North Dakota lawmakers, during a special session in early September, failed to pass legislation that would have banned nondisclosure agreements (NDAs) between billion-dollar, out-of-state data center companies and local elected officials. This decision leaves the rapidly expanding industry largely unregulated, according to observations from the session.
The inability to redefine limits on these NDAs is particularly concerning, as it could permit the ongoing and accelerated construction of large data center complexes across the state without adequate public transparency. Rapid planning and development are reportedly underway for at least two additional massive installations, building on existing construction in Ellendale and Harwood.
Fargo Democratic Sen. Tim Mathern brought forward a proposal during the Senate floor debate that aimed to prevent these secret agreements. However, his effort did not garner sufficient support from other legislators. Majority lawmakers have indicated that the issue will be revisited in the 2027 session, a delay that could effectively grant data center companies a full four months to continue or speed up construction before any new regulations might be considered.
Opponents of a ban on NDAs reportedly argued that North Dakota’s existing open meetings laws, open records laws, and other freedom of information tools provide sufficient public insight. However, this perspective is challenged by the reality that these methods cannot inform the public when the underlying deals and private meetings between company representatives and individual public officials are not disclosed. Such one-on-one sit-downs between a mayor and an executive do not constitute public meetings under state law, offering a way to circumvent transparency.
The use of NDAs has been identified as a significant factor in blacking out transparency that is considered fundamental to local government operations. Unlike minor violations of state sunshine laws, such as unannounced township meetings for gravel purchases, the strategies employed by data center companies are described as having successfully bypassed required public participation in a matter of major consequence for the state.
As data centers continue to develop, questions about their potential effects, including water usage, impacts on consumer electricity rates, sound pollution, and the risk of empty buildings in the future, remain largely unaddressed. Without transparent information, North Dakotans may not understand the full scope of these impacts until it is too late. Responsibility for this lack of clarity is being attributed to majority lawmakers for not applying legislative brakes, and to local elected officials who have signed the nondisclosure agreements.
