The AI Boom Is Here; the Secret Deals Shouldn’t Be – Inside Sources

In Bessemer, Ala., a secrecy pact with the developer of a proposed $14.5 billion data center didn’t just keep city officials quiet. It required them to destroy records.

In Salem, Ore., a city council member learned of her city’s nondisclosure agreement only when the public did.

In Pine Island, Minn., officials knew about a project for two years before residents heard a word. One resident told lawmakers the democratic process there had been “hijacked by big tech.”

These aren’t isolated lapses. That’s how the artificial intelligence boom is being built: deals negotiated behind closed doors, with elected officials contractually barred from telling constituents what enterprise is coming, how much electricity and water the facility will consume, and what tax breaks it will get. The AI train has left the station. Secrecy is a choice, and it’s the wrong one.

When University of Mary Washington sociologist Eric Bonds filed public records requests across Virginia, the nation’s data center capital, he found nondisclosure agreements in 25 of 31 localities.

Why would any official sign away the public’s right to know? Towns and states are competing for these investments, and a developer that doesn’t get its secrecy can take its billions elsewhere. Red and blue states alike have signed. And the pushback is just as bipartisan: Republicans and Democrats in Congress have joined forces on a bill to ban the agreements.

What do these contracts hide? Sometimes just the business’s name. In Spotsylvania County, Va., an agreement with Amazon kept the company’s water use confidential. Residents drink from that same public system, yet they couldn’t find out how much Amazon would draw from it.

The industry’s argument isn’t frivolous. Once landowners learn a data center is the buyer, prices soar, Dan Diorio of the Data Center Coalition told Spotlight PA.

Fair enough, for a land deal. That doesn’t require hiding a facility’s water and power use from the people who will live beside it. Microsoft said in March that it would end its nondisclosure agreements with local governments. Amazon Web Services CEO Matt Garman has since written that the company “ no longer use(s) nondisclosure agreements with the government agencies” it works with.

Distrust breeds backlash: Garman counts more than 100 data center moratoriums under consideration nationwide. In Monterey Park, outside Los Angeles, 88 percent of voters banned data centers outright.

Ending nondisclosure agreements only lets us see the bill. It doesn’t decide who pays it. That’s settled piecemeal, by utility commissions, county boards and water agencies, each with its own rules. Government often approves a data center with the same scrutiny as a shopping mall, by zoning boards never designed to handle infrastructure of national consequence.

We’ve done this before. America didn’t build the interstate highway system by letting every county haggle over asphalt. It set national standards and built one network. The AI build-out deserves the same.

Ohio offers a start. When data center demand outran central Ohio’s grid, regulators required large new facilities to pay for at least 85 percent of their expected power, for up to 12 years, whether they use it or not. The rules weeded out speculative projects, let new hookups resume, and aim to keep households from paying for power some server farm has reserved. Manufacturers have challenged it in court. However, it answers the question nondisclosure agreements never do: Who pays?

California has gone further. Laws by San Diego state Sen. Steve Padilla and others order regulators to set separate electricity rates so data centers, not households, cover their grid upgrades, and require developers to report projected power demand when seeking local permits.

Pima County, Ariz., went after the secrecy itself, capping nondisclosure agreements at two years and requiring disclosure at least 90 days before any county vote.

Now, take these models national. Permit server farms like power plants. Before any council or county board approves a land sale, rezoning or tax break, require developers to disclose power, water and incentives. And make data centers pay.

The servers are coming either way. What’s still up for a vote is whether Americans get to see the deal, and whether they’re the ones stuck paying for it.