Debate Surrounds Use of NDAs in Data Center Projects

The rise of artificial intelligence is fueling a surge in data center construction across the United States. This boom has led to scrutiny of local governments for signing nondisclosure agreements (NDAs) that limit public discourse on proposed projects. Critics argue that these NDAs reduce transparency in developments impacting energy grids, water supplies, and local communities. Supporters believe that these agreements are necessary for protecting sensitive business negotiations.

Pennsylvania and NDA Controversies

Pennsylvania has become central to this debate, revealing how NDAs are shaping data center developments. An investigation by Center Square found that in Governor Josh Shapiro’s previous “Fast Track” permitting program, four out of nine data center projects involved NDAs signed by municipalities. These projects involved companies such as Amazon and Oracle America. As a response, Shapiro issued an executive order eliminating data centers from the fast-track program and prohibiting future use of NDAs under agencies in his jurisdiction.

National Widespread Use of NDAs

The issue extends beyond Pennsylvania. In Virginia, which houses the nation’s largest data center hub, a study showed 25 out of 31 localities with projects had signed NDAs. In Arizona, Senator Richard Blumenthal highlighted Amazon’s restrictions on public discussion in Pima County regarding a proposed $3.6 billion data center. Meanwhile, in Louisiana, NPR reported that an Applied Digital project in Rapides Parish proceeded under NDAs, raising public concern.

Additionally, controversies arose in Tennessee over a high-profile “Colossus” facility near Memphis, where NDAs limited information about the project’s development stages until operations were imminent. Wisconsin also saw NDA-related conflicts; an investigation revealed agreements affecting communities like Beaver Dam and Kenosha in connection with significant data center plans. Indiana faced transparency issues in Posey County and Indianapolis, where NDAs cloaked the identities of project developers.

Implications of Data Center NDAs

For opponents, these nondisclosure agreements reflect a tension between fast-paced AI infrastructure growth and public accountability. Criticisms highlight potential impacts, such as increased electricity usage, water consumption, and changes in land use. Transparency advocates argue that preventing public access to project details before approvals undermines democratic processes.

Senator Blumenthal launched a nationwide investigation into NDA usage in March, emphasizing the public’s right to understand data centers’ infrastructure and utility impacts. In contrast, supporters defend NDAs as integral to commercial negotiations, citing businesses’ needs to secure proprietary information and strategic plans.

Ongoing National Challenge

The use of NDAs epitomizes a challenge for communities as demand for AI-driven data centers grows. While developers see them as crucial to supporting advanced AI services, critics see project secrecy as excluding residents from crucial community-shaping decisions. As data center construction accelerates, transparency versus confidentiality debates are intensifying.