categories and safety criteria. The independent review would provide an external benchmark and identify areas in which government and private experts reach similar or different conclusions. After independently developing their recommendations, the two groups should develop a private-public technical working group with co-chairs from the private sector and one from DOLA to resolve disagreements. Although debatable whether independence would be the most effective path initially, an important aspect of the scientific process is independent verification, and as such, independent verification is what is suggested here. As a point of note, perhaps the most comparable example to what is proposed here is the National Renewable Energy Laboratory’s development of Solar APP+, built collaboratively with local governments, code-development organizations, and industry stakeholders to establish standardized criteria for automated residential solar permitting.

As a point left for debate, after considering both groups’ findings and the joint group’s work, and after publishing an explanation of how significant disagreements were resolved, policymakers may want to debate whether responsibility should lie with DOLA for the final recommended framework or with a private sector-led group. Lowering the cost of permitting may be better achieved through a joint effort, at least initially. After confidence is built, the process could potentially be improved by using just a private industry-led group, similar to the way the Motion Picture Association assigns movie ratings through its Classification and Ratings Administration. The General Assembly would determine which elements require statutory authorization, while DOLA would adopt administrative rules only within authority granted by law.

The framework should classify routine projects, such as HVAC replacements, water heaters, electrical panel upgrades, rooftop solar, roof work, and similar improvements, into permitting tiers based on risk, complexity, inspection needs, and consumer protection concerns. For example: 

• Tier 0 could identify activities that do not require a permit; 
• Tier 1 could cover instant or over-the-counter permits for low-risk, like-for-like replacements; 
• Tier 2 could use expedited local review or independent third-party review for standardized but somewhat more complex work; and 
• Tier 3 could preserve full local plan review for projects with structural, fire, electrical-load, life-safety, or consumer protection risk. 

Each tier should specify minimum documentation, inspection requirements, audit rates, consumer notices, correction procedures, and enforcement consequences. Once developed, the tiered framework should become the basis for model rules, application checklists, public reporting measures, and future legislation that improve consistency across jurisdictions while preserving local authority over inspection, enforcement, and code compliance. The same working group should also define a phase-two option for selected larger residential or post-entitlement permit categories, so the state can move beyond routine home improvements without delaying the initial reform.

Although the proposed four-tier structure would be tailored to Colorado, its individual elements have established precedents. SolarAPP+ provides a model for automated review of standardized projects; California provides an example of independent professional review when local timelines are exceeded; and Colorado’s factory-built structure framework demonstrates how third-party review can operate under state standards and audits.

Recommendation 2. Incentivize fast-track approval pathways

The state should use DOLA’s Division of Housing as the lead agency for encouraging local governments to adopt fast-track review pathways for standardized, low-risk residential projects, with the Division of Local Government supporting grants, local-government outreach, and capacity building. DOLA should certify jurisdictions that adopt approved fast-track processes with the expertise of builders, economists, and other knowledgeable professionals insight, such as over-the-counter approvals, preapproved templates, automated review tools, instant permits, or shortened review timelines for projects that meet state-defined criteria. The Governor’s Office could support this through executive coordinated competition: setting statewide implementation goals, publishing comparable jurisdiction-level metrics, highlighting high-performing local governments, and making it politically and administratively easier for lagging jurisdictions to adopt proven workflows. The private sector and the state should encourage the sharing of regulatory resources so as to avoid recreating the wheel.

DOLA should pair certification with concrete incentives, including one-time implementation grants to cover software, staff training, consultant support, template development, and process redesign; priority access or scoring preferences for relevant housing, planning, and local government grant programs; and technical assistance for smaller or rural jurisdictions with limited permitting capacity, with the commitment amount of at least $2.5 million. Because comparable permit data are not always readily available, the General Assembly should fund a standardized reporting system and give DOLA clear authority to define data fields, reporting cadence, project categories, and compliance expectations for participating jurisdictions. This approach would use funding, eligibility, technical assistance, public reporting, and recognition as policy interventions while allowing local governments to choose the fast-track model that best fits their staffing, risk profile, and development review process.

Recommendation 3. Create a self-certified pathway backed by state review for self-certification and third-party review of low-risk residential projects

The Legislature should authorize a limited independent professional certification and third-party review pathway for clearly defined categories of routine residential work along the lines of California’s AB 253. To address the conflict-of-interest concern, Colorado should not rely on unrestricted contractor self-certification as the default model. For the lowest-risk, like-for-like work, a licensed contractor attestation may be appropriate only as one piece of documentation, paired with eligibility rules, homeowner notice, inspection rights, and audit exposure by the local government agency. For higher-risk categories, certification should come from an independent third-party reviewer or licensed professional who has no financial interest in the permit, the project contract, or the preparation of the plans being reviewed. 

Under this model, qualified independent professionals or approved third-party reviewers could certify that eligible projects meet state-defined code, safety, documentation, and inspection requirements. The incentive for third-party certifiers would be a clear state-approved market for review services: contractors, utilities, and homeowners could pay certified reviewers or software-enabled review providers to move eligible projects through faster, predictable pathways. The consumer protection incentive is equally important: a homeowner would receive a standardized checklist, clear proof of what was certified, notice of inspection and complaint rights, and a defined enforcement pathway if the work fails to meet code or the certification is false. Certification would not eliminate local oversight; instead, it would allow local governments to issue permits more quickly for projects that meet predefined risk-based criteria while retaining authority to audit, inspect, revoke approvals, require corrections, and penalize false certifications. 

Oversight should include a private registry of approved certifiers, training and renewal requirements, insurance or bonding requirements, conflict-of-interest rules, random audits, complaint tracking, public reporting, and removal from the program for poor performance or false certification. The state would provide its input and oversight through DOLA. The program should also require plain-language homeowner disclosures that explain what the permit does and does not cover, who performed the certification, how to request an inspection or file a complaint, and what remedies are available when a certified project fails audit or inspection. The program should begin with low- to medium-risk categories where code requirements are well understood, such as certain like-for-like equipment replacements, standardized rooftop solar projects, minor electrical or mechanical upgrades, roof work, and other routine residential improvements identified by the technical advisory group. The state could expand eligible categories only after reviewing audit results, inspection outcomes, complaints, and local implementation experience.

Conclusion

Colorado can reduce permitting delays without weakening safety by matching review requirements to project risk and aligning the decision makers that shape the permitting system. By establishing a risk-based framework, incentivizing fast track approvals, and creating a self-certified pathway and third-party review of low risk residential projects, Colorado will make routine residential work faster and more predictable. Colorado does not need to choose between local control and modernization: it can preserve local safety authority while creating clearer rules, faster pathways, and better oversight for projects that do not warrant intensive review.

About 86% of Colorado’s water is used for agriculture, but only about 30-60% of that water actually reaches crops. With historic drought, record-low snowpack, and the Colorado River nearing “system crash,” this proposal focuses on a critical and largely untapped source for Colorado’s water future: the water lost in transit. This may be Colorado’s most readily available tool for strengthening drought resilience and meeting Colorado River Compact obligations without further reducing agricultural production.

Many conservation programs try to reduce the amount of water used in agriculture by targeting consumptive use, i.e. the water actually consumed by crops, through changing irrigation practices, adjusting crop choices, or taking land out of production (“fallowing”). These efforts matter, but they place the burden of conservation squarely on farmers and face significant pushback.  

This proposal shares that burden upstream. Conveyance systems consist of thousands of miles of century-old canals that transport water from rivers to farms. Irrigation districts and ditch companies (referred to as “districts” throughout this memo) typically manage these systems with operators driving around the clock to manually adjust wooden boards and heavy gates to control canal flow. These systems lose enormous volumes of water due to inefficiency, imprecise delivery, evaporation, and seepage during transit before water ever reaches a crop. 

Infrastructure upgrades like automated gates, real-time measurement, lining, and piping can sharply cut conveyance losses, free water up for other uses, and substantially improve day-to-day district operations. Efficiency also makes water more reliable for farmers, especially in dry years. Most districts want to modernize, but face financial and legal barriers. The policy recommendations outlined in this memo address these challenges, simultaneously benefiting Colorado irrigation districts, farmers, and rivers by:

• Protecting water rights from legal challenges when diversions are reduced through efficiency improvements.
• Incentivizing districts to become more efficient by compensating water freed up through modernization.
• Enabling water savings to be flexibly used and reliably planned around to help meet Colorado’s water goals.

Challenge and Opportunity

Colorado is in the midst of a long-term water crisis. The Colorado Water Plan projects a shortage of 560,000 acre-feet (ac-ft) by 2050. The 2026 snowpack peaked at only 51% of average, and in June, Colorado entered a Statewide Drought Emergency. Summer runoff is forecasted at 21-37% of the median, and a Colorado River conference white paper warned of “system crash” as early as 2027. 

This water crisis has drawn intense attention and effort, but agricultural water conservation has mostly focused on reducing consumptive use through measures like fallowing fields. While this is effective in reducing total water demand, these measures risk accelerating Colorado’s already-leading rate of farmland loss, put disproportionate responsibility on farmers, and impose real economic and cultural costs. 

Less attention has gone to the significant portion of water lost in transit before reaching a field. Given that agriculture uses over 86% of Colorado’s water (Figure 1), and only 30-60% actually reaches crops, this means roughly a quarter to half of all water diverted statewide is lost in conveyance to evaporation, seepage, or unmanaged return flow. While some of this water is reused and returns to the river, much of it is tied up in inefficient canal systems and unavailable for other beneficial use or planning. Harnessing a fraction of these losses in the Colorado River basin would contribute significantly to the 200,000 ac-ft voluntary conservation goal for the Upper Basin detailed in the U.S. Bureau of Reclamation’s (USBR) Final Environmental Impact Statement (EIS).

Conveyance efficiency is also a powerful drought resilience strategy. For example, a canal system operating at 60% efficiency would require 167,000 ac-ft of river water to deliver 100,000 ac-ft of consumptive use to farms. At 80% efficiency, that system could meet the same demand with just 125,000 ac-ft, and withstand a 25% dry-year cut with no reduction in water deliveries. In a wet year, that extra 42,000 ac-ft could be left instream for rivers and habitats, banked in storage, or exchanged under the new Colorado River conservation framework.

The technical feasibility of conveyance efficiency gains has long been proven. For instance, in response to the Millennium Drought, Australia’s Murrumbidgee Irrigation Area completely modernized and was able to cut water losses by two-thirds. In Colorado’s Grand Valley, automated check structures on the Government Highline Canal cut the minimum flow needed to operate from 400 cubic feet per second (cfs) to 150 cfs. This freed up 250 cfs that once had to be diverted to keep the system running. Over the course of a typical irrigation season, that’s equivalent to roughly 32 billion gallons, or nearly half of the annual water consumption of Denver (calculated in Figure 2).

Figure 2. Government Highline Canal efficiency savings calculations based on data from Denver Water and Irrigation.org.

Is This Really Saving Water?

This is a common objection to efficiency-based conservation, and it’s worth addressing head-on. Reducing conveyance inefficiencies doesn’t necessarily shrink total water consumption the way fallowing does, since most of what’s “lost” isn’t permanently removed from the system, but eventually returns to rivers or aquifers as “return flows.” However, consumptive use isn’t the only thing that matters to water managers. Timing and location matter just as much as quantity. Water saved through efficiency can be metered and delivered to a specific reach or reservoir on a predictable schedule. Water that resurfaces later as diffuse, degraded return flow generally cannot. Tracking water through a modernized delivery system is also far easier than tracking it across thousands of miles of canals, farm runoffs, spills, and geologically complex aquifers. That distinction is critical for initiatives like the Colorado River Upper Basin’s voluntary conservation goal, which requires water to actually reach Lake Powell, not just exist somewhere in the system. Efficiency and modernization can deliver that kind of control and accountability, and they do so without asking farmers to reduce or change what they grow, unlike consumptive-use-focused programs. 

Current Barriers to Efficiency

Several barriers discourage efficiency improvements even when the operational case is clear. The primary argument is that conveyance losses are harmless, or even necessary, since return flows are assumed to stay in the basin, and downstream users and habitats often depend on them. However, it’s an inefficient way to manage water. It’s comparable to leaving the tap running while you brush your teeth because the water comes back to the system through the drain. In reality, a portion of return flows is lost to disconnected groundwater systems or evaporation before returning to the river, and what does return is often mistimed or degraded. This status quo results in river depletions and salinity damages estimated at $332 million annually for the Colorado River alone. The fix is not to keep canals inefficient or to eliminate all return flows, but rather to distinguish critical return flows from nonbeneficial losses through the same no-injury review used in existing state programs like water leasing. Modern measurement and control can then precisely deliver critical return flows where and when they’re needed, while the extra water can stay in the river.

A second barrier is that “use it or lose it” legal fears persist among districts. While formal abandonment is rare, the more realistic concern is “diminishment”: a permanent reduction of a portion of a water right. A lower diversion pattern due to efficiency gains may be read as evidence that the right’s true extent is smaller than decreed. Even though these doctrines are meant to reduce waste, not discourage efficiency, districts are reluctant to show they can do more with less for fear of inviting a future challenge to their right. Districts need a statutory guarantee that investing in efficiency won’t threaten their water rights. 

Third, modernization is expensive, and districts often lack the funds to pursue it. Upfront capital is hard to recover because districts have no way to monetize the water they save. As it stands, districts have no legal claim to water conserved through efficiency gains; if they don’t divert it, it simply flows to the next user in line. Despite water’s high value, districts receive no return on their investment. This is compounded by growing unpredictability in funding sources water projects have historically relied on, like federal grants and state severance taxes, and by farmers’ resistance to funding upgrades through higher water prices. Without a way to turn saved water into a new source of revenue, modernization will remain a pipe dream for most districts.

To address these barriers, Colorado already has a strong legal foundation. Existing state statutes protect historic consumptive use when diversions are reduced under approved conservation programs, and the Colorado Water Conservation Board’s (CWCB) Instream Flow (ISF) program provides a model for compensating saved water and streamlining no-injury review. Other prior appropriation states also offer precedent. In Idaho, Code § 42-223(9) protects the full extent of a water right for users who decrease diversions through efficiency gains, so long as the full beneficial use is maintained. In Oregon, the Allocation of Conserved Water Program has enabled districts to certify a legal claim on their efficiency savings since 1987, which they can then lease, sell, or in some cases, apply to new consumptive use.

Colorado came close to solving this problem before. In 2014, SB 14-023 passed both the Colorado House and Senate with broad bipartisan support. This bill would have allowed water users to receive compensation for efficiency savings transferred to the CWCB for instream flow protection. However, Governor Hickenlooper vetoed it at the last minute over water rights issues. This proposal takes the same core approach but resolves some of the earlier concerns by allowing flexible use of saved water rather than an instream-only design.

A Growing Sense of Urgency and Window to Act

The time to finally pass this legislation is now. Record drought, an historic state election cycle, and the expiration of the Colorado River operating guidelines have together created a sense of urgency that makes this common-sense, infrastructure-focused solution extremely timely and critical. Two recent announcements add concrete, immediate stakes. In mid-July 2026, CWCB announced a new state-run contribution program to save 100,000 ac-ft across the Upper Basin by 2028. Two weeks later, USBR’s Final EIS for Post-2026 Colorado River operations was released, setting a target of 200,000 ac-ft per year of voluntary Upper Basin conservation. 

Both goals depend on the state’s ability to generate real, verifiable savings, which starts with modernization, control, and measurement. We can’t save what we can’t measure. State Engineer Jason Ullmann has called accurate measurement critical to protecting Colorado’s entitlement under the Colorado River Compact, and the Colorado Department of Water Resources (DWR) is already rolling out new basin-by-basin measurement rules. Colorado is on the right track, but gauges alone will not save water. This proposal builds directly on that foundation by treating measurement not as an endpoint, but as an essential step towards modernization and efficiency savings that support Colorado’s conservation goals. 

The conditions for this proposal to succeed are as favorable as they have been in years. Heading into the 2026 elections, water security is a front-of-mind, bipartisan issue. Republicans emphasize water rights as property rights, while Democrats champion full funding of the Colorado Water Plan and an end to “buy-and-drys.” Conveyance modernization advances both agendas simultaneously. It expands water security without asking farmers to bear the cost of conservation, while also providing the legal and technical foundation to support the conservation, storage, and exchange objectives set out in the new Colorado River operating framework.

Plan of Action

Figure 3. Recommendations 1-4 mapped onto a breakdown of a district’s total diversion.

Recommendation 1. Protect water users from legal challenges when diversion reductions result from conveyance efficiency savings.

The Colorado General Assembly should amend C.R.S. 37-92-103(2)(b) to suspend abandonment and diminishment when diversion reductions are the result of conveyance efficiency savings. Conveyance efficiency savings are the amount of water by which conveyance loss is reduced as a result of infrastructure and operational improvements. This definition excludes any reductions attributable to changes in consumptive use, cropping patterns, or weather. In other words, a district that can divert less water because it invested in efficiency should not risk losing the full extent of its water right. Districts must retain the ability to divert their full entitlement when needed, regardless of how much they previously diverted, since needs vary from year to year and efficiency measures may fail. This would extend the same tolling protection SB13-019 and HB17-1233 already provide for historic consumptive use under approved conservation programs, applying protection to the entitlement itself.

Recommendation 2. Create a no-injury administrative process to separate conveyance losses into two categories: 1) critical return flows that should be preserved, and 2) nonbeneficial losses that can be targeted and reduced through efficiency improvements.

The DWR (Office of the State Engineer) should develop an administrative no-injury review process that sets a ceiling on how much a district can reduce its conveyance losses without harming other water rights, ecosystems, or Colorado’s compact obligations. This process would identify where, when, and to what extent critical return flows must be preserved. This mirrors how DWR already handles no-injury review for other specific, temporary changes of a water right, such as Substitute Water Supply Plans, where a full water court proceeding is not required since no water right will be permanently transferred. The process would include public notice, comment periods involving basin roundtables, and technical determinations by Division Engineers.

Recommendation 3. Create a default reimbursement pathway for conveyance efficiency savings registration and compensation.

CWCB and DWR should create a program allowing districts to register conveyance efficiency savings for reimbursement. Districts would be compensated for voluntary reductions in diversions attributable to efficiency improvements, conditioned on all payments being reinvested in continued efficiency improvements. Under the reimbursement pathway, districts would be compensated post-season, based on metered savings against a verified pre-modernization baseline, with no pre-season savings commitments and no penalty for falling short of prior years. This structure reflects the reality that modernization unfolds over many years, and savings will vary while upgrades are underway. As a result, these savings volumes cannot yet be predicted ahead of time or relied upon by other water users for planning purposes, but still merit compensation. The saved water would simply not be diverted and remain in the priority system, like any unclaimed water today, and how savings were treated under the Upper Colorado River Commission’s System Conservation Pilot Program (SCPP).

Recommendation 4. Develop a certification pathway to give conveyance efficiency savings a defined legal status and enable flexible use.

The default reimbursement pathway under Recommendation 3 would not be the only option. Similar to Oregon’s certificate model, once a district has registered savings for several consecutive seasons, DWR would issue conservative baseline savings certificates that give districts a choice on how the water is to be used. Once certified, a district may opt to lease the savings to CWCB’s ISF program for instream protection, lease to other users at negotiated rates, simply leave them in the reimbursement pathway, or shepherd them downstream once the legal authority exists. No portion of the certified volume could be used to expand historic consumptive use. Leasing is an equal, fully voluntary option once savings are predictable enough to support it. Of a district’s total year-to-year savings, these certified baseline savings would be the only portion eligible for leasing to other users, and the priority date of the underlying right would be untouched. Everything saved beyond the certified amount would remain in the flexible, default reimbursement pathway described in Recommendation 3. As with the reimbursement pathway, all resulting revenue must be reinvested in continued efficiency improvements. Baseline savings certificates can be reevaluated and increased as districts continue to become more efficient.

Conclusion

Colorado’s water future is at a crossroads, and the window to act is now. The drought is real, and the political moment is rare. This proposal doesn’t require fallowed fields or further depleted rivers. It targets something simpler and largely overlooked: the water we’re already diverting but not putting to use, lost in transit through century-old infrastructure before it ever reaches a field. By addressing the legal risks and financial barriers that have kept irrigation districts and ditch companies from modernizing, this proposal transforms conserved water from a perceived loss into a tangible asset.  

For districts, this means legal certainty and new revenue to modernize infrastructure that was overdue for investment a generation ago. For farmers, it means a more reliable water supply, even during drought years, without having to change their practices or dry-up their fields. For rivers, it means more water staying instream for ecosystems, recreation, and interstate compacts. For other water users like municipalities, it means increased water availability and security. For Colorado, it means a replicable and sustainable model of water stewardship for other states to follow. 

Conveyance modernization won’t solve the water crisis alone. However, it is one of the clearest, most actionable steps available right now that protects agriculture, strengthens water rights, and puts more water back in the river.

Part 1. And Other Executive Actions to Make the Permitting Workforce More Efficient

View as a PDF here

Nearly every major national domestic priority—from energy and housing, to new infrastructure—runs through permitting. Yet, despite significant political momentum behind reform efforts, limited attention has been paid to the federal workforce that will actually be responsible for interpreting and implementing new permitting regulations and better outcomes.

Since the beginning of 2025, federal roles tasked with permitting are down 20-30%.¹ Agencies have lost staff responsible for everything from data analysis, environmental science, and regulatory interpretation, to complex project management—and numerous other functions—essential to permitting. At the same time, major regulatory change, new technology to streamline workflows, and the need for speed and efficiency are placing new demands on the existing permitting workforce. 

The solution is not to simply replace departed federal staff—the executive branch must instead reimagine the permitting workforce to meet the demands of a new regulatory environment. This memo details a series of recommendations for doing precisely that. These include:

• Creating a “U.S. Permitting Corps”  composed of innovative interdisciplinary professionals who can be “deployed” alongside agency teams in  ways  that complement existing permitting staff tasked with implementing reforms and improving efficiency. The Permitting Corps could be designed and funded under the auspices of the federal Permitting Council.
• Investing in the skills to share and use of best-in-class digital tools and permitting data across agencies to improve project management, streamline processes, and accelerate permitting timelines. 
• Engaging in targeted hiring for key permitting  roles in scientific disciplines, project management, and regulatory skill sets to bolster overburdened permitting teams  and accelerate progress on federal projects.
• Rewarding achievements by federal permitting staff and agency leaders by linking clear, outcomes-based project metrics to improvements in the permitting  process. 

Background

Today’s changing technology and policy landscapes are colliding with urgent, sprawling national priorities like new energy infrastructure, housing, and climate mitigation. That collision  has  placed a radically different set of expectations on the federal permitting process to accelerate both the speed and efficiency of projects, while also managing environmental risk. In practice, that means increased pressure on a federal permitting ecosystem that has given little consideration to the scope, composition, or key skill sets needed to implement dramatically improved permitting operations. 

Permitting workforce challenges have actually existed for decades: in the form of underinvestment in dedicated permitting staff, poor coordination of permitting decisions within and across agencies, long-standing data, technology, and information gaps, and inconsistent leadership commitments to removing permitting bottlenecks. Take, for example, the federal Environmental Protection Specialist.² This role—prominent across the agency teams who administer the complex set of procedures that make up the permitting process—frequently prepares documentation to support permitting decisions. Those decisions range from established or newer Categorical Exclusions (CEs), to the much lengthier and robust process of creating an Environmental Impact Statements (EIS), and many scenarios in-between. Today, changing workflows and the proliferation of AI and other technologies (see example here)  are reshaping this job in fundamental ways—i.e., in ways that will automate or augment both routine NEPA document preparation (for example) as well as highly technical applications of policy or CE determinations.

The work of a modern permitting professional is also inherently cross-functional, sometimes interagency in scope, and needs to respond effectively to evolving permitting regulations. In practice, that means integrating large volumes of information, key data inputs, CE criteria or guidance, and environmental review findings—drawn from numerous subject matter experts and in varying formats—into a coherent evidentiary base for decision-makers. They will need to simultaneously track an evolving regulatory landscape composed of new case law, shifting interpretations of implementing regulations, and agency-specific procedural guidance; and they will need to orchestrate that integration in a manner that actually translates emerging changes into operational requirements for other permitting staff, applicants, and agency leaders. 

The discrepancy between those needed skill sets and the status quo in permitting capacity illustrates that the government has failed to assess the impacts of who is leaving, who is staying, and whether any federal entity or leader is deliberately shaping what comes next for the workforce charged with making permitting faster and better. Indeed, the 20-30% reduction in roles like this one in 2025/2026 was not a planned approach issuing from new technology capabilities or streamlining regulatory changes—but future permitting workforce decisions need to be. 

Recommendations

Fortunately, federal leaders have a real opportunity to transform permitting performance through targeted workforce actions. With the right talent embedded in well-designed teams—and sustained support for that talent—federal permitting will move faster and realize better outcomes. Based on confidential interviews conducted with permitting practitioners across agencies in early 2026, they need three skill sets to adapt to regulatory changes, accelerate permitting and maintain quality outcomes consistent with law and national permitting goals.

The recommendations detailed below are informed by these three overarching skill gaps:

1. Digital tools, data, and AI to integrate new technologies into permitting tasks and workflows
2. Complex project management skill sets to guide and track the schedule, cost, and quality of review procedures that make up permitting activities 
3. Targeted, scientific and technical skill sets in environmental and science disciplines to support consultation, data analysis, and permit decisionmaking

We recommend a series of actions by agencies at the center of government as well as permitting agency teams themselves:

Conclusion

Whether taken together as complementary pieces of a comprehensive workforce strategy, or a “menu” of options to demonstrate results quickly and scale,  all our recommendations share a common goal set: increase the use of modern technology and data practices to streamline permitting workflows, improve the quality, cost, and timelines of permits, and reduce the overall likelihood of litigation and unnecessary delays. Better tools and processes won’t deliver better results on their own, however—and agency leaders and teams must be equipped to source, empower, and retain the talent needed to realize the benefits of those investments.

Part 2. And Other Legislative Ideas for Improving the Federal Permitting Workforce

View as a PDF here

Nearly every major national domestic priority—from energy and housing, to new infrastructure—runs through permitting. Yet, despite significant political momentum behind reform efforts, limited attention has been paid to the federal workforce that will actually be responsible for interpreting and implementing new permitting regulations and better outcomes.

Since the beginning of 2025, federal roles tasked with permitting are down 20-30%.³ Agencies have lost staff responsible for everything from data analysis, environmental science, and regulatory interpretation, to complex project management—and numerous other functions—essential to permitting. At the same time, major regulatory change, new technology to streamline workflows, and the need for speed and efficiency are placing new demands on the existing permitting workforce. 

Congress must pass legislation and engage in oversight that reimagines the permitting workforce to meet the demands of a new regulatory environment. This memo details a series of recommendations for doing precisely that. These include:

Revising current permitting reform legislative proposals to:

• Create a “U.S. Permitting Corps” that will bring together interdisciplinary professionals who can be “deployed” with agency teams tasked with implementing reforms and improving efficiency. The Permitting Corps should be drawn from experienced permitting professionals outside government and managed and funded under the auspices of the federal Permitting Council.
• Invest in the skills to share and use best-in-class digital tools and permitting data across agencies to improve project management, streamline processes, and accelerate permitting timelines.

Using existing oversight and budget hearings to ensure agencies:

• Are engaging in targeted hiring for key permitting roles in scientific disciplines, project management, and regulatory skill sets to bolster overburdened permitting teams and accelerate progress on federal projects.
• Are rewarding achievements by federal permitting staff and agency leaders by linking clear, outcomes-based project metrics to improvements in the permitting process.

Background

Today’s changing technology and policy landscapes are colliding with urgent, sprawling national priorities like new energy infrastructure, housing, and climate mitigation. That collision  has  placed a radically different set of expectations on the federal permitting process to accelerate both the speed and efficiency of projects, while also managing environmental risk. In practice, that means increased pressure on a federal permitting ecosystem that has given little consideration to the scope, composition, or key skill sets needed to implement dramatically improved permitting operations. 

Permitting workforce challenges have actually existed for decades: in the form of underinvestment in dedicated permitting staff, poor coordination of permitting decisions within and across agencies, long-standing data, technology, and information gaps, and inconsistent leadership commitments to removing permitting bottlenecks. Take, for example, the federal Environmental Protection Specialist. This role—prominent across the agency teams who administer the complex set of procedures that make up the permitting process—frequently prepares documentation to support permitting decisions. Those decisions range from established or newer Categorical Exclusions (CEs), to the much lengthier and robust process of creating an Environmental Impact Statements (EIS), and many scenarios in-between. Today, changing workflows and the proliferation of AI and other technologies (see example here)  are reshaping this job in fundamental ways—i.e., in ways that will automate or augment both routine NEPA document preparation (for example) as well as highly technical applications of policy or CE determinations.

The work of a modern permitting professional is also inherently cross-functional, sometimes interagency in scope, and needs to respond effectively to evolving permitting regulations. In practice, that means integrating large volumes of information, key data inputs, CE criteria or guidance, and environmental review findings—drawn from numerous subject matter experts and in varying formats—into a coherent evidentiary base for decision-makers. They will need to simultaneously track an evolving regulatory landscape composed of new case law, shifting interpretations of implementing regulations, and agency-specific procedural guidance; and they will need to orchestrate that integration in a manner that actually translates emerging changes into operational requirements for other permitting staff, applicants, and agency leaders. 

The discrepancy between those needed skill sets and the status quo in permitting capacity illustrates that the government has failed to assess the impacts of who is leaving, who is staying, and whether any federal entity or leader is deliberately shaping what comes next for the workforce charged with making permitting faster and better. Indeed, the 20-30% reduction in roles like this one in 2025/2026 was not a planned approach issuing from new technology capabilities or streamlining regulatory changes—but future permitting workforce decisions need to be. 

Before those workforce deficits undermine the potential benefits of permitting reform efforts, Congress has opportunities to help bridge talent gaps so that the permitting workforce is ready to take full advantage of both the regulatory flexibilities and permitting-focused technology now available to them. 

Congress is working on a series of legislative initiatives to improve permitting, including the PERMIT Act, SPEED Act, ePermit Act, and the CERTAIN Act. These legislative initiatives and Administration actions hold promise for accelerating and improving permitting – providing cost savings, moving projects forward faster, and driving better outcomes for all involved in the federal permitting process. 

However,  most of the focus is on deploying new technologies and changing regulatory and program direction and not on providing direction or resources on the talent needed to implement these critical improvements.  

This presents Congress with an opportunity to improve the speed and quality of permitting using skill sets and technologies available to agencies today. Through talent development and the dispersion of technology use cases across agencies, the government can transform both the reputation and experience of permitting for all the actors in the process. The quality of a permit depends on the expertise of the permitting professionals doing the work; and the bottom line for lawmakers and agency leaders alike is that workload and mission demands don’t match the talent supply—and that new talent configurations and strategies are needed to execute on permitting priorities.

Recommendations

Fortunately, Congress has a real opportunity to transform permitting performance through targeted workforce actions. With the right talent embedded in well-designed teams—and sustained support for that talent—federal permitting will move faster and realize better outcomes. Based on confidential interviews conducted with permitting practitioners across agencies in early 2026, they need three skill sets to adapt to regulatory changes, accelerate permitting and maintain quality outcomes consistent with law and national permitting goals.

The recommendations detailed below are informed by these three overarching skill gaps:

1. Digital tools, data, and AI to integrate new technologies into permitting tasks and workflows
2. Complex project management skill sets to guide and track the schedule, cost, and quality of review procedures that make up permitting activities 
3. Targeted, scientific and technical skill sets in environmental and science disciplines to support consultation, data analysis, and permit decisionmaking

We recommend a series of actions by agencies at the center of government as well as permitting agency teams themselves:

Conclusion

Whether taken together as complementary pieces of a comprehensive workforce strategy, or a “menu” of options to demonstrate results quickly and scale,  all our recommendations share a common goal set: increase the use of modern technology and data practices to streamline permitting workflows, improve the quality, cost, and timelines of permits, and reduce the overall likelihood of litigation and unnecessary delays. Legislation that provides better tools and processes won’t deliver better results on their own, however—and agency leaders and teams must be equipped to source, empower, and retain the talent needed to realize the benefits of those investments.

[Add Your Support Here]

It’s only early July and already more than 3,000 all-time temperature records have fallen in the United States. And as America celebrated its 250th anniversary, over 185 million Americans – over half the population – were under an extreme heat alert. Forecasters are anticipating a very hot summer that could take 2024’s “hottest year on record” crown. 

We’ve always had heat waves and hot places. But extreme heat is now touching every corner of our country. The implications of this growing threat are profound.

Extreme heat has become a national economic crisis: lowering productivity, shrinking business revenue, destroying crops, and pushing power grids to the brink. The impacts of extreme heat cost our Nation an estimated $162 billion in 2024 – equivalent to nearly 1% of the U.S. GDP. Additionally, local governments and their partners are footing the bill for increased demand for social services, public safety, and health care. 

Extreme heat is also taking a human toll. Heat kills more Americans every year than hurricanes, floods, and tornadoes combined. The number of heat-related illnesses is even higher.

Even when heat doesn’t kill, it severely compromises quality of life. During high heat, people have to make impossible choices: between eating or overheating, working in dangerous conditions or losing a paycheck, telling kids they can’t go outside or risking heat illness. They also face aging infrastructure not built for extreme temperatures that buckles in the heat. 

Policy needs to catch up to the scale of the extreme heat problem, and fast. To do so, policymakers at all levels will need to make their communities “heat safe” by (1) reducing heat risk in the places where people spend the most time and (2) preparing social and physical infrastructure to handle rising heat. Heat-safe communities are places that don’t just survive but thrive, and where people and families can grow and prosper.

Addressing rising heat will take all of us. Already, almost 150 organizations and government offices and over 150 experts have committed to supporting the State & Local Heat Policy Agenda. Together, we can create heat-safe homes, workplaces, schools, childcare facilities, and communities – the backbone of a heat-ready nation.

[See all policy recommendations at HeatAgenda.us]

Safe Homes

Home is where families raise children, work, spend time with and care for loved ones, and relax. Yet 13 million households report being too hot at home and at least 80 million people struggle to pay their electricity bills today. A cool home is the best strategy to keep people from getting sick.

To protect every family from dangerous heat at home, policymakers should:

• Establish the right to cooling. Every household should have guaranteed access to active and passive cooling systems that keep their home at safe, comfortable temperatures.
• Protect energy access during hot weather. Every household should be protected from utility disconnection and during power outages in hot weather. Every household should also be able to afford the energy needed to keep homes cool. 
• Upgrade existing homes for extreme heat. Every household should be able to afford and easily implement upgrades to their homes, from heat pumps to cool roofs.
• Create a heat-resilient housing supply. Every new home should be built to stay cool during extreme temperatures, even when the power goes out. 
• Ensure large loads do not create affordability and reliability risks during extreme heat. Every household should be protected from electricity price spikes and reliability issues due to large-load customer demand, like data centers, on high heat days. Households should also not subsidize energy costs and infrastructure for large-load customers.

Safe Workplaces

Every year, an estimated 28,000 workers are injured on the job during high heat days, and dozens lose their lives. Workplace heat protections are both a moral imperative and a common-sense win-win: they prevent injuries and deaths, reduce workers’ compensation claims, decrease employee turnover, and even increase productivity, boosting bottom lines.

To protect every worker from dangerous heat on the job, policymakers should:

• Secure heat protections in all workplaces. Every worker should be guaranteed paid rest, water and shade access, heat-acclimatization periods, and, if applicable, cooling in their employer-provided housing.
• Create or expand paid leave and income protection for days too hot to work. Every worker should be able to stay safe from heat without financial penalty or risk to job security. 
• Incentivize uptake of best practices for workplace heat safety. Every government should develop strategies that encourage employers to implement protections and maintain good heat safety records, such as through workers compensation or procurement practices.

Safe Schools and Childcare

Heat harms our children’s health, development, activity, mood, sleep, and ability to focus. Yet 1 in 3 schools don’t have adequate cooling and 45% of childcare facilities have been physically or financially strained by extreme weather. Kids deserve safe, cool spaces to learn and play.

To protect every child from dangerous heat at school and childcare, policymakers should:

• Keep kids safe from extreme heat at school and childcare. Every child should be guaranteed a cool environment, including classrooms, school grounds, athletic facilities, and school buses. Every school and childcare facility should have plans, training, and policies for hot weather, including school operations, recess, and for sporting and outdoor activities.
• Make heat resilience possible for all schools and childcare facilities. Every school and childcare provider should be able to afford to upgrade their facilities to keep children cool.

Safe Communities

Dangerous heat is happening earlier in the year and lasting longer, while average temperatures across seasons are on the rise, affecting everything from snowpack to crops. Recognizing our new heat reality and preparing accordingly prevents deaths and avoids infrastructure failures and economic losses, while creating places where people want to build their lives and families.

To help every community get heat-safe, policymakers should:

• Prepare for higher temperatures as an acute emergency as well as a chronic risk. Every government should have plans for annual heat preparedness and long-term risk mitigation as well as strategies to coordinate with surrounding governments on efforts.
• Establish a governance structure and training for extreme heat. Every government should designate a public official (either a new hire or current employee) with authority and budget to lead heat efforts, coordinate interagency and intergovernmental efforts, and form partnerships with nonprofits, health systems, and the private sector. Every government should also upskill all frontline employees in their roles for heat mitigation and response.
• Assess heat’s impacts and costs. Every government should track heat impacts on people, infrastructure, the economy, and their budgets and set goals to reduce heat’s effects.
• Declare and respond to heat as an emergency. Every government should have and deploy the resources to protect their populations, such as shelter and welfare checks. Every government should prepare for infrastructure failures like of energy and water systems.
• Shape and finance heat-resilient infrastructure. Every government should set incentives or requirements to reduce heat’s impacts on people and infrastructure and identify or create public and private funding for building and maintaining heat-resilient infrastructure like trees, shade, back up power for critical facilities, and grid upgrades.

To learn more about how every state is implementing the Agenda’s recommendations, click here. To support this effort as a public signatory, click here. And to learn more about how you, your organization, or your government can help build a heat-resilient nation, contact Grace Wickerson (gwickerson@fas.org).

Cell-free expression (CFE) is a biomanufacturing platform capable of producing diverse biomolecules, including proteins, enzymes, and mRNA, outside of (or “without needing”) living cells. Because CFE extracts can be freeze-dried, stored at room temperature, and reactivated on demand, they enable rapid, portable, and decentralized production of diagnostics, vaccines, and therapeutics with minimal infrastructure. These properties make CFE a powerful tool for preparedness, point-of-need healthcare, and defense applications. The same properties, however, also create an underappreciated biosecurity risk. Commercially available CFE kits already support the production of toxins, bacteriophages, and virus-like particles, with no oversight of who is purchasing them or why. As CFE becomes more sophisticated and accessible, DNA synthesis and export controls remain the primary regulatory safeguards against de novo production of harmful biological agents, yet governance frameworks lack the situational awareness and enforcement capacity to keep pace with rapidly falling technical barriers.

The United States (U.S.) faces a dual imperative: invest in CFE to secure strategic leadership in next-generation biomanufacturing, and close the governance gap to prevent misuse and to ultimately enable American innovation to advance even more rapidly. We recommend two coordinated actions:

1. A tiered oversight framework that includes know-your-customer measures for all CFE vendors and biosafety-level grading for extracts with different capabilities.
2. Federal investment to improve CFE yield, reliability, purification, and portable GMP-compatible manufacturing. 

Acting now, while norms are still forming, gives the U.S. the opportunity to lead both in the technology and in its governance.

Challenge and Opportunity

CFE enables new production methods that outpace traditional cell-based and chemical synthesis by minimizing the need for specialized infrastructure such as sterile culture systems, bioreactors, and technical expertise to maintain living cells. This makes it the preferred method of production for malicious actors, particularly lone-wolfs or small groups that may be under-resourced.
In parallel, CFE technology is rapidly moving from the research lab into the real world, with improvements in yield being further accelerated by AI, yet U.S. policy has not kept pace on multiple fronts. 

Biomanufacturing is a strategic national asset

The challenge is compounded by intensifying international competition in advanced biomanufacturing. Nations that move first to translate CFE into deployable bioproduction infrastructure will gain durable advantages across pharmaceutical supply chains, emergency response capacity, and industrial biotechnology. China, in particular, has moved aggressively to secure intellectual property and scale capabilities in cell-free systems, signaling that CFE is viewed not merely as a scientific tool but as a strategic national asset in China’s race to close the gap with the United States. Absent timely policy engagement, the U.S. risks ceding leadership in a foundational biomanufacturing modality while simultaneously inheriting its downstream security risks. In this context, reactive governance is doubly damaging: it increases both strategic vulnerability and potential biosecurity risks.

The core policy problem is therefore twofold: first, to prevent the unintended security consequences of increasingly accessible synthesis technologies; and second, to do so in a way that enables the innovation needed to maintain U.S. leadership. Addressing only one side of this problem, through either permissiveness or restriction, would undermine the other.

CFE changes the threat landscape

Historically, biological attacks have been rare, in part because the technical and economic barriers to producing dangerous agents were high, and in part because biosecurity itself occupied a relatively narrow space in public consciousness. Lone actors who pursued biological harm tended to default to comparatively crude options, such as ricin, precisely because more sophisticated agents required infrastructure, expertise, and resources that placed them out of reach. This historical pattern has shaped policymakers’ intuitions about biorisk, but it is increasingly a poor guide to the present threat landscape.

Commercially available CFE kits, which are enabling researchers to massively accelerate the design of protein-based therapeutics, can already be used to produce toxins, bacteriophages, and virus-like particles, with no requirement to verify who is purchasing them and why. CFE has also been demonstrated to support the production of non-enveloped mammalian viruses such as polio. This ease of use and commercial access lies in contrast to traditional bioproduction, which requires sterile culture systems, bioreactors, and transfection reagents. In fact, CFE is an increasingly common component of high school and undergraduate biology education. Increased access to such kits eliminates the specialized equipment and expertise that historically served as barriers to entry into biological engineering. To ensure that the U.S.’ industry and education systems can fully capitalize on the promise offered by CFE, biosecurity frameworks need to be reviewed and updated to establish proper guardrails to prevent acquisition by malicious actors. 

Two shifts are eroding the conditions that kept the historical incidence of bioattacks low. First, the rise of large language models and broader public discourse around AI-enabled threats has dramatically raised general awareness of biological weapons as a category of weapon of mass destruction. Even when frontier models decline to provide synthesis instructions, they readily communicate which agents are dangerous and why, effectively lowering the informational barrier to identifying high-consequence targets. Second, and more critically, CFE collapses the economic and infrastructural gap between “crude” and “sophisticated” biological agents. Producing a functional non-enveloped virus using a commercial CFE kit is approaching the same order of magnitude in cost and complexity as producing a classical toxin, while yielding an agent with vastly greater potential for harm and transmissibility. Additionally, directly purchasing the toxin itself is now more expensive than purchasing the CFE and DNA needed to synthesize the same amount of toxin. The historical logic that pushed bad actors toward cheaper, lower-impact agents no longer holds: when the cheapest option is also among the most dangerous, the deterrent effect of cost and complexity disappears.

This is the heart of why CFE warrants near-term policy attention rather than deferred study. Unlike scenarios in which an AI model must walk a malicious actor through a difficult synthesis, CFE provides the production capability directly out of the box. 

The need to update regulatory frameworks

Regulating CFE research, however, will require a different approach than that of regulating CFE distribution. Existing biosafety rules, such as BSL designations and previous guidelines regarding dual-use research of concern, govern how scientists work with dangerous material inside institutions. They do not govern what biological templates scientists use with these commercial CFE kits, or whether a given kit can support the synthesis of harmful agents. A researcher using CFE to produce a pathogenic virus might not trigger any regulatory review today, especially if the virus is not on the Select Agents list, and a non-state actor utilizing the same kit could potentially fly completely under the radar. 

DNA synthesis screening, the main current safeguard, addresses the template but not the production machinery. This means that in cases where synthesis orders circumvent existing regulatory measures, a malicious actor could still use CFE to rapidly synthesize harmful biological material. While new legislation such as the Biosecurity Modernization and Innovation Act of 2025 introduces important guidelines for DNA synthesis screening that could also protect against misuse of CFE, uneven international standards, AI-driven protein design, and the ability to split orders across multiple vendors mean this protection is insufficient. In the meantime, benchtop and unregulated DNA synthesis capabilities coupled with CFE exacerbate the need for near-term policy. 

This gap is also not easily addressable by simply applying expanded DNA synthesis guidelines to a new tool. CFE systems will likely vary in risk profile depending on their composition: mammalian cell extract with intact translation machinery can support the production of pathogens that a minimal reconstituted system optimized for protein product cannot. Addressing this requires a new, capability-based approach to oversight that is proportionate to the actual risk of each type of CFE formulation.

CFE can strengthen biodefense and health security

CFE’s portability and on-demand production capability make it directly relevant to homeland defense, supply chain resiliency, and health security. CFE has been demonstrated as an effective diagnostic platform, and recent work has shown that full-scale production of mRNA vaccines formulated in lipid nanoparticles can be achieved using benchtop microfluidic devices. Additional work has shown the incorporation of CFE into Zika virus detection assays, zinc level quantification, and portable GMP-grade therapeutic production. These capabilities establish that CFE can operate at clinically relevant scales in compact, field-deployable formats — enabling diagnostics, vaccines, and other critical biologics to be produced closer to the point of need. This reduces vulnerability to supply chain disruptions and could dramatically accelerate response timelines in a national security emergency. As costs decline with scale and standardization, CFE becomes increasingly cost-competitive with traditional biomanufacturing for time-sensitive and distributed applications.

Critically, CFE offers a rare opportunity to build security in from the start rather than bolt it on later. Because CFE operates in test tubes rather than inside replicating living organisms, production platforms can be engineered with intrinsic safety features. For example, bioorthogonal genetic systems that use reassigned or non-natural molecular components incompatible with standard biological systems are made possible by CFE. Such systems would make any agent produced within them unable to function in natural biological contexts, providing a built-in containment mechanism. Importantly, these same modifications are already required to push CFE into its most commercially valuable applications, such as producing proteins incorporating non-natural amino acids. This means that investing in safety-by-design CFE simultaneously advances biosecurity and commercial competitiveness: a rare alignment of incentives that policymakers should move quickly to capitalize on.

The window for proactive governance is open, but it will not remain so. CFE capabilities are expanding rapidly, and both the norms and commercial infrastructure around these systems are still being formed. Policymakers must act now to enable the United States to shape those norms, lead in establishing global standards, and position our nation as a leader in responsible next-generation biomanufacturing. The recommendations below outline a two-pronged strategy: tiered regulatory oversight calibrated to actual CFE capabilities, and targeted federal investment to accelerate safe, scalable CFE infrastructure that supports decentralized biomanufacturing.

Plan of Action

CFE enables a new model of biomanufacturing that is faster, more flexible, and less dependent on centralized infrastructure traditionally needed for cell culture. Those same features also introduce novel risks, especially since CFE is currently commercially available and has demonstrated the ability to produce functioning viruses and toxins. Due to the unique technical makeup of the technology, the traditional trade-off between innovation and regulation does not apply, as safety-improving technological measures, such as bioorthogonality, can also boost CFE’s manufacturing capacity. Thus, harmonizing these efforts with other dominant biosecurity measures, DNA synthesis screening, will safely unlock this technology to its full capacity. 

Because CFE risk depends not only on the DNA template but also on the CFE system’s functional capabilities, governance should focus on tiering, standards, and capability-based controls. We recommend: 

1. a tiered oversight framework anchored by NIST standards, integrated into NIH/CDC biosafety tiering, and linked to export controls and industry know-your-customer measures through a Cell-Free Expression Oversight Consortium modeled after the IGSC.

2. A federal investment strategy to improve CFE yield, reliability, purification, and portable GMP-compatible manufacturing. CFE is unusually well-suited for safety-by-design: the same modifications that improve performance and commercial competitiveness, including the use of biological orthogonalization, can also constrain misuse by reducing compatibility with uncontrolled biological contexts.

Recommendation 1. Enable Safe Scaling of CFE Through Capability-Based Tiering and Export Alignment

Establishing clear, capability-based tiers for CFE systems would not only improve biosecurity but also provide regulatory clarity that enables innovation, commercialization, and responsible scaling. While different types of CFE can share similar material components, characteristics such as yield, the ability to produce modified proteins, and the capacity to support viral production can differ substantially. These differences depend not only on the DNA template but on the properties of the CFE system itself, and those should be taken as a central consideration for classification, especially given the proliferation of benchtop DNA synthesizers. The National Institute of Standards and Technology (NIST) synthetic cell laboratories can support the technical validation and calibration of these tiering frameworks, utilizing the National Agile Biomanufacturing Initiative , enabling standardized evaluation of systems with different functional properties, including those incorporating orthogonal biological components.

1. Given that the main biosafety risk CFE poses currently comes from malicious activity from lone wolf actors, the Department of Commerce should convene a Cell-Free Expression Oversight Consortium, modeled on the International Gene Synthesis Consortium, to encourage sellers of CFE mixes to implement know-your-customer measures and harmonize customer screening internationally, implement export controls, and international standards. 
2. The NIH should be engaged to update dual-use research of concern (DURC) guidelines, ensuring that emerging CFE-based research on mammalian viral synthesis is flagged early for ethical and security review. 
3. The Department of Commerce’s Bureau of Industry and Security (BIS), in coordination with the Departments of State and Energy, should explicitly classify advanced cell-free expression (CFE) systems under the Export Administration Regulations (EAR), harmonized with the Australia Group control lists, establishing clear export control thresholds based on functional capabilities (such as the ones relevant for the biosafety framework). This classification should enable licensing requirements, end-user verification, and international alignment without impeding benign academic or industrial research.

Recommendation 2. Invest in Safe, Scalable, GMP-Compatible CFE Infrastructure

Congress should establish a National Agile Biomanufacturing Initiative, housed within the Office of Science and Technology Policy (OSTP), with a five-year mandate and an option for renewal, to accelerate the development of distributed, GMP-compatible manufacturing infrastructure. For the initiative to be effective, it will require appropriations of at least 40 million USD annually, with coordinated investment across NASA, the Department of Defense (including DARPA and DEVCOM-CBC), NIST, and NSF. Cell-free expression is a critical enabling technology within this strategy, but the initiative should encompass the full portfolio of agile biomanufacturing modalities for distributed deployment in public health, defense, and emergency-response settings.

1. NIST should receive 10 million USD annually to deliver measurements and standards that support quality and performance benchmarks, safety requirements, and compliance metrics for cell-free manufacturing systems (as listed in recommendation 1). This will inform risk and performance tiers for cell-free manufacturing, in alignment with NSCEB recommendation 4.1a (appendix C). 
2. NSF should expand its Cell-Free Innovations in Research and Engineering (CFIRE) program by doubling its $40 million budget and extending its duration by five years. The expanded program should fund projects that develop and test modular, GMP-compatible CFE units, while incentivizing the integration of safety-constraining design features into federally funded systems. Progress can be tracked through concrete indicators such as improvements in CFE yield and demonstrated advances in safety-by-design bioorthogonalization (e.g., genetic code reassignment, orthogonal ribosomes).
3. Congress should direct DARPA, or another suitably equipped laboratory within the DoD research ecosystem, to fund the development of field-deployable, GMP-compliant manufacturing platforms built on CFE technologies. In parallel, NASA should pursue complementary work on cell-free systems for space applications, where its operational environments can serve as a testbed for autonomous, remote biomanufacturing.

Conclusion

CFE represents a unique opportunity to both strengthen American competitiveness and preparedness in bioproduction while anticipating and preventing biorisks posed by lone actors. Targeted government investments in developing CFE could position the US as a global leader in next-generation biomanufacturing and reduce dependence on foreign pharmaceutical innovation and supply chains. Prioritizing this research would also transform pandemic preparedness infrastructure from centralized, vulnerable systems to resilient, rapid-response networks. In the future, we envision standardized, GMP-compliant CFE units capable of rapidly scaling production for various vaccines and therapeutics within days, rather than months, of pathogen detection. The freeze-dried and shelf-stable nature of CFE extracts also means that these systems can even be poised for autonomous deployment. Importantly, developing bioorthogonal CFE will fundamentally alter the risk calculus by making any potential replicative product incompatible with natural biological systems. Combined with tiered access controls, this approach would rebalance the traditional tradeoff between beneficial innovation and security concerns.

The authors thank Kata Adamala for her ongoing support, as well as Janika Schmitt and Kimberley Ma for their helpful discussion and feedback.

Employers increasingly rely on scheduling, timekeeping, and payroll software to determine hours, eligibility, and pay. When monitoring data and optimization rules feed these systems, or what this memo refers to as “algorithmic wage-setting”—it rarely appears as a standalone tool. It shows up as configured rules and thresholds, time edits, automatic deductions, and eligibility flags that can quietly change compensable time and earnings. A 2025 Equitable Growth brief describes this dynamic as “surveillance pay”—the use of granular monitoring data integrated into pay systems to set compensation and calculate wages in ways that can disconnect time from pay and make outcomes harder to predict, audit, and challenge for discrimination.

States are already moving to regulate surveillance/algorithmic wage-setting, but proposals focus on prohibition and basic notice rights. This memo complements those efforts by centering the enforcement reality: payroll and timekeeping are the system of record and the regulatory choke point. It pairs guardrails on non-job-related data use with an enforcement operating model, audit-ready decision trails, integration/egress mapping, standardized audits and complaints triage, and minimum operational standards, so agencies can prove violations, correct errors quickly, and prevent repeat harm using preexisting wage-and-hour, civil rights, consumer protection, and procurement authority.

Challenge and Opportunity

Core labor protections like minimum wage, overtime, predictable scheduling, and anti-discrimination regulations, increasingly run through proprietary workplace systems that employers and vendors configure, but workers and regulators often cannot see or challenge. As these tools spread across white- and blue-collar industries—including healthcare, retail, logistics, food service, manufacturing, construction, and public services, they can normalize hidden wage loss, income volatility, and unequal treatment, especially when employers use surveillance-derived metrics to change pay tiers, incentives, benefits eligibility, or hours without clear notice or a workable way to challenge errors.

Why payroll and timekeeping are the focus.

In most workplaces, pay and schedules do not come from a single “algorithmic wage tool.” Instead, they come from connected systems that track hours, assign shifts, and apply workplace rules, that then feed into HR and payroll systems, which serve as the official record for compensation.

This memo focuses on payroll and timekeeping/scheduling because that’s where data turns into earnings: wages, hours paid, premiums, bonuses, and benefits eligibility. It is also where states can most realistically require auditable records, set clear limits on what data can influence pay decisions, and enforce worker rights.

Worker data typically flows through a simple data chain:

1. Capture: timekeeping, scheduling, attendance, and productivity/monitoring tools record events (clock-ins, breaks, shift changes, performance flags). 
2. Integrate: HR and payroll systems (and their vendors/subcontractors) pull those inputs together and link them to pay rules. 
3. Decide: configured rules, thresholds, or models trigger pay-affecting actions—time edits, automatic deductions, eligibility flags for premiums/bonuses, schedule adjustments, and pay calculations. 
4. Pay out: the results appear in payroll as wages, hours paid, premiums, bonuses, and take-home pay.

Because payroll and timekeeping are the official record, regulators cannot rely on the paycheck alone. Instead, regulators need to see and audit the system’s decision trail which includes the data sources that were used, the rule or thresholds that were applied, what changed (e.g., edits, deductions, eligibility flags), and who made (or approved) any changes.

Added risk pathway: third-party intermediaries.

Worker data does not always stay inside a single employer system. In instances, third parties such as verification services, analytics intermediaries, and sometimes data brokers/resellers collect and commercialize worker-related data and feed it back into workplace tools in the form of aggregated scores, flags, or “risk/reliability” signals that can affect scheduling, wages, and/or compensation.

Without clear limits and disclosure on this type of third-party data sourcing and onward sharing for pay and time keeping-affecting decisions (including brokered data and broker-derived scores), non-job-related data can also shape pay and scheduling indirectly while obscuring provenance (who supplied it), purpose (why it was used), and accountability (who is responsible) .

From a regulatory standpoint, the risks typically concentrate in four areas:

1. Implementation/configuration failures, rollouts, integrations, default settings, or rule changes that trigger underpayment or missing premiums. 
2. Improper inputs/uses in pay or time keeping decisions, such that non-job-related personal data (including surveillance-derived metrics and brokered inferences) used to set or modify wages, hours, eligibility, or incentives. 
3. Secondary use and onward sharing (data governance risk), in that worker pay/HR data repurposed, shared, or sold beyond payroll/service delivery, potentially re-entering decision systems as scores, flags, or eligibility signals. 
4. Black-box accountability gaps, in which systems that prevent workers, unions, and regulators from seeing which inputs and rules produced pay outcomes.

Understanding these is key from a regulatory standpoint because the question then becomes not only what the paycheck says, but what rules and input influenced any changes in wage or compensation calculations and whether those inputs are legitimate and traceable. 

The recommendations that follow do three things: (1) cut off high-risk data inputs, (2) require audit-ready decision trails, and (3) give workers enforceable rights to notice, explanation, and correction.

Why states should act now.

We already have evidence that algorithmic pay is common in some sectors in the labor markets, and that payroll “modernization” rollouts can cause widespread pay errors when software becomes the system of record. Even if “surveillance wages” is not yet widespread beyond the gig economy, which is the point: states can act upstream, before these tools harden into default infrastructure. At the same time and in parallel, states are also introducing surveillance-pricing prohibition signaling growing legislative appetite to regulate data-driven personalization and discrimination before it becomes default infrastructure.

Below are examples of the ways this trend is taking shape:

• Algorithmic pay in app-based work. The best-known example of algorithmic wage-setting is in the context of ride-hail and delivery platforms, where algorithms determine pay and can be difficult for workers to predict or contest, a classic “black box” accountability problem that vendors now export into traditional workplaces. Bloomberg Law notes this “baseline model” is now being exported to other industries through vendors marketing automated pay tools.

• Payroll systems failing at scale: Workday rollouts. After Seattle rolled out Workday, a third-party algorithmic payment system, workers filed a wage theft class action alleging underpayments and payroll problems. This is an example of how implementation/configuration failures at scale can take place when software becomes the system of recording. In another example, Oregon state workers also reached a $15 million class action settlement over wage errors tied to the implementation of Workday Payroll. Both cases show why “software errors” can function as de facto wage theft when employers run pay through complex proprietary systems that workers cannot debug and employers struggle to correct. 

• Timekeeping rules driving wage loss: time edits, rounding, and auto meal deductions. In a federal class action against Yale New Haven Health, workers alleged the employer rounded and edited time records and automatically deducted meal breaks even when breaks were missed, interrupted, or not fully taken, showing how pay harm can come from timekeeping configuration choices (and the lack of a transparent, contestable audit trail), not an “even when no one labels it “algorithmic wage-setting”.

• Timekeeping systems failing at scale: the Kronos/UKG outage. The 2021 ransomware attack on Kronos/UKG’s timekeeping platform left employers without their normal system of record for weeks, triggering wage-and-hour claims that employees went unpaid or underpaid when employers reconstructed hours and overtime. For example, Cargill reached a $2.4M settlement tied to unpaid wages/overtime allegations stemming from the outage, and other employers (e.g., Frito-Lay; Honda) have faced similar outage-related wage claims and settlements, illustrating how dependence on a single timekeeping/payroll platform can create systemic pay risk when the software fails.

These examples show how payroll and timekeeping systems are often the choke point because they encode pay rules, execute pay-affecting actions (like time edits and eligibility flags), and generate, or withhold, the audit trail regulators need to verify compliance. 

Harms this proposal targets (and what we know about scope)

This memo targets a specific set of harms that arise when employers route compensation decisions through timekeeping, scheduling, and payroll systems (often with third-party inputs). 

These harms fall into five buckets:

1. Hidden wage loss and underpayment.
   Examples include time edits and reclassifications, automatic deductions (e.g., meal breaks), missing premiums/differentials, or misapplied overtime triggers that reduce pay without a clear explanation or easy correction path.
   What we know: wage-and-hour complaints and litigation regularly surface these mechanisms, especially when payroll/timekeeping becomes the system of record.
   
2. Income volatility and scheduling instability.
   Automated scheduling and rule-based eligibility can drive unpredictable hours, unstable earnings, and difficulty budgeting, even more so, when rules change inside proprietary systems.
   What we know: volatility is well-documented in app and gig-based labor markets and is a growing concern as similar logic moves into traditional workplaces.
   
3. Discrimination and disparate impact at scale.
   Surveillance-derived metrics, proxy variables, and eligibility flags can embed unequal treatment in pay, hours allocation, or access to premiums/bonuses, especially when workers cannot see or contest the underlying rule or data input.
   What we know: civil rights risk is structural when decisioning relies on opaque metrics and limited contestability; disability advocates flag heightened vulnerability due to higher fixed costs and budgeting constraints.
   
4. Accountability failures (“black box” enforcement gaps).
   When the system’s decision trail is unavailable, employers can’t explain pay outcomes, workers can’t self-advocate, and agencies can’t prove violations, turning basic labor protections into an after-the-fact guessing game.
   What we know: this is a recurring barrier in investigations and disputes involving payroll/timekeeping platforms and integrated tools.
   
5. Data governance harms (secondary use and third-party re-entry).
   Worker pay/HR data may be repurposed, shared onward, or reintroduced via third-party scores/flags (e.g., verification, analytics intermediaries, brokers), shaping pay and scheduling indirectly while obscuring provenance and accountability.
   What we know: third-party ecosystems exist and can influence eligibility/access decisions; the risk increases when data egress and sourcing aren’t disclosed.
   

Given these harms, this memo seeks to reduce wage loss, volatility, and discrimination by (1) limiting high-risk inputs and secondary use, (2) requiring audit-ready decision trails and integration/egress visibility, and (3) giving workers practical rights to notice, explanation, and correction.

Plan of Action

Recommendation 1. Establish a clear guardrail on compensation data use.

Adopt legislation to create the bright-line ban, scope, and remedies, then reinforce it through existing wage/civil rights/UDAP enforcement and procurement requirements for public employers and contractors.

States should adopt a bright-line rule that bars employers and vendors from using non-job-related personal data, including brokered data and broker-derived scores or classifications—to set or change wages, hours, bonuses, differentials, benefits, or pay eligibility. “Non-job-related personal data” means any data or inference not reasonably necessary and proportionate to determine hours worked, pay owed, or job-related compensation factors, which are limited to seniority, job classification, documented skills/credentials, objective shift attributes (e.g., nights/weekends/hazard pay), location-based cost adjustments, and transparent performance metrics tied to job duties (not biometrics, health inferences, parenthood status, home address, or off-duty behavior). This targets the core risk: opaque, individualized wage manipulation.

To prevent loopholes and misclassification incentives, the guardrail should:

• Cover workers broadly. Apply to employees and to workers treated as independent contractors when an algorithm or platform determines compensation, since contractors are often most vulnerable to misclassification and therefore irregular pay, and exposed to variable, algorithm-set pay.
• Define prohibited practices clearly. Treat “surveillance wage-setting” as the use of surveillance-derived data or inferences to determine compensation at an individualized level.
• Create real accountability. Pair agency enforcement (e.g., labor and state Attorney Generals) with meaningful penalties and a private right of action. For this, states can look to bills such as Colorado’s HB26-1210, New York’s S8872 (and Assembly companion A9641), or Maryland’s HB0148 as models.
• Center disability and civil rights protection. Require accessibility, nondiscrimination testing, and meaningful appeal/human review for any permitted automated compensation practices.
• Preserve legitimate pay practices. Allow transparent, non-personalized wage premiums (e.g., seniority steps, COLA, hazard pay, shift differentials) and job-related market adjustments that do not rely on individualized surveillance.
• Limit secondary use and commercialization of compensation data. Prohibit employers and vendors from selling, licensing, or otherwise disclosing worker compensation data (and pay-derived eligibility flags) to third parties for purposes unrelated to payroll and scheduling/service delivery, and prohibit use of compensation data to train generalized AI models unless the data is truly deidentified and the use is strictly necessary for the contracted service.

Recommendation 2. Make enforcement practical: require audit-ready records for algorithmic pay and scheduling systems.

Use rulemaking/guidance and enforcement to require decision-trail records and standardized audits, reinforced through procurement requirements for public employers and contractors, and use targeted legislation only if agencies lack clear authority to compel retention/production or to cover vendors directly.

This recommendation targets two recurring failure modes: (1) rollout/configuration errors (especially during integrations) and (2) black-box systems that prevent regulators from showing what the software did and why. Guardrails only work if agencies can access the decision trail behind pay outcomes. 

Agencies already use payroll records/paystubs, time and attendance data, schedules, job classifications and rate tables, and worker complaints. But those records often show only the outcome, not the mechanism; they rarely reveal which rules, inputs, or system changes produced a pay result. To enforce wage and civil rights protections when software mediates pay and scheduling, agencies must also require retention and production of:

• Automated decision records (audit trails): logs of pay-affecting actions (time edits, auto-deductions, pay recalculations, eligibility changes for premiums/bonuses), including timestamps and the rule or data source that triggered each change.
• Rule/configuration history: the pay rules in effect over time, plus change history and approvals.
• Integration and egress map: (a) upstream systems feeding decisioning (timekeeping, scheduling, attendance, productivity, location/ratings); (b) any third-party sources supplying inputs (verification databases and any data brokers/resellers), including which fields/scores they provide and which pay/eligibility rules use them; and (c) whether worker pay/HR data is shared onward or sold, and for what purposes, including any analytics, benchmarking, or model-training uses unrelated to payroll/service delivery.

These missing records are not “nice to have;” they are the minimum evidence needed to audit pay outcomes when software is the system of record. To close this enforcement gap, states should do two things at once: (1) require retention and production of decision-trail records, and (2) standardize how agencies request, analyze, and enforce them. 

Actions states can take now include:

1. Modernize payroll recordkeeping. Require employers (and covered vendors where appropriate) to retain and produce audit trails, rule/configuration history, and integration/egress maps as standard payroll records.
2. Standardize an audit protocol (Labor and State Attorney Generals). Use a shared checklist and data request template to compare system outputs to hours worked/pay owed and identify repeat patterns (missing premiums, unexplained deductions, volatility, disparate impact). A small interagency working group should maintain templates, secure intake, and a vendor/system map.
   • Rapid supply-chain mapping: for each investigation, map (1) payroll/HRIS, timekeeping, scheduling, and monitoring systems; (2) each vendor/subcontractor processing worker data; (3) third-party sources supplying scores/flags; (4) which fields feed which pay/eligibility rules; and (5) any onward sharing/sale of worker data.
   • Audit templates should include both case-level review (individual decision trails) and pattern tests (aggregate metrics that reveal systematic underpayment, volatility, or disparities after rollouts or rule changes).
3. Use procurement as leverage. For public employers and contractors, require auditability, data retention, worker notice, and cooperation with investigations as contract conditions. Contracts should also prohibit undisclosed sale/sharing of workforce and pay data and prohibit using worker pay/HR data for analytics, benchmarking, or model training unrelated to the contracted service, with audit rights and penalties for noncompliance.
4. Set minimum standards for pay-affecting vendor practices (rule-setting and procurement). States do not need to regulate every feature of payroll and scheduling software to reduce harm. A practical approach is to set a small set of baselines, enforcement-ready standards through State Attorney General labor enforcement guidance, settlement terms, and public procurement that target the most common ways software drives wage loss and blocks accountability.

To make this action (#4) more concrete, states can start with a brief list of “minimum operational standards” that directly targets the most common ways payroll and timekeeping systems reduce pay and block accountability.

Four minimum operational standards can pursue:

• No silent time edits or auto-deductions. Prohibit break deductions, time reclassifications (e.g., “idle time”), or post-hoc hour changes without clear worker notice. Require an easy, timely process to review and correct records. (Example: an automatic meal-break deduction should not reduce paid time when a worker did not take a break, took a shorter break, or had the break interrupted, unless the worker can easily confirm or correct the record.)  States can also require logs that show what changed, when, and why. 
• Document and notify pay rules and eligibility changes. Require documentation and worker notice when systems change eligibility for premiums, bonuses, differentials, or overtime triggers and when pay rules/configurations change. States can also seek to prohibit earnings-impacting changes without a traceable record and a responsible human owner. 
• Exportable audit logs (decision trails) as payroll records. Require tamper-resistant, exportable logs that capture pay-affecting actions, the rule that triggered them, and the data source used, and treat these logs as payroll records subject to retention and production requirements. 
• Burden-shifting when records are missing. If required records are missing, place the risk on the employer and not the worker—using a rebuttable presumption in favor of the worker’s reasonable account of hours/pay, plus escalating penalties for recordkeeping failures (civil fines, enhanced damages for systemic violations, monitoring/injunctive relief, and procurement consequences). 

When to act. Agencies should open an investigation when complaints jump right after a new system rollout, when time edits or auto-deductions show up unusually often, when workers can’t get a plain-English explanation or timely correction, or when it looks like third-party/non-work data is affecting pay, hours, or eligibility. To do this consistently, agencies should use a simple, standardized intake and escalation process that logs the employer, the vendor/system (when known), and the issue type and flags patterns that should be reviewed by a designated triage team.

Recommendation 3. Guarantee worker-facing transparency and contestability: a right to know, a right to an explanation, and a right to correct.

Use agency guidance/rules and procurement to require notice, explanations, and fast corrections where agencies already have authority; use legislation to create new worker rights (access, deadlines, anti-retaliation) where needed; and use enforcement to hold employers and vendors accountable when notices or records are missing, false, or misleading.

Enforcement alone often leaves workers waiting months for relief. States should therefore require worker-facing transparency for any automated system that sets pay or materially shapes earnings through time classification, scheduling, differentials, bonuses, or pay eligibility so workers can spot problems early, document patterns, and seek timely correction. Aggregated reporting can help identify systemic issues, but it does not replace a worker’s right to see and contest the records that determine their individual pay.

Privacy and data-broker rules (e.g., CCPA/CPRA-style disclosure and Delete Act-style broker mechanisms) provide useful templates for disclosure and access rights in the worker-pay context.

A worker rights package focused on this issue would include: 

• Right to notice. Provide clear, plain-language notice when automated systems affect pay, time classification, hours allocation, or eligibility for premiums/bonuses. Notices should name the system(s), the categories of data used, the outcomes affected, and whether the employer/vendor relies on third-party sources (including brokers/resellers, verification databases, or analytics intermediaries).
• Right to an explanation. When pay, eligibility, or schedules change due to an automated rule, provide a readable explanation showing what changed; the rule/threshold applied; the input data sources; the effective date; the responsible human owner; and the identity of any third-party source that supplied an input, score, or eligibility flag.
• Right to inspect core records. Provide access to pay-related artifacts needed for self-advocacy, including time entries and edits (including auto-deductions); premium/differential eligibility status; incentive/bonus formulas that apply; and a history of pay-affecting adjustments within the pay period.
• Aggregated reporting for pattern detection (privacy-protective). Require aggregated reporting (by job role/site/shift/pay period, with privacy thresholds) so workers and unions can detect systemic patterns (frequent time edits, missing premiums, pay volatility, disparities). Examples include: % of shifts with auto-deductions; time edits per one hundred workers per pay period; premium eligibility changes over time by job class/site; weekly hours volatility pre/post rollout; and disparity checks such as premium loss rates (no tiny groups).
• Right to timely correction and human review. Require fast, accessible processes to challenge errors or automated determinations affecting pay, with clear deadlines for correction/back pay and escalation paths when errors cause hardship.
• Collective bargaining compatibility. Structure these rights so unions can incorporate them into CBAs and side letters, including access to aggregated reports (time edits/auto-deductions, eligibility changes, error rates, volatility, disparate impact indicators) and bargaining triggers when vendors, integrations, or pay rules change.

Worker-facing transparency also strengthens enforcement: it creates documentation, reduces information asymmetry, and helps agencies identify employers and vendors that warrant priority investigation.

Conclusion

Fair and trustworthy workplace technology starts with something workers understand: a paycheck they can trust and a schedule they can plan around. The evidence is clear: algorithmic pay-setting is established in app-based work, and payroll/timekeeping failures show how software can produce systemic wage harm at scale. States can act now using existing labor, civil rights, consumer protection, and procurement authority—strengthened by a prohibition on surveillance wage-setting, enforcement-ready decision trails, and worker rights to notice, explanation, and correction, so “efficiency” doesn’t come at the expense of fairness, dignity, accessibility, or basic economic security.