North Dakota governor says data center transparency bill not needed 

North Dakota Gov. Kelly Armstrong joined private industry and economic development groups to speak against a bill that would further restrict public officials and agencies from signing nondisclosure agreements with developers of data centers and other industrial projects.

The bipartisan bill, Senate Bill 2406, if passed, would mean a project developer could see an agency permit revoked if a public official or agency agreed to a nondisclosure agreement with the company. 

The bill will be considered as the North Dakota Legislature begins a special session Wednesday, but a legislative committee gathered testimony Tuesday. 

Armstrong testified in favor of an amendment by Rep. Jonathan Warrey, R-Casselton, one of the sponsors of the bill. The amendment clarifies that the law would not prohibit an agency from entering a nondisclosure agreement to maintain the confidentiality of information that is already considered confidential or exempt from disclosure under state law.

Armstrong said without the amendment, the bill would put entities such as the Bank of North Dakota in an awkward position as a private company provides project information during a loan consideration. 

He said the bill would allow the bank to enter a confidentiality agreement with a farm operation, but not an ethanol plant because the ethanol plant would be an industrial project. 

Armstrong said it could interfere with hiring consultants to evaluate potential investments. 

“When we sign agreements with people who help us analyze where and how to invest our money, almost all of them have some form of a confidentiality agreement based on them not wanting to share their analysis with their competitors,” said Armstrong, a Republican. 

Armstrong favored the amendment, but also said the state’s existing public records laws already prevent officials from signing nondisclosure agreements, also known as NDAs. 

“We have good open records law,” Armstrong said. “There’s debate about the enforcement side of it.” 

The nondisclosure agreement ban tries to add an enforcement mechanism. The bill says a company that enters a nondisclosure agreement with an agency is not eligible for actions such as obtaining a permit or a zoning change from that agency. 

If an NDA violation is found later, the company’s permit could be revoked. 

Costs, benefits of data centers take center stage at legislative meeting

Rep. Todd Porter, R-Mandan, asked witnesses testifying in favor of the bill how it improves on North Dakota’s existing open records law. 

“This new bill has teeth because you could lose your permitting,” said David Tamisiea, executive director of the North Dakota Catholic Conference. 

Sen. Tim Mathern, D-Fargo, who introduced the bill, said there is very little consequence for violating open records and open meetings laws in North Dakota law. 

But Armstrong and others said it doesn’t make sense to punish the private company if a public official signs an NDA in violation of the law. 

Terry Effertz, executive director of TechND, was among the representatives of industry and economic development organizations opposing the bill. 

“You could halt or unwind a project that a community and its workforce are ready for over a paperwork violation,” Effertz said. 

Mathern and other supporters said the bill provides more transparency for communities that are getting blindsided by multibillion data center projects. 

He said Harwood-area residents learned of the Applied Digital project just six weeks before the company planned to break ground. 

Mathern also outlined two proposed amendments. 

One would provide an exemption for public entities that are also an energy provider, such as a municipal utility. The exemption would allow public utility companies the ability to privately negotiate a service agreement with a large industrial user the same way an electric co-op or investor-owned utility can. 

The other amendment would eliminate a state sales tax exemption for data center developers.

Nick Phillips, executive vice president of external affairs for Applied Digital, said the company has used NDAs in North Dakota, but said it did so in compliance with state laws.

He said the NDA was in place for about six weeks while it determined whether a project was viable. As Applied Digital entered permitting, he said the NDA was lifted.

Stark Power, which is eyeing Mandan for a proposed data center, promoted during a recent community town hall that it does not plan to use nondisclosure agreements for the project.