There’s something bigger than power lines and water consumption driving the broader revolt against hyperscale data centre development. The nondisclosure agreement — a tool the industry treated as standard practice — turned passive neighbourhood scepticism into organised litigation, bipartisan legislation, and voided rezonings across multiple jurisdictions in 2025 and 2026. If you’re evaluating cloud capacity commitments or co-location contracts, this matters. The permitting landscape just fundamentally changed.
What Are Data Centre NDAs and Why Did the Industry Adopt Them?
Data centre NDAs are legally binding confidentiality agreements. Local officials, economic development administrators, and sometimes landowners are required to keep project identity, scale, power consumption, and tax arrangements under wraps during a project’s pre-announcement phase.
The industry rationale was straightforward: protect competitive intelligence, prevent organised community opposition before entitlements are secured, and preserve negotiating leverage with utilities and local governments. Corporate leaders called it “a normal and necessary part of the economic development process.” That was the mainstream position — before the backlash.
NDAs also gave projects code names. Project Loon (Google, Hermantown MN), Project Delta (Stokes County NC), Project Corn Maze (Wisconsin) — opaque designations that let developers advance through rezonings before anyone outside the room knew what was happening.
What gets concealed goes well beyond trade secrets. Developer identity, project footprint, power estimates, and tax subsidy packages are all typically covered. A survey of 31 Virginia municipalities found 25 — 80% — had NDAs in place. And the strategy consistently produced outcomes that were the exact opposite of what it was designed to achieve.
How Do NDAs Work in Practice — and What Do Communities Actually Object To?
Here’s how it plays out. Officials sign NDAs before any project details are disclosed. Communities discover a project exists only when rezonings or permits are filed — often after the key decisions are already made.
The objections come down to three things: no informed consent during entitlement votes, no ability to evaluate environmental and infrastructure concerns communities couldn’t evaluate, and a power dynamic where the developer’s interests are protected and the community’s are not.
That last point is the core grievance. When NDAs cover power draw, water consumption, and traffic impact, communities can’t assess how a facility will affect their local grid or aquifer until approval is near-certain. Aubree Derksen of Pine Island, Minnesota testified that city officials had known about a proposed data centre for two years before residents were informed. “The democratic process where my voice is supposed to matter has been hijacked by big tech.”
Port Washington, WI Mayor Ted Neitzke rejected an NDA and fared measurably better. The secrecy around financial terms — tax arrangements negotiated without public input — often proved more inflammatory than the secrecy about the project itself.
What Happened in Stokes County When Secrecy Became Untenable?
In January 2026, Stokes County, NC commissioners voted 3-2 to rezone approximately 1,845 acres of residential-agricultural Dan River land for a hyperscale data centre — “Project Delta” — without publicly naming the developer or disclosing key project details. That vote overruled the county Planning Board’s recommendation to deny.
A six-group lawsuit filed by the Southern Environmental Law Center and Southern Coalition for Social Justice voided the rezoning. Stokes County is now the most documented case of NDA-fuelled secrecy escalating into organised legal action. Stokes County’s opposition was fuelled partly by NDA secrecy.
The community response was particularly organised because the rezoned property includes burial grounds of Native American and enslaved people. Robert Hairston of the National Hairston Clan described “real people, in the ground.” SELC and SCSJ filed suit on behalf of six plaintiff groups. The Board of Commissioners ultimately reversed the zoning decision.
Developer CEO Drew Nations confirmed plans to reapply. Project delay, not cancellation, is the typical outcome — but the cost in legal fees, timeline slippage, and community trust is precisely what the NDA strategy was supposed to prevent.
Are Hyperscalers Using the Same NDA Practices as Smaller Developers?
Yes. Google’s proposed 1.8 million sq ft, $650 million data centre in Hermantown, Minnesota — developed under the code name “Project Loon” by Mortenson Development — required NDAs from the city administrator, his assistant, 22 St Louis County employees, and three county commissioners before any public announcement.
The practice is not confined to smaller developers. Google, Meta, and Microsoft are all documented as hyperscalers that used NDA-first site selection strategies. This was industry-wide.
MCEA (Minnesota Centre for Environmental Advocacy) obtained public records revealing the Project Loon details — including an Xcel Energy representative’s informal disclosure of Google’s identity to a senator the day before the formal announcement. The NDA-shrouded deal leaked anyway. The Stop the Hermantown Data Center Facebook group reached 5,000 members. MCEA filed suit. The AUAR environmental process was restarted, sidelining development for seven months.
Beaver Dam, WI signed an NDA related to a Meta data centre. Microsoft signed NDAs with Kenosha and four other Wisconsin communities. The breadth of the practice across hyperscalers made the backlash inevitable.
What Bipartisan Legislation Is Advancing to Prohibit Data Centre NDAs?
Wisconsin Senate Bill 969 would prohibit local governments from signing NDAs with data centre developers. The Senate utilities committee passed it 4-1 on a bipartisan vote — with Republican support — which is a significant signal. NDA prohibition has cross-party backing on community right-to-know grounds.
Minnesota’s House advanced a similar NDA prohibition bill with unanimous bipartisan support. Florida advanced a bill but removed it after industry lobbying — which illustrates how contested this reform is across different state legislative environments.
Wisconsin produced four competing data centre bills in a single session. Husch Blackwell‘s analysis calls it the model for what other states will face, and is explicit that NDA ban legislation “will almost certainly be reintroduced.” Pima County, Arizona acted ahead of state legislatures entirely. At least 10 states have now seen lawmakers propose banning or limiting data centre NDAs.
Microsoft’s March 2026 announcement to stop using NDAs came as Wisconsin legislative pressure mounted. Corporate VP Rima Alaily framed it as a trust question. Bill Lueders of the Wisconsin Freedom of Information Council offered a more empirical verdict: data centre NDA use “did blow up in their faces.”
What Does Transparent Site Selection Actually Look Like?
Nixon Peabody‘s “power-plus-permission” model is the clearest articulation of where the industry is heading. It replaces energy-first site selection by requiring power access, regulatory readiness, and earned community acceptance as co-equal prerequisites for project viability.
💡 Social licence to operate: Nixon Peabody’s term for earned community acceptance — achieved through transparent operations and proactive stakeholder engagement — now required alongside power access and regulatory approvals.
💡 Power-plus-permission model: Nixon Peabody’s coinage for the post-2025 paradigm: power access must be combined with regulatory readiness and earned community acceptance.
In practice, transparent site selection means proactive stakeholder engagement before the project is announced, legislative risk scanning as a due diligence step, and Community Benefit Agreements as the formal mechanism for making public commitments legally binding.
That last part matters. Microsoft’s announcement had no legal mechanism attached — it can be reversed without consequence. A CBA cannot. If you’re evaluating a developer’s transparency commitments, that distinction is the one to focus on.
Why Does NDA Practice Matter as a Vendor Transparency Signal?
Here’s the practical concern for technology decision-makers. Hyperscalers that relied on NDA-heavy site selection may have accumulated undisclosed permitting risk in regions where they claim capacity availability — capacity that could be delayed or stranded by community opposition, legislative action, or voided rezonings. This is part of the data center community revolt reshaping how the industry operates at every level — from site selection to infrastructure procurement.
NDA-heavy site selection history is a proxy for opacity-driven permitting risk. That risk does not appear in vendor capacity availability claims.
Twenty-five data centres were scrapped in 2025 — four times the 2024 figure. Google’s Hermantown project remains in limbo while the second AUAR is compiled. That capacity is not available in any meaningful sense, regardless of what vendor materials say.
So when you’re evaluating cloud or co-location providers, here are the questions worth asking:
- Does the provider disclose its community engagement approach for new site selection?
- Has it adopted a transparent site selection policy — and is that policy legally binding or a voluntary announcement?
- Does it publish Community Benefit Agreements or equivalent enforceable commitments?
- Has it publicly committed to dropping NDAs — and is that commitment documented and verifiable?
Microsoft has made a public commitment, however informal. Google and Meta have not. That’s a proxy — imperfect, but available — for the relative permitting risk embedded in their regional capacity claims. Virginia projects where NDA practices contributed to opposition escalation illustrate how this risk materialises at scale. For the full vendor evaluation framework, see the vendor transparency as a procurement evaluation criterion guide.
The NDA strategy was calibrated for an environment that no longer exists. In 2026, the vendors best positioned to deliver on capacity commitments are the ones whose site selection practices can withstand public scrutiny.
FAQ
What is a data centre NDA?
A nondisclosure agreement requiring local officials, administrators, or landowners to keep project details — developer identity, scale, power consumption, tax arrangements — confidential during the pre-announcement phase. Typically persists until entitlements are nearly secured.
Why did tech companies use NDAs when siting data centres?
The rationale was threefold: protect competitive intelligence, prevent organised community opposition before entitlements were secured, and preserve negotiating leverage with utilities and local governments. It was characterised as standard economic development practice before the backlash.
What is a social licence to operate for a data centre project?
Nixon Peabody’s term for earned community acceptance through transparent operations and proactive stakeholder engagement — now required alongside power access and regulatory approvals. It’s the alternative to NDA-first site selection.
What is a Community Benefit Agreement for a data centre?
A legally binding agreement specifying public commitments — jobs, tax contributions, environmental standards — as a condition of project approval. Brookings Institution identifies CBAs as the replacement for NDA-first approaches. The “legally binding” characteristic is what distinguishes them from informal announcements with no enforcement mechanism.
What is the power-plus-permission model?
Nixon Peabody’s term for the post-2025 paradigm: power access must be combined with regulatory readiness and earned community acceptance to be viable. It replaces the energy-first model where power access alone was sufficient.
Which states are advancing legislation to prohibit data centre NDAs?
Wisconsin (SB-969 passed committee 4-1 with bipartisan support), Minnesota (House NDA prohibition bill advanced unanimously), and Florida (advanced then removed after industry lobbying) are the primary jurisdictions. Pima County, AZ was the first to enact limits. At least 10 states have seen lawmakers propose banning or limiting data centre NDAs.
Was the Wisconsin NDA prohibition vote bipartisan?
Yes. The Senate utilities committee voted 4-1 with Republican sponsorship from Sen. André Jacque. Community right-to-know concerns transcend partisan divides.
Has any major hyperscaler stopped using NDAs?
Microsoft announced in March 2026 it would cease using NDAs with local governments. Google and Meta have not made equivalent public commitments.
What happened to the data centre project in Stokes County, North Carolina?
The January 2026 rezoning of 1,845 acres for Project Delta was voided following a lawsuit filed by SELC and SCSJ. The developer intends to reapply — project delay, not cancellation, is the typical outcome.
What was Project Loon and why did it cause controversy?
Project Loon was the code name for a proposed Google data centre in Hermantown, Minnesota. NDAs were signed with the city administrator, 22 county employees, and three county commissioners. Public records obtained by MCEA triggered a 5,000-member opposition group, a lawsuit, and a seven-month environmental review restart.
How do NDA-using developers compare to transparent developers in project outcomes?
The evidence favours transparency. Menomonie, WI passed an ordinance blocking a proposed $1.6 billion data centre. Stokes County’s rezoning was voided. Hermantown’s AUAR was restarted for seven months. Port Washington, WI — which rejected an NDA — fared measurably better. Nixon Peabody frames early community engagement as a risk reduction strategy, not merely an ethical preference.
Can informal transparency commitments be enforced?
Generally no. Microsoft’s March 2026 announcement had no legal mechanism attached. Brookings Institution notes that Community Benefit Agreements should be “legally binding” — distinguishing them from voluntary commitments that can be reversed without consequence. Treat CBAs as a substantially stronger signal than announcements alone.
