Data center nondisclosure bill dies in North Dakota Senate vote

North Dakota legislators on Thursday rejected a push to ban the use of nondisclosure agreements between government entities and developers of data centers and other industrial projects.

Bill sponsor Sen. Tim Mathern, D-Fargo, tried to persuade lawmakers that the bill was needed to preserve trust in government in the face of multi-billion dollar data center development projects that are popping up around the state. 

“Secrets destroy trust in government,” Mathern said.

Senators voted 32-15 to reject Senate Bill 2406, which included penalties for companies that enter a nondisclosure agreement, also known as an NDA, with a government agency or official. 

A committee on Wednesday recommended rejecting the bill and Republican Gov. Kelly Armstrong on Tuesday testified that the state’s transparency laws were already sufficient, though he said enforcement could be debated. 

Sen. Jerry Klein, R-Fessenden, on Thursday said the three-day special session was not enough time to deal with all the questions about the bill language that came up in committee, which he chaired. 

“This bill needs full hearings. It needs votes in both chambers. It needs public testimony, and a lot more discussion,” Klein said. 

That discussion could continue in a legislative committee developed to address data center and artificial intelligence issues and in the regular legislative session that begins in January. 

Sen. Janne Myrdal, R-Edinburg, who also is a member of that committee, said the bill was an overreaction, with evidence of only one NDA related to a data center in North Dakota

“Let’s not live in fear,” she said. 

Sen. Dale Patten, R-Watford City, added that local governments in North Dakota are free to pass their own restrictions on nondisclosure agreements. 

The North Dakota League of Cities did not take a position on the NDA bill, said Matt Gardner, executive director for the organization.

“They are not widely used,” Gardner said. “Open records is open records, and cities comply with that all the time.”

He said League of Cities provides training on the state’s open records and meetings laws to its members. 

Rep. Jonathan Warrey, R-Casselton, chair of a legislative committee studying data centers, said he believes a similar bill will be brought forward during the 2027 session. He added the bill shined a light on the issue and put public officials on notice for what specific information can be withheld through the state’s open records laws, such as proprietary, financial, trade secret and health information.

“I don’t want people to be left in the dark,” Warrey said. “The law is already clear on what we can or can’t keep from the public.”

Reporter Michael Achterling contributed to this article. 

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