Tech companies like Applied Digital and Amazon are increasingly using non-disclosure agreements to keep datacenter projects secret during negotiations, preventing voters from participating in decisions about massive community-shaping developments that come with significant environmental and economic trade-offs.
The practice of using non-disclosure agreements (NDAs) to keep datacenter projects secret during early negotiations is becoming standard operating procedure for major tech companies, according to industry insiders and critics. These NDAs, often justified as necessary for compliance with securities regulations, effectively prevent local communities from participating in discussions about developments that will reshape their infrastructure, environment, and economy.
The Secrecy Justification
Applied Digital CEO Wes Cummins explained his company's approach to The Register, stating that NDAs protect against insider trading violations when dealing with publicly traded companies. "Each one of these projects is still a big deal for us," Cummins said. "When we do NDAs, it's really specifically about trading in our public shares. We're trying to protect people from the insider trading laws of the country because not everyone knows that, 'Hey, I've got insider information on a company,' and then they go trade in it, and then you get in trouble."
This justification has been adopted by other major players in the datacenter industry, including Amazon, which has faced criticism for similar practices. The NDAs typically bind local officials to silence about project details until formal announcements, which can occur months after initial discussions begin.
Community Impact and Economic Trade-offs
The secrecy surrounding datacenter projects often precedes significant community decisions about tax incentives, infrastructure investments, and environmental regulations. Deanna Noel, campaign director with the nonprofit consumer advocacy group Public Citizen, argues that this approach systematically disadvantages local communities.
"Wealthy tech companies talk a big game about economic development. In reality, they're using NDAs to quietly secure massive tax breaks and public subsidies, depriving local communities of critical resources," Noel told The Register. "The public shouldn't be expected to pay the price for datacenter expansion, and we deserve a seat at the table—not to be blocked by NDAs."
Datacenters bring substantial economic benefits, including hundreds of permanent jobs and infrastructure improvements. However, they also consume enormous amounts of energy and water, create construction disruptions, and often receive significant tax breaks that can strain local budgets. The secrecy prevents communities from weighing these trade-offs before commitments are made.
A Case Study in Harwood, North Dakota
Applied Digital's $3 billion, 280 MW datacenter project in Harwood, North Dakota—a community of approximately 800 people—illustrates the tension between corporate secrecy and community transparency. Mayor Blake Hankey first learned of Applied Digital's plans in July, a month before the public was informed. He signed an NDA to keep the project under wraps until the August 19 announcement.
"Because they're a publicly traded company, they're subject to SEC violations, so I did have to file a non-disclosure agreement. So I was not allowed to talk about it until it was announced publicly," Hankey told KMSP-TV Fox 9.
The project faced pushback around noise, the 900-acre plot size, water use, and energy costs. While Cummins claims that "98 or 99%" of local residents supported the project, critics note that the secrecy prevented informed participation from the start.
Legal and Ethical Concerns
Pat Garofalo, director of state and local policy at the American Economic Liberties Project and author of The Billionaire Boondoggle, views these NDAs as fundamentally corrupt. "My view is that the use of non-disclosure agreements in these deals is corrupt. Full stop," he said. "You are requiring public officials whose duty is to the public, whose duty is to being good stewards of public resources and making the right decisions for the community, and you are making it explicit that they cannot tell their constituents who voted for them, who pay their salaries, what is going to happen in the community."
Garofalo, who has studied the topic for a decade, believes the SEC insider trading justification is a new, convenient excuse. "That's very cute that they're getting into these insider trading allegations," he said. "From what I've experienced and from what I've seen, the very explicit purpose of these non-disclosure agreements is so that the community doesn't know what's happening until it's too late in places where they think there will be pushback on one of these projects."
Regulatory Context and Policy Solutions
Noel, who co-wrote the research paper "Reining in Big Tech: Policy Solutions to Address the Data Center Buildout," argues that NDAs allow corporations to "milk communities dry." She advocates for state and local policymakers to prohibit or strictly limit NDAs in datacenter deals.
"NDAs act as community gag orders, giving some of the world's richest corporations carte blanche to build what they want, where they want, and how they want — often in lockstep with a Trump-administration agenda focused on expanding fossil fuel production while blocking the clean energy transition," Noel stated.
The paper, published by Public Citizen, outlines policy solutions to address the rapid datacenter expansion, including transparency requirements for community impact assessments and restrictions on the use of NDAs in public-private negotiations.
Applied Digital's Defense and Evolving Approach
Cummins defends his company's practices, telling The Register, "We don't sneak around to try to get deals done." Applied Digital conducts public meetings, site assessments, and impact surveys, considering factors like school schedules, traffic patterns, and environmental concerns.
"The impact is wildly positive overall, but are there going to be some headaches during construction? A hundred percent," Cummins said. "We go in there with plans that are very detailed, because people who live there want that detail. Where are the routes that the trucks will run through? Where are we going to see congestion? How are you dealing with it? What time of day?"
Following the Harwood experience, Cummins indicated the company is adjusting its approach. Applied Digital recently broke ground on a 430 MW datacenter in an unnamed southern US state, with more information promised in February. "You'll see we're not circumventing public comments or anything of that nature," he said.
The Broader Pattern
The datacenter industry's use of NDAs represents a broader pattern in which technology companies leverage legal instruments to control the narrative and timing of community discussions. As datacenter construction accelerates—driven by AI development, cloud computing growth, and power scarcity—these practices will likely face increasing scrutiny.
For communities facing datacenter proposals, the challenge involves balancing the need for economic development with the right to informed participation in decisions that will shape their future for decades. The tension between corporate secrecy and community transparency remains unresolved, with significant implications for democratic governance at the local level.
The debate extends beyond individual projects to fundamental questions about how society should govern the deployment of critical digital infrastructure that powers the modern economy while consuming resources essential for community wellbeing.
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