Is the Red Tape for Data Center Developers Red Enough?
As data centers boom across the U.S. at a never-before-seen scale, the nation’s communities are feeling it. Americans are reeling from these facilities dirtying their air, depleting their water supply and disrupting their local ecosystems. But amid these potential harms to health, well-being and livelihood, the people are resisting.
With developers in their pockets, elected officials are sacrificing their constituents at the altar of promised prosperity — and they’re doing it in the dark. Not only are communities unaware that their representatives are betraying their interests in secret, they have no clue as to how these deals are happening or what they entail.
This is the function of non-disclosure agreements for data center stakeholders: obscuring revenue-driven decision-making and protecting the bad actors who bypass the system. NBC News reviewed over 30 data center proposals spanning 14 states and found that local officials signed non-disclosure agreements in the majority of instances. Five elected officials from different counties disclosed that the agreements prohibited them from sharing information with their constituents.
As the data center capital of the world, with nearly 300 facilities in Northern Virginia alone, Virginia is a central case study in this battle. After submitting Freedom of Information Act requests to every Virginia locality with an existing, approved or proposed data center, researchers Eric Bonds, Ph.D., and Viktor Newby found non-disclosure agreements for 25 of 31 localities.
These documents were written broadly, prohibiting the sharing of all “business plans” and/or “non-public information” — details that are directly consequential to community stakeholders.
“If they are in the public interest, the projects should be able to withstand scrutiny even as they develop,” Bonds and Newby wrote. And the stakes for public interest could not be higher — confidentiality agreements conceal potential dangers not only to the health of the environment, but also to democracy.
Amanda Garcia of SELC says that this moment demands a reckoning: transparency and accountability for developers and politicians, and empowerment for communities.
“In order for communities to make a decision about whether the benefits of a data center outweigh the costs, the community needs to be informed on the front end about what those benefits and costs actually are,” Garcia said. “We’ve just seen a stunning lack of transparency across our region.”
The Trump administration’s Ratepayer Protection Pledge was announced in March, with tech companies promising to supply their own power. But while this pledge may seem like a sustainable solution on the surface, it appears to have ultimately just been designed to placate the communities who are being affected.
“It basically didn’t do anything positive for communities, because the devil is really in the details in terms of ensuring that local communities don’t pay the price for AI companies’ use of the grid or other infrastructure,” Garcia said. “And those decisions don’t get made by the White House. … Paying your way is a lot more complicated than the companies signing a pledge.”
Garcia cited a data center bill moving through general assembly in Tennessee. “It says it’s a ‘pay your own way’ bill, but the exceptions swallow the rule,” she explained. “So, there are all these exceptions where the local utilities can actually charge residential ratepayers and other ratepayers for some of the facilities that the data centers are also going to be using.”
Big Tech developers are also parading pop-up power plants: fossil fuel generators that data centers are building on site or near their facilities. While tech companies claim that these plants prevent grid overload and increases in electricity bills for local residents, this touted solution brings its own set of costs.
Garcia describes that this was exactly what she observed with xAI in Memphis. “There was no discussion of the costs of those proposals, which include air pollution, noise pollution, all of the harms that come along with any fossil fuel plant.” As data centers expand nationwide, pairing them with pop-up power plants can exacerbate the existing damages of these facilities.
And with these developers being rewarded on a large scale, concerned citizens and advocates believe that resistance on the state and community levels is more critical than ever before. Texas is giving data centers more than $1 billion in tax breaks every year. One criteria to qualify for the tax break is to agree to create at least 20 jobs paying at least 120% of the area’s median salary.
“We’re talking about some of the wealthiest companies in the world,” Garcia said. “Why do they need a tax break in order to develop property in communities?”
What is being done at the local level? In Pittsylvania County, Virginia, a data center developer wanted to build the largest gas plant east of the Mississippi, to which the local communities outright resisted the proposal. Local governments are also passing moratoria on approving data center proposals, so that they can get alignment on putting some protections in place with community input.
In Birmingham, Alabama, the city council passed a temporary suspension of approving new data center projects, and they are considering other regulatory action. Garcia describes such guardrails as “common sense protections.”
Ultimately, major tension exists between who is suffering now and projections of future benefit. “Having tax breaks that make it harder for communities to support improvements to infrastructure on the front end,” Garcia said, “they’re taking a risk that the data center company is not going to generate the amount of revenue that is being projected, and that the benefits are not going to accrue to the community until much later.”
