In a unanimous floor vote late last month, the New Jersey Senate approved Senate Bill 4304, legislation that would make it illegal for data center developers to use non-disclosure agreements to conceal project details from the public.

The bill, which passed 38-0 with two abstentions, now heads to the state Assembly, where it has been referred to the Science, Innovation and Technology Committee.

Why lawmakers say secrecy has no place in approvals

The legislation targets a practice that has drawn increasing criticism as data center construction accelerates across the country. Under the bill, any applicant, and agents acting on their behalf, would be barred from entering agreements that hide details of a project or prevent its public review. The bill states outright that such NDAs are "against public policy and unenforceable." The prohibition covers agreements with an approving authority or municipal agency, as well as with a property seller.

The enforcement mechanism is concrete: approving authorities and municipal agencies would be directed not to approve site plans or subdivisions if an applicant breaks the NDA rules. Senator Linda Greenstein, the lead Democratic sponsor, framed the measure as a community-protection tool.

"Transparency is crucial during the data center development process, especially since these projects can have a major impact on our communities," she said.

"This 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." Fellow Democratic sponsor Brian Stack pointed to residents' right to information about projects proposed near them.

"There is a responsibility that must be honored to surrounding communities when a data center is proposed for development," he said. "Residents deserve to know what is being proposed in their neighborhoods and how it could impact their communities.

This legislation will help prevent agreements that keep important information out of the public eye."

Cross-party sponsorship behind the bill

The legislation carries the names of eight sponsors from both parties. Alongside Greenstein and Stack, Democratic senators Angela McKnight, Patrick Deignan, Joseph Cryan, Teresa Ruiz, and Shirley Turner signed on, as did Republican Senator Carmen Amato. The 38-0 Senate result underscores the breadth of that support.

How the industry's codenames and shell companies came under fire

The bill responds to habits that have defined the sector for years.

Many data center operators have historically worked behind NDAs, spinning up shell companies and assigning project codenames so their involvement stayed hidden until a project secured permits. Operators previously defended the practice on commercial grounds. That defense has weakened amid rising public hostility toward data centers.

Several major operators, among them Amazon and Microsoft, have recently committed to abandoning NDAs around their data center developments going forward.

The issue has also reached Congress. Earlier this year, US Representative Jamie Raskin, Ranking Member of the House Judiciary Committee, opened an investigation into Amazon, Google, Meta, and Oracle over their use of NDAs for data center projects. Raskin said Amazon's former secrecy agreements stopped local officials from disclosing broadly defined "proprietary" or "confidential" information, leaving uncertainty about what could actually be shared.

A crowded market where sentiment has soured

New Jersey's data center footprint is substantial.

Data Center Map lists 65 facilities in the state, much of it serving as overspill capacity for New York City and concentrated around Newark and Secaucus.

QTS, Equinix, and Iron Mountain already operate there, while CoreWeave and Nebius are among the companies looking to build new capacity in the Garden State.

The NDA ban arrives at a moment when local tolerance for the industry is thinning. Numerous New Jersey municipalities have recently imposed moratoriums on data center development, and several have moved to permanent bans.