Artificial intelligence has driven a surge in data center construction across the United States. As this trend continues, many local governments face scrutiny for signing nondisclosure agreements (NDAs) related to proposed projects. Critics claim these agreements limit transparency concerning impacts on energy grids, water supplies, and communities. Meanwhile, supporters believe confidentiality is necessary during business negotiations.
Pennsylvania: A Key Point in the Debate
Pennsylvania recently became a focal point in this national debate. An investigation by Center Square revealed that four out of nine data center projects in the state’s former ‘Fast Track’ permitting program involved NDAs with officials. Governor Josh Shapiro, who has changed his stance, signed an executive order preventing the future use of NDAs under his jurisdiction for data center projects.
The projects included companies like Amazon and Oracle America. At the same time, the municipality of Kline Township ceased responding to requests for information on potential confidentiality agreements.
States Facing Similar NDA Issues
Other states also grapple with NDA concerns. Virginia, the leading data center hub, is notable. Researchers found NDAs in 25 of 31 localities with current or upcoming data centers. Arizona also sees scrutiny, particularly from Senator Richard Blumenthal, over reports of Amazon’s efforts to limit public discussion in Pima County about a $3.6 billion center.
In Louisiana, NPR reported that key details of the Applied Digital data center project remained hidden during NDA-protected negotiations. Similarly, in Tennessee, NDAs around xAI’s ‘Colossus’ facility in Memphis limited disclosure of potential environmental and infrastructure impacts.
Transparency Concerns Across the Nation
Wisconsin faced transparency challenges as officials in several communities signed NDAs tied to major data center proposals. Indiana experienced similar issues, with Posey County officials and an Indianapolis council member signing NDAs concerning potential projects.
The Impact of Data Center NDAs
Opponents see the agreements as representing a clash between AI infrastructure development and public accountability. They argue data centers could lead to electricity demand spikes, increased water consumption, noise, and land use changes. Advocates for transparency insist on public access to information prior to permits and incentives being decided.
Federal interest in the issue is growing. In March, Senator Blumenthal launched a national investigation into NDAs and limits on public disclosure regarding energy use, water needs, and community impacts of data centers.
Supporters of NDAs suggest they are typical in commercial dealings to protect proprietary information, land strategies, and competitive planning during location evaluations.
National Struggle Over Data Center Transparency
The use of NDAs highlights a broader challenge as AI demand fosters a national race to build data centers. While these facilities are essential for future AI services, critics argue that the secrecy often surrounding these projects indicates a lack of resident involvement in transformative decisions.
As data center construction continues nationwide, the argument over transparency versus confidentiality remains paramount.