Data center nondisclosure bill lacks support in committee

A legislative committee on Wednesday recommended rejecting a bill that would add repercussions to North Dakota data center developers that enter into nondisclosure agreements with public agencies or officials. 

Senate Bill 2406 will advance to a vote by the full Senate with a do-not-pass recommendation from a joint House-Senate policy committee.

The committee approved an amendment to the bill that clarified that state agencies are still able to enter into confidentiality agreements to protect sensitive information for data centers and other industrial projects. 

But the committee recommended dismissing the bill, with some arguing that the topic is too complex to deal with in a three-day special session. 

Rep. Jonathan Warrey, R-Casselton, who brought the amendment and is one of the sponsors of the bill, was among those who voted for rejecting the bill. 

Rep. Todd Porter, R-Mandan, argued that the state’s existing transparency laws are sufficient. 

“I don’t know what we’re chasing,” Porter said. 

Rep. Austin Foss, D-Foss, called the penalties under current law “a slap on the wrist.” 

He supported the bill because it includes the possibility that an industrial developer could have a permit revoked if a nondisclosure agreement is in place.

“The crux of this bill is basically saying it’s not all on the public official, that both parties are in violation of that law,” Foss said.

Two amendments offered by the primary bill sponsor, Sen. Tim Mathern, D-Fargo, were not considered. One, which granted municipal power providers the ability to negotiate potential service agreements in private, was deemed unnecessary with the adoption of Warrey’s amendment. 

Mathern’s other amendment sought to repeal a state sales tax exemption for data center developers. It was deemed not germane to the bill topic.

North Dakota has several data centers proposed or in the works, including one under construction near Harwood being developed by Applied Digital. 

Nick Phillips, executive vice president of external affairs for Applied Digital, testified Tuesday that the company used nondisclosure agreements, also known as NDAs, for that project, but said it did so in compliance with state laws.

A separate committee, chaired by Warrey, is evaluating the impact of data centers and artificial intelligence. The committee’s work could lead to legislation in the 2027 regular session that starts in January. 

Reach North Dakota Monitor deputy editor Jeff Beach at [email protected]