By Miranda Spivack
On paper, the public records laws in the 50 states and territories are pretty good. But there is one key exemption that private companies consistently insist on invoking when they are doing government work and paid with public funds. That is the trade secrets exemption to public disclosure, which is part of virtually every state public records law as well as the federal Freedom of Information Act. It allows the protection of proprietary information, such as software code. But private companies often want more secrecy: they insist that state and local governments sign Non-disclosure agreements (NDAs), and then try to use these agreements with government officials to make it even harder for the public to get information. In some communities, the NDAs, often crafted by the private companies’ lawyers, required that the existence of the NDA itself be kept secret and exempt from public records laws. So government officials who agree to them can’t even tell the public they signed an NDA.
NDAs are being widely used in the data center world, where companies seeking to build these massive warehouse-like facilities with hundreds of heat-creating and water-guzzling computer servers, feel the need to keep their plans secret. They are worried about tipping off competitors, disclosing their massive water and electricity needs and the tax deals they seek, and hoping to tamp down community knowledge until the deal is done, and the public has little recourse to object
In several parts of Northern Virginia, local officials signed NDAs as data center companies were eager to make big land deals to locate there. Northern Virginia is known as “data center alley,” and has the largest concentration of data centers in the world. Data center construction in the region was attractive going back to the 1980s because they could be built close to major pieces of internet infrastructure, such as undersea cables and other connection points on land that are part of the foundation of the internet.
There is a similar hub on the West Coast near Silicon Valley. Both areas function as conveyor belts for internet traffic. So building data centers near these sites, especially in the early days when lag time for connections were more common, was very appealing to tech companies. As connectivity sped up, this proximity has become less crucial, and has helped spawn the data center boom across the country in areas further from the two coasts.
That boom has been accompanied by NDAs, almost as a matter of routine. A recent study spearheaded by Eric Bonds, a sociology professor at the University of Mary Washington in Fredericksburg, Va., found that 25 of 31 local governments in Virginia that are involved in data center development, had signed NDAs. Bonds and his colleague Victor Newby believe that number may be understating reality because they found one county that said officials had signed an NDA with a tech firm but did not have a copy to provide to Bonds’ records request.
Bonds had thought that the NDAs would be narrow and focus on trade secrets. But that turned out to be an incorrect assumption. Instead, they had been written more broadly, preventing the public from learning about “business plans” and/or “non-public information.” This could mean almost anything, he wrote, “including information that relates directly to community impacts.”
Clearly, these NDAs are an attempt to try to work around public records laws. Similar broad requirements were unearthed by Arizona Luminaria, a non-profit news organization that examined a non-disclosure agreement that Pima County officials signed in 2023 to keep secret Amazon Web Services’ role in a major data center development for five years from signing or when the project was completed.
Another part of the deal: Amazon would get advance notice of any request for information from the public, which would give the company time to rebuff it. That practice is a common one for Amazon and many other companies. Arlington, Va. agreed to a similar privilege for Amazon when it inked the deal for the company’s second headquarters, as did the University of California, Berkeley, and UMass in Amherst, Mass. for other deals with Amazon.
But there have been recent signs that state and local governments are beginning to push back against NDAs. In Limerick Township, Pa., a data center company asked for an NDA, but Daniel Kerr, township manager, said local officials and their lawyer rejected it. “We just didn’t think it was the right thing to do,” Kerr said. “We want all the discussions to be public,” he told a local news organization.
Several state legislatures are considering bans on NDAs with public officials. Congress seems to be starting to pay attention to data centers and NDAs as well. Earlier this month, U.S. Sen. Richard Blumenthal (D-Conn.) sent letters to every state looking for information on NDAs signed by government officials.
Microsoft, meanwhile, issued a statement saying it was ending NDAs with local governments but might still insist on them to protect some information. Details are murky, and it’s unclear if someone filed a public records request for these past NDAs in any state if Microsoft would try to stop the government from disclosing them. I asked Microsoft for more information and an interview, and the response (by email) was that there was no new information at this time.
Good Jobs First, which has been studying data centers and their economic deals for several years, has a new study that details big financial losses for governments that have offered tax breaks and other deals for data centers. The study also says promised jobs don’t always materialize. Good Jobs First recommended greater transparency about these losses from – you guessed it- state and local governments that aren’t disclosing them to the public. Just another forum in which the public is being kept in the dark.
