Nondisclosure agreements (NDAs) became common practice in economic development site selection at some point. Now, the data center debate has prompted companies, governments, and site selectors to reconsider how and when confidentiality should apply to proposed projects.
While economic development work is intended to benefit the public, details about major investment projects are often kept confidential until a location decision has been made. By then, communities may have little opportunity to discuss the potential costs, benefits and impacts of projects that could significantly affect their future.
The anxiety about data centers has brought this issue to the fore. Learning after the fact how a major project could affect land use, noise levels, water resources, and electricity consumption and costs, not surprisingly, raises alarms. These concerns are amplified when residents feel that economic development is being done to them rather than for them. Broad NDAs prevent meaningful conversation about whether, how and under what conditions a project would actually benefit a community.
There are signs that these practices are changing.
- Companies are reconsidering confidentiality. Amazon, Microsoft, and OpenAI have stated that they will no longer use NDAs for data center projects
- States are taking action. Virginia, Maryland and Pennsylvania are among the states that have restricted or prohibited future NDAs related to data centers at the state executive branch level.
- Site selectors are also starting to reconsider their NDA practices, narrowing the focus by limiting NDAs to information that genuinely needs protection rather than treating every project detail as confidential.
This policy debate will continue. The National Conference of State Legislatures expects additional state-level proposals to restrict NDAs in 2027. At the federal level, bipartisan legislation has been introduced to increase transparency around data center projects by voiding NDAs signed by government officials that hide data center project details and that would stop companies from using incentives if the incentive is conditional on keeping project details confidential.
It is not clear if efforts to limit NDAs will extend beyond data center projects. Regardless, we all need to rethink policies on NDAs for business investment projects. At a minimum we should step away from secrecy and blanket NDAs as a default, reserving them only for specific types of confidential or protected data.
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