San Jose may bar officials from signing nondisclosure agreements

As community distrust of data centers grows, San Jose is considering banning councilmembers from signing confidentiality agreements that bind them from publicly discussing development projects.

The Rules and Open Government Committee on Wednesday unanimously voted to have the city manager create a policy to ensure transparency with developments, including data centers. The committee — comprised of five members of the City Council — wants to establish a process to review proprietary information from companies without requiring officials to sign nondisclosure agreements (NDA).

The policy is expected to return to the committee next week or by the end of the the month, depending on how long it takes for staff to draft it.

“Councilmembers work for the public, not for private companies, and no company seeking city approval should be able to determine what an elected representative can tell the people they serve,” District 5 Councilmember Peter Ortiz, one of the lead authors of the memo, told San José Spotlight. “When City Hall is considering major developments, infrastructure, data centers or other projects that could shape San Jose for decades, the public deserves transparency.”

Local governments across the U.S. have entered into NDAs with companies that shield the public from knowing the full scope of data center projects, which experts say is common practice. In Virginia, also known as the data center capital of the world, researchers found 25 of 31 local governments with an existing or proposed data center had signed NDAs. Northern Virginia, also referred to as “Data Center Alley,” has the largest concentration of these developments globally.

Ortiz said while he is not aware of current San Jose councilmembers signing NDAs for data center projects, the proposal is more of a preemptive move to protect public trust and transparency.

San Jose is on the cusp of developing uniform standards for data centers that will steer how these facilities get built and how developers will mitigate environmental impacts and support economic growth. The city has roughly 20 data centers in operation. Six more are under construction and five are in the entitlement review process to obtain city approvals before beginning construction, according to Erica Garaffo, assistant to the city manager.

Residents have pushed for a moratorium on new data centers until these standards are finalized, which councilmembers are expected to decide in December.

At the meeting, Vice Mayor Pam Foley questioned why chiefs of staff and city workers aren’t being considered in the proposal. Ortiz said he’s open to including them in the policy.

“It’s not that I object to the intent of this (proposal) at all,” Foley said at the meeting.  “I wouldn’t even enter into an NDA.”

District 4 Councilmember David Cohen said he’s never been asked to sign a NDA and wouldn’t sign one. He wants to build a flexible policy that allows developers to have conversations with the city early on.

“There are times early in project development where you have somebody come and say, ‘We’re still thinking things out. We’re still trying to decide what kind of project we might want to do on a property, and this isn’t necessarily ready for public consumption yet,'” Cohen said at the meeting. “We do want to be able to have those those candid conversations about potential projects and how they might play out before they’re even ready to be public.”

Linda Hutchins-Knowles, co-founder of a climate justice nonprofit Mothers Out Front Silicon Valley, said the policy should apply to city staff as well.

“My sense is because they’re very involved in negotiations too and policy making,” she told San José Spotlight.

Companies that prioritize NDAs say they do so to protect trade secrets and be able to negotiate. Yet secrecy has allowed companies such as Meta to fast-track its largest data center project in Louisiana and circumvent local opposition, according to a New York Times investigation. The more than 3,000-acre project will have a 5,000-megawatt capacity — enough to power up to 5 million homes.

San Jose’s proposal to ban NDAs is not intended to interfere with trade secret protections or other proprietary information protected by law, according to the memo, but to ensure public officials are not restricted by what they can publicly share.

San Jose officials have signed NDAs in the past, including nearly 20 officials in 2017 at the behest of Google as it explored building a massive campus in downtown San Jose near Diridon Station. That includes former Mayor Sam Liccardo, former Councilmembers Dev Davis, Raul Peralez and Magdalena Carrasco and former City Manager Norberto Dueñas.

“If you work for the public, I think there should be no such thing as an NDA,” Alviso resident Deborah York told San José Spotlight. “You work for us, it’s our right to know what you’re doing.”

Contact Joyce Chu at [email protected] or @joyce_speaks on X.