New Jersey Senate votes 38-0 to ban data center NDAs

New Jersey data center applicants would be barred from using non-disclosure agreements with municipalities and land sellers under a bill the state Senate passed 38-0, with two abstentions, late last month.

Data Center Dynamics first reported that Senate Bill 4304 has been received in the Assembly and referred to its Science, Innovation and Technology Committee. The bill directs approving authorities and municipal agencies not to approve site plans or subdivisions where an applicant breaches the NDA rules, and describes the agreements as "against public policy and unenforceable."

The property-seller provision removes confidentiality developers have used to keep a land assemblage quiet before site plan review. Parcel-level pricing and site control become visible to competing buyers and to boards that vote on approvals. For a fund underwriting a New Jersey site, the diligence question is whether an existing NDA with a town or land seller would be treated as a violation that blocks site plan approval.

Seven Democrats and one Republican sponsored the bill. Sen. Linda Greenstein said the legislation "makes it illegal for applicants who attempt to conceal data center development plans and makes clear that these agreements have no place in the approval process."

New Jersey is a spillover market for New York, with 65 data center facilities listed by Data Center Map. Operators have long used NDAs, shell companies and project codenames to keep their involvement quiet until a project is permitted; Amazon and Microsoft have recently promised to drop NDAs around their data center developments, according to Data Center Dynamics. The bill is written around agreements rather than corporate structure, so shell entities and project codenames fall outside its described scope.

The Assembly Science, Innovation and Technology Committee is the next gate for the bill.