Amazon stops using NDAs with local governments on data centers

Amazon says it no longer uses NDAs in its dealings with county and city officials over data centers. The pledge came in a long blog post from Matt Garman, the chief executive of Amazon Web Services, published at the start of October, which mostly argued that data centers are good for the places that host them.

Alongside the NDA change, Garman said Amazon will put $1 billion over the next five years into communities with its data centers. The money is meant for free community college programs, job training, and energy efficiency upgrades for schools, homes and public buildings.

Garman was blunt about why. He wrote that more than 100 data center moratoriums are being considered across the US, and warned that if they pass, the country risks falling behind in the AI race. He also blamed what he called “misinformation and outright lies” about water use, energy use and diesel backup generators.

An NDA in this setting is a contract that bars local officials from sharing details of a project with the public. In many cases that included even basic facts, such as which tech company would use the building, plus its expected energy and water demand.

Amazon has been caught up in several of these fights:

• Tucson, Arizona: a public records request by a local outlet showed Amazon was the hidden tenant of a disputed data center. County officials had been barred from naming it. Amazon has since pulled out of that project.
• South Bend, Indiana: where Amazon has put more than $13 billion into a large campus, some elected officials said city staff could not answer questions because of NDAs. The city’s mayor has since banned such agreements.
• Wharton County, Texas: a top county official signed an NDA not with Amazon but with a contractor, VisionFirst Advisors, which kept him from discussing the Amazon project.

Rep. Jamie Raskin says the problem goes well beyond one company. His office says more than 1,000 new data centers are reportedly in development in over 40 states, and that officials signed NDAs or worked with apparent shell companies in most of the proposals reviewed in 14 states. In Boyce, Louisiana, residents only learned of a 300-acre project after fences went up and land clearing had started.

The biggest open question is who actually signs. Big tech firms often stay in the background while developers and consultants deal with local governments, as the Wharton County case shows. Amazon did not answer when asked whether its promise also applies to those contractors.

Amazon is also not the first. Microsoft announced in March that it would stop using NDAs with local governments. In late September, Raskin, the top Democrat on the House Judiciary Committee, sent letters to Amazon, Google, Meta and Oracle demanding copies of their confidentiality agreements with public officials, along with projected power and water use for their US data centers. Amazon replied that it had already ended the practice. The other three did not comment at first.

Raskin, Rep. Greg Landsman of Ohio and Rep. Tom Barrett of Michigan are also backing a bipartisan House bill, the No Secrets for Data Centers Act, that would curb these agreements.

Lawmakers are not waiting for companies to volunteer. The governors of Pennsylvania, Massachusetts and Delaware, Josh Shapiro, Maura Healey and Matt Meyer, have all cracked down on data center NDAs through executive orders. Bills to ban them have been considered in Ohio, New Jersey, Indiana and New York, though not every attempt has passed.

Local governments are moving too. Eugene, Oregon, stopped city staff from signing data center NDAs in September. In October, Lane County commissioners voted unanimously to have staff draft a similar ordinance, with a sunset clause so they can revisit it once the state legislature acts. Commissioner Pat Farr summed up the issue as simply whether the public should know who is building on a piece of land.

Ending NDAs will not stop data centers from being built, but it should make it easier to find out what is coming before decisions are final. Some skeptics also point out that moratoriums usually last a year or two, while many of these projects will not switch on for several years anyway.

If a data center is proposed near you, here is what you can do now:

• Ask who the tenant is. With Amazon and Microsoft dropping NDAs, local officials should be freer to say which company is behind a project.
• Ask about power and water. Request estimated electricity demand and water use, and how the utility plans to cover any new grid costs.
• File a public records request. That is how the Tucson tenant came to light.
• Watch meeting agendas. Zoning votes, tax incentive deals and moratorium debates are usually public, and many allow comments.