California and North Dakota Move to Ban Public Official NDAs

Legislators in California and North Dakota are moving to restrict the use of nondisclosure agreements (NDAs) by public officials to ensure transparency in government business.

The California Legislature unanimously passed Senate Bill 994, authored by Christopher Cabaldon, which prohibits local government officials from signing NDAs that prevent them from sharing information about public business with other board or council members. The bill was prompted by an NDA signed by Vacaville Mayor John Carli with Saronic Technologies during the company's exploration of an autonomous drone shipyard in Solano County. While the shipyard project eventually moved to Brownsville, Texas, the incident highlighted a legal loophole. Carli defended his agreement as protecting trade secrets but supported the principle that NDAs should not keep the public or governing bodies in the dark.

Simultaneously, Democratic Senator Tim Mathern, Republican Senator Ron Sorvaag, and Republican Representative Jonathan Warrey introduced draft legislation in North Dakota to ban NDAs regarding data centers and industrial projects. The proposed measure would void such agreements to prevent developers from hiding environmental impacts, water consumption, and energy demands. The bill follows controversies involving Applied Digital, which requested NDAs from officials in Ellendale and Harwood. To ensure compliance, the North Dakota proposal would prohibit government entities from granting permits or tax incentives to developers tied to unlawful NDAs and could impose civil fines of up to $1,000 on violating agencies.