As data centers continue their rapid spread across the United States, a growing number of communities are pushing back—not over technology, but transparency. The use of non-disclosure agreements (NDAs) between tech giants and local officials has become standard practice in development negotiations, leaving residents, and sometimes even elected leaders, in the dark about who is building in their backyards and what the environmental toll may be.
In Virginia, a Freedom of Information Act survey found that 25 of 31 localities with existing or proposed data centers had signed NDAs. In most cases, the agreements barred public officials from sharing nearly any information related to business plans or non-public data, broad categories that can encompass details about water consumption, power demand, and noise impact.
Proponents say the confidentiality clauses are a routine part of economic development, meant to protect corporate trade secrets and keep competitors from gaining an edge. But as data centers grow larger and more energy-intensive, particularly those facilities powering artificial intelligence workloads, the scale of secrecy has raised alarm among residents and environmental advocates.
A Widespread Issue
In Tucson, Arizona, public opposition recently halted Project Blue, a data center development that turned out to be owned by Amazon Web Services. The company’s identity was revealed only after a mistaken release of a document through a public records request. “We deserve transparency and accountability,” said Council Member Lane Santa Cruz after the vote to cancel the project, as reported by Arizona Public Media. “Giant corporations prefer to operate in the shadows, but Tucson is not for sale.”
Tucson’s experience is far from unique. Across the country, local officials have signed NDAs with unnamed tech firms. In Mason County, Kentucky, a family declined to sell their farm after prospective buyers offered millions above market value but refused to disclose who they represented. Months later, county officials confirmed, only in a public budget meeting, that the project was a global selection process for a data center.
Critics see a troubling pattern: secrecy agreements negotiated behind closed doors, often with shell companies, followed by rapid zoning approvals and community outrage once details emerge. “Economic development nondisclosure agreements are simply and comically corrupt,” said Pat Garofalo, Director of State and Local Policy at the American Economic Liberties Project. “They keep the public from knowing what is being done with their tax dollars, prevent elected officials from understanding what they’re voting on, and let big corporations operate in secrecy until it’s too late for anyone to stop them.”
Massive Footprint
The environmental footprint of these projects adds to public concern. Data centers can consume several million gallons of water daily for cooling and require massive amounts of electricity. In Loudoun County, Virginia, home to the world’s densest cluster of data centers, residents complain about nonstop noise from cooling fans. Elsewhere, communities report higher energy bills as utilities raise rates to meet corporate demand, even as data center operators receive tax breaks and discounted power.
Those tax incentives can reach into the hundreds of millions of dollars. More than 30 states now offer tax exemptions for data center construction. Meanwhile, legislative efforts to restrict NDAs in development deals have emerged in New York, Michigan, and Illinois. Tucson and Pima County are also reviewing policies to prevent another Project Blue scenario.
Even in smaller jurisdictions, the issue is combustible. In Minnesota’s St. Louis County, a proposed data center in Hermantown sparked a heated dispute among commissioners after several signed NDAs with a potential developer. When a journalist questioned the secrecy, one official replied with an expletive, prompting public outcry and a special hearing to educate residents on the process.
There is no law against NDAs, and local governments argue that without NDAs, companies might take their projects, and promised tax revenue, elsewhere. But transparency advocates counter that the price of secrecy is too high. Confidentiality agreements may shield corporate interests, but they also limit the public’s right to weigh in on developments that reshape their communities and strain local resources. As artificial intelligence drives unprecedented demand for computing infrastructure, the tension between growth and governance prompted by NDAs is set to intensify.
