A rapid expansion of data centers across the United States, driven by the demand for artificial intelligence services, has ignited controversy. This boom often involves major tech companies using non-disclosure agreements with land sellers and local officials, limiting public discussion about these large-scale projects and raising questions about transparency and community impact.
Key Takeaways
- Data center development is booming, fueled by AI, but often involves strict NDAs.
- NDAs limit public disclosure, leaving residents and some officials in the dark about project details.
- Communities express concerns over environmental impacts like water usage, noise, and pollution.
- Lack of transparency has led to public outcry and project rejections in several states.
- Officials argue NDAs are necessary to attract competitive tech investments.
Confidential Deals in Rural America
In Mason County, Kentucky, Dr. Timothy Grosser and his son Andy faced an offer of $10 million for their 250-acre farm. This sum was 35 times what Grosser paid for the land in 1988. The catch was a non-disclosure agreement (NDA) presented by representatives of an unnamed "Fortune 100 company." The NDA would have prevented Grosser from discussing project details, including the company's identity, until a public announcement.
Grosser refused to sign the agreement, stating,
"I’m not selling my farm for any amount of money."Five months later, local officials confirmed that Mason County was being considered for a new data center. This scenario highlights a growing trend where tech giants leverage NDAs to secure land for massive data facilities, often in quiet, rural areas.
Fact: Data Center NDAs
A review of over 30 data center proposals across 14 states revealed that a majority involved local officials signing NDAs. These agreements often restrict officials from sharing information with their constituents.
The AI-Driven Data Center Surge
The construction of hyperscale data centers, which house vast arrays of servers and computing resources, is increasing rapidly across the nation. This expansion is largely fueled by the demands of artificial intelligence. Developers and many local officials promote these projects as economic boons, promising jobs and investment.
Proponents in the data center industry argue that NDAs are crucial for competitive reasons. They prevent rivals from gaining insights into strategic plans and project locations before public announcements. NDAs are common in many economic development deals, not just data centers.
Community Concerns and Environmental Impact
Despite economic promises, the proliferation of data centers in suburban and rural landscapes has generated significant community pushback. Residents voice concerns about potential disruptions to daily life.
Data centers demand enormous amounts of water and electricity. This can lead to increased power bills and concerns about water shortages. In Loudoun County, Virginia, a major data center hub, locals report a "constant whir" from cooling fans and backup generators. In South Memphis, Tennessee, an xAI data center's methane gas turbines release air pollutants that contribute to smog and formaldehyde, even as the company pledges to remain below pollutant limits.
Background: Hyperscale Data Centers
These are massive facilities designed to handle large-scale computing tasks. They are essential infrastructure for cloud computing, online services, and, increasingly, advanced AI applications. Their operation requires substantial energy and cooling systems.
The Information Vacuum
The secrecy surrounding these projects often intensifies resident concerns. In Mason County, 20 residents, including Dr. Grosser, received offers to sell thousands of acres at significantly inflated prices. According to Tyler McHugh, director of the county’s industrial development authority, 18 residents signed purchase contracts with the undisclosed company.
One family, the Huddlestons, who have owned their property for over 150 years, signed a contract for $60,000 per acre. When they later learned from neighbors that a data center was planned, they sought release from their contract and its confidentiality clause. Delsia Huddleston Bare expressed strong reservations, stating,
"If it’s artificial intelligence, I don’t want it anywhere near me at all."
She cited worries about noise, pollution, and groundwater contamination. McHugh acknowledges the desire for transparency but fears public opposition could deter investment. He noted,
"If I could go get on a megaphone downtown and say everything I know about this project, I would. You know what’s going to happen if I do that? Then everybody in the county is going to put it on Facebook, they’re going to put it out there, and then it just becomes a huge mess. Companies don’t want to deal with that."
However, many residents find this lack of information unacceptable. A local Facebook group, "We are Mason County, KY," with 1,500 members, has collected over 500 signatures from residents who believe the project threatens their quality of life. Max Moran, who started the group, said,
"It’s just destroying trust in the government. People just feel let down and kind of betrayed, because if you can’t ask what’s going on, then how can you trust anything they say?"
When Secrecy Backfires: Case Studies
The trend of confidential data center deals has sparked local opposition across the country, sometimes leading to project cancellations and new regulations.
Saint Charles, Missouri
In Saint Charles, Missouri, a grassroots movement defeated "Project Cumulus," a proposed 440-acre data center. The tech company behind it remained anonymous, using NDAs and a smaller entity, Spark Innovations LLC, which locals suspected was a shell company. Mayor Dan Borgmeyer, bound by an NDA, stated he repeatedly asked developers to allow him to share details, but they refused due to competitive concerns. The project was eventually withdrawn, and Saint Charles enacted a yearlong ban on data center construction in August, a first in the nation. Similar bans are now under consideration in other counties, including St. Louis, Oldham County in Kentucky, and Jerome Township in Ohio.
Pima County, Arizona
In Pima County, Arizona, secrecy also led to significant backlash. County officials were under an NDA for "Project Blue," a $3.6 billion Amazon Web Services proposal. This project, slated for outside Tucson, was revealed through a leak to a local news outlet. Dr. Matt Heinz, a Pima County Board of Supervisors member, stated he was unaware he was covered by the NDA until a developer's spokesperson accused him of violating it by speaking to a newspaper. He found the idea of an elected official being bound by such an agreement problematic.
"I just have a lot of trouble with the general idea that I, as an elected official representing 200,000-plus people in Pima County, can be held to the parameters of a non-disclosure agreement with a for-profit, private entity,"Heinz said.
"That seems like there could be just a natural conflict with what I have to do in service to my constituents."
Tucson city leaders, whose utilities would have supplied water and power, were left uninformed until late in the process. City Council member Nikki Lee commented,
"The lack of community engagement from the jump led to a lot of distrust. I’ve never seen Tucson as united in opposition to one thing as they were to this project."Residents created a dashboard to estimate Project Blue's energy and water consumption, finding it would use more energy than every home in Tucson combined. The Tucson City Council ultimately rejected the project, and the Pima County Board of Supervisors voted to dissolve NDAs 90 days before any county body vote.
The Dilemma for Local Governments
The data center industry is highly competitive, and companies often prioritize secrecy to protect their strategies. Local officials, eager to attract investment and create jobs, often feel compelled to sign NDAs. Mason County Attorney John Estill, who signed an NDA for the current proposal, believes it is the only way for officials to stay informed.
"Either you want your government to be courting businesses and looking for development in your communities or you don’t. And if you want them to be courting businesses and looking for growth in your local economies, then unfortunately, NDAs are part of the landscape,"Estill explained.
However, many residents and local leaders disagree. Mason County Schools Superintendent Rick Ross argued,
"We don’t have to give up our way of life and bow down to the data center in order to attract other business and industry. Saying we must cede hundreds of acres of farmland without regard for those who will be stuck looking at and hearing this thing is just a weak scare tactic."
Fact: Extended Secrecy
Data center NDAs can extend for years. Many agreements also include clauses requiring local jurisdictions to limit public records disclosure and notify companies before any release, giving them a chance to prevent it.
Hidden Environmental Reviews
The Minnesota Center for Environmental Advocacy has sued several towns, alleging developers used NDAs to obscure project details from the public. Kathryn Hoffman, the group's CEO, noted that in Farmington, residents were unaware it was a data center six months into the planning. She stated that some environmental review documents avoid using the term "data center," instead processing projects as smaller developments, which can lead to inadequate impact analyses.
What Lies Ahead for Mason County?
Mason County officials view the proposed data center as a potential economic boon. The county's population and workforce have declined by over 5% since 2018. Tyler McHugh believes the data center could create approximately 400 high-paying jobs, reversing these trends.
"This is not the time for Mason County to be overly picky or critical about anyone who’s showing interest in coming to our area,"he asserted.
Yet, residents like Janet Garrison, who lives near the scouted site, question the confidentiality.
"They could have come in and said we have a prime location and we have the resources for a data center. Why don’t we get together and have a big community discussion about the pros and cons?"
Kentucky residents are already facing financial pressures, with two major power companies requesting rate hikes that could add $9 to monthly bills. Records from the East Kentucky Power Cooperative indicate a new customer is requesting transmission upgrades for a "2.2 gigawatt data center load" by 2031. Jennifer Setty-Botkin, who moved to Mason County for its peaceful, rural environment, fears the project could force her to move.
"We love the community, but if this goes through and we have constant 24/7 noise and other issues like power surges, we’re going to want to move. But then the problem is: who’s going to buy our house if we’re having those issues?"
Dr. Grosser understands developers can build around his farm, but this does not alleviate his concerns about increased electric bills, declining land values, and pollution. From his porch, he reflected,
"It’ll knock out the woods I’m sitting right next to. I’ve got too many memories, too much sweat and blood there."