North Dakota to debate data center NDAs amid rising tax exemptions

North Dakota lawmakers are preparing for a September special session to debate several issues, including a proposal to temporarily ban nondisclosure agreements (NDAs) between data center developers and public officials. The proposal, introduced by Sen. Tim Mathern, was expanded to cover all industrial development for the duration of the current biennium ending June 30, 2027.

While a proposed moratorium on data center development did not advance, the state is seeing massive growth in tax incentives for the sector. State Tax Commissioner Brian Kroshus reported that sales and use tax exemptions for data center information technology equipment have increased significantly, rising from $5.4 million in 2021 to over $65 million last year.

The tax exemptions, originally established in 2015 to attract industries like banking and precision agriculture, cover hardware such as servers, routers, and cooling systems. Kroshus noted that the scale of these exemptions has far exceeded what legislators originally envisioned when the policies were implemented.