The backlash against data centers has opened a rift between Colorado’s leading environmental groups and labor unions.
At the core of the dispute is a legislative proposal to rein in the energy-hungry facilities powering the artificial intelligence boom. Backed by environmental groups, the legislation aims to shield ratepayers from higher utility bills while keeping state climate goals within reach.
This story was produced as part of the Colorado Capitol News Alliance. It first appeared at cpr.org.
The bill would require data center developers to invest in climate-friendly energy and grid upgrades to cover the impact of their projects — a strategy energy insiders call BYONCE, short for “bring your own new clean energy.”
That plan, however, ran into a parade of labor opposition at its first committee hearing last week. During roughly five hours of testimony, union representatives warned that the proposal would drive good-paying jobs into Wyoming and other neighboring states.
“The punitive measures this bill creates will effectively act as a prohibition on data center development,” said Nate Bernstein, the executive director of Climate Jobs Colorado, an advocacy group working to ensure climate policies support union workers.
Other labor activists struck a less confrontational tone and called for substantial amendments. Official lobbying records, however, show leading unions oppose the legislation in its current form, aligning with business groups and the data center industry itself.
A few labor organizations are instead backing an opposing bill supported by the data center industry, which offers a 20-year sales tax break if data center developers follow more moderate environmental regulations.
The exact potential for jobs is unclear. Even though data centers create fewer permanent jobs than other industries, labor unions see the current buildout as a massive opportunity for skilled tradespeople and construction workers.
A replay of a familiar tension
Tension between the labor and environmental movements isn’t new.
The two traditional Democratic constituencies have often battled over the last half-century, tussling over everything from coal mining jobs to former President Biden’s attempts to boost electric vehicles. In Colorado, unions have repeatedly pushed back against the state’s efforts to retire coal-fired power plants, warning that clean energy jobs often offer less pay and fewer benefits.
There’s also been a push for greater collaboration. Dennis Dougherty, the executive director of the Colorado AFL-CIO, a co-chair with the BlueGreen Alliance, an organization dedicated to ensuring the transition away from fossil fuels benefits workers.
He said Colorado labor unions and environmental groups don’t always agree, but have found common ground on key issues like job training and investments in green infrastructure.
“That’s where we’ve really honed in, in the past, to get really impactful legislation for workers and the environment,” Dougherty said.
State Sen. Cathy Kipp, D-Fort Collins, speaks at a rally at the Colorado Capitol against data center proliferation on Friday, March 14, 2026. (Jesse Paul, The Colorado Sun)But few issues are better positioned to divide labor and environmental interests than data centers. Between 2013 and 2024, global private investment into data centers and other AI systems reached $1.6 trillion, according to a report from Stanford University. The spending splurge vastly outstrips major government infrastructure projects, like the U.S. Interstate Highway System or NASA’s Apollo program.
That degree of investment is already buoying the construction industry. During the committee hearing, Jose Soto, a longtime member of the Laborers’ International Union of North America, said Colorado lawmakers can’t risk missing out on those jobs.
“Excessive regulations or moratoriums risk choking off this vital industry just as it is poised to deliver significant employment opportunities and local economic benefits,” Soto said.
Equipment in the “Meet Me Room” March 18, 2024 at the Novva Data Center in Colorado Springs, Colorado. The room is the entry point for neworks coming into the building. (Mark Reis, Special to The Colorado Sun)A policy brief completed by the University of Michigan notes that data centers tend to operate more like infrastructure projects than traditional job-creating businesses, such as factories or warehouses. Once a facility is complete, it requires relatively few employees to keep the computer equipment humming.
Building a data center, however, requires no shortage of skilled workers. In the next decade, the data center boom is expected to boost non-residential construction jobs by roughly 6%, according to a recent report from the U.S. Bureau of Labor Statistics.
Many local communities and environmental activists, however, aren’t convinced the benefits outweigh the risks, such as the potential for rising energy bills or depleting precious water resources.
In north Denver, residents are also worried that massive diesel backup generators at a facility under construction could add air pollution to an already polluted neighborhood. The dispute is one reason why the city is considering a moratorium on new data center developments.
Next steps for the legislation
Given the amount of disagreement over Colorado’s dueling data center bills, it’s unlikely either bill will move forward in its current form.
As the sponsor of the environmental regulations bill, state Sen. Cathy Kipp, D-Fort Collins, said she’s currently in negotiations with labor groups looking for a way to “thread the needle.”
“We cannot just think about giving away our natural resources,” Kipp said. “I understand people want jobs and people should have jobs, but there are also quality of life considerations.”
Kipp’s bill would require large data centers to pay prevailing wages and participate in apprenticeship programs. She said unions support those labor standards, but some argue the state can’t enforce the requirements under current law unless it provides a direct financial incentive to the data center industry.
“We are trying to look at everything right now,” Kipp said.
Alana Miller, the state policy director for the Natural Resources Defense Council, is also optimistic that environmental and labor groups can arrive at some sort of compromise around “protecting customers, good jobs and climate progress.”
The competing industry-backed bill was set to appear before its first committee on Thursday, but lawmakers are now rescheduling the hearing. The delay is meant to give committee members time to review major amendments to legislation, said state Rep. Alex Valdez, a Denver Democrat and a leading bill sponsor.
This story was produced by the Capitol News Alliance, a collaboration between KUNC News, Colorado Public Radio, Rocky Mountain PBS, and The Colorado Sun, with support from news outlets throughout the state. Startup funding for the Alliance was provided in part by the Corporation for Public Broadcasting.
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