Secrecy in Turning Farmland into Data Center Deals

Some rural communities provide the perfect setting for the nation’s growing demand for data centers to provide artificial intelligence for an industry that is exploding. But many residents in town are kept in the dark until the deal for a new data center is done.

Rural America offers large tracts of land, cheap power and favorable zoning regulations to build high-capacity data centers. But an increasingly common feature in the development process is the use of non-disclosure agreements (NDAs), confidentiality contracts between developers and local governments.

Developers say NDAs are vital to protect trade secrets and proprietary information from competitors. 

RELATED: Non-disclosure agreements or code names are not only used in data center developments. American Farmland Owner reported on a Florida development that required secrecy, “Project Pan,” as it made new plans for a processing plant.

These agreements often preceded public notification, raising questions about transparency, community input, and land-use impacts.

Lawsuit About Secrecy

In northern Minnesota, two groups are suing because they say local officials kept information about a data center development secret from the public for a project described as “Project Loon.”

Commissioners had signed NDAs with the developer for a 1.8 million-square-foot, $650 million data center near Duluth.

The lawsuit contends that the public didn’t know that the project would be a data center, didn’t know what the water demands would be for the region, and was not informed about what zoning changes would be needed because of the confidentiality clause.

“Efforts to keep the proposed Hermantown data center a secret, revealed in documents obtained by public data requests, are some of the most extreme examples we’ve found of keeping the public in the dark about a data center,” stated Kathryn Hoffman, CEO of the Minnesota Center for Environmental Advocacy, according to Minnesota Public Radio.

Indiana Data Center Development Required NDA

A proposal in Franklin Township near Indianapolis, Indiana, required secrecy after a company – whose name was not made public at the time – looked to convert farmland into a new 468-acre data center.

Residents protested. They were concerned about the energy demands that the data center would have, along with concerns about water use and the loss of farmland for the project.

“To weigh the costs and benefits of data centers and to set the ground rules for any potential data-center development, local governments should empower members of the public with all relevant information to foster a meaningful debate,” wrote Dr. Eric Bonds, a professor of sociology at the University of Mary Washington.

He continued, “We fear, however, that the widespread use of non-disclosure agreements (NDAs) and a larger ethic of secrecy regarding data-center development curtails this discussion and, in so doing, impairs local democracy.”

The pushback continued for months. Eventually, the company – which was later publicly identified as Google – that was looking to develop the farmland into the data center, pulled out of the project. 

RELATED: Energy demands, regardless of whether it is due to data centers or elsewhere, put pressure on farmland to remain devoted to agriculture. Dr. Dave Muth told American Farmland Owner about what’s happening across the country.