Artificial intelligence is fueling a surge in data center construction across the United States. This growth in infrastructure has led to scrutiny over nondisclosure agreements (NDAs) signed by local governments. These agreements limit what officials can publicly disclose about projects. Opponents of NDAs argue they reduce transparency on developments with major impacts on energy grids, water supplies, and communities. Supporters claim confidentiality is often necessary during sensitive business negotiations.
Pennsylvania at the Center of the Debate
Pennsylvania stands out in the national debate on data center facilities. A Center Square investigation revealed four of nine data center projects in Governor Josh Shapiro’s former “Fast Track” permitting program involved municipalities that signed NDAs with developers or related parties. Another municipality, Kline Township, stopped responding to information requests about potential NDAs.
The projects were linked to companies such as Amazon, Quality Technology Services, and Oracle America. Shapiro later shifted his stance and signed an executive order removing data centers from the fast-track program. He also barred NDAs by agencies under the governor’s jurisdiction for future data center projects.
Other States Face Similar NDA Questions
Pennsylvania isn’t alone in dealing with NDA-related issues. Virginia, the United States’ largest data center hub, saw researchers report that 25 of 31 localities with data centers had signed NDAs with developers. These findings indicate confidentiality agreements are common in major data center project negotiations.
Arizona has become another focal point. Senator Richard Blumenthal referred to reports of Amazon restricting public discussion in Pima County regarding a $3.6 billion data center project. This case is part of a broader Senate inquiry into data center secrecy.
In Louisiana, NPR reported resident concerns as negotiations for an Applied Digital data center project in Rapides Parish involved NDAs. Some residents felt key details were hidden during decision-making.
Tennessee has seen similar questions over NDAs for xAI’s “Colossus” facility near Memphis. Public Citizen noted NDAs limited information disclosure about the facility before operations started. Critics argue residents understood potential environmental and infrastructure impacts only weeks before the site’s activation.
Wisconsin has emerged as a battleground in data center secrecy discussions. Wisconsin Watch found NDAs tied to major data center proposals in communities like Beaver Dam, Kenosha, Janesville, and Menomonie. A further investigation identified Beloit connected to similar agreements.
Indiana faces transparency concerns too. In July, Posey County officials admitted signing an NDA about a possible data center, preventing them from naming the developer. In Franklin Township, Indianapolis, Council Member Michael-Paul Hart noted signing an NDA for a proposed 468-acre data center campus, which limited disclosure of the company involved.
What the Data Center NDAs Signify
Critics view NDAs as symbols of tension between AI infrastructure growth and public accountability. They argue data centers’ impacts should be known before permit approval and incentives are awarded. Transparency advocates claim NDAs undermine democratic decision-making.
Federal attention on this issue is rising. Senator Blumenthal initiated a nationwide investigation in March into NDAs that might restrict public disclosure regarding data centers’ energy use, water needs, and community impacts. Blumenthal asserts communities deserve transparency about projects affecting infrastructure and utility costs.
Supporters view NDAs as standard in commercial negotiations, protecting business information, land strategies, and competitive plans during location evaluations.
National Battle Over Data Center Transparency
The surge in NDAs underpins the challenge communities face as AI-driven demand spurs a national race to build data centers. Technology companies consider these facilities crucial for upcoming AI services. However, critics see secrecy as residents’ exclusion from decisions impacting their communities for decades.
As data center construction expands nationwide, the debate over transparency versus confidentiality may become as significant as the facilities themselves.
For inquiries, contact Newsweek editors John Fitzpatrick and Shakeema Edwards.
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