SB 2406 “The No NDAs Bill” Goes Far Beyond Data Centers

Special Session is slated for 3-days, starting Sept 2, and one of the bills coming up has captured GNDC’s attention – in the wrong way. The Data Center NDA Bill (SB 2406)

A nondisclosure agreement, or NDA, sets rules for sharing and protecting sensitive information. Businesses use NDAs when discussing possible investments, locations, financing, technology, utility needs, and growth plans.

An NDA does not override North Dakota’s open-records laws. It cannot make public information private. It gives businesses more certainty when sharing information that may already qualify for protection under state law.

Senate Bill 2406 seeks to prevent public agencies from entering NDAs with developers of data centers and industrial projects. However, the bill’s wording reaches much further than those large projects. GNDC stands in opposition to this bill.

WHAT THE BILL WOULD DO
In plain terms, SB 2406 would:

• Apply to more than data centers. The bill could cover almost any business, utility, or infrastructure project.
• Limit who can sign an NDA. State and local governments—and people working for them—could not sign certain NDAs with businesses.
• Reach into other contracts. The bill could ban privacy language included in grants, research agreements, utility contracts, and other business documents.
• Put projects at risk. A business could be denied a permit, zoning approval, tax break, or other government approval because of a banned NDA.
• Create penalties. A permit could be suspended or taken away. Businesses would have to legally confirm that they had not signed a banned NDA. Public agencies could be fined up to $1,000 for each violation. 

WHY GNDC OPPOSES THIS BILL
GNDC supports open government. An NDA cannot override North Dakota law or make public information private.

Our concern is what could happen if SB 2406 passes as written:

• Businesses may stop sharing early project details with state and local leaders.
• Public agencies may have less information when reviewing a possible project.
• Permits and approvals could be put at risk because of an NDA issue—not because of the project’s safety or impact.
• Utilities, research programs, and other public-private partnerships could face higher costs or delays.
• Companies comparing several states may remove North Dakota from consideration. 

The likely result is less information shared, more legal risk, and fewer opportunities for North Dakota. This bill is too broad.
 
WHO ELSE IS OPPOSING
Other organizations that have submitted or shared opposition or significant concerns include:

• Economic Development Association of North Dakota (EDND)
• Local Chambers and Economic Development Corporations
• TechND
• Power Companies of North Dakota
• Lignite Energy Council
• Private Businesses 

As the Economic Development Association of North Dakota warned: “If North Dakota enacts a blanket prohibition on reasonable NDAs during preliminary site inquiries, companies will simply eliminate our state from their shortlists.”