San Jose weighs limits on nondisclosure agreements for officials as data center debate grows

San José’s Rules and Open Government Committee unanimously backed developing policy options that could prevent City Council members from signing private nondisclosure or confidentiality agreements over matters requiring city action, including data centers and other large-energy-use projects.

The action came September 9. It is not an ordinance or law, and no new restriction is currently in effect. The city’s Legistar record identifies the item as a recommendation directing the City Manager’s Office, in coordination with the City Attorney’s Office and City Clerk’s Office, to evaluate options and return them to the City Council.

What the committee action covers

The council memo, titled “Council Transparency and Private Non-Disclosure Agreements,” asks the city to consider prohibiting councilmembers from entering NDAs involving projects, contracts, developments or other matters subject to city approval, funding, regulation, oversight or legislative action.

The proposed scope includes data centers, other large-energy-use projects, related infrastructure and agreements. It also would address situations in which a person or company seeking city action conditions access to project information on an elected official signing a confidentiality agreement.

As reported by San José Spotlight, the committee wants officials to be able to review confidential project information through a city process without accepting broad private restrictions on what they may discuss publicly.

Balancing transparency and proprietary information

The proposal is intended to preserve lawful protections for trade secrets, proprietary information and commercially sensitive material. The unresolved question is how San José can protect that information without allowing a private agreement to broadly limit an elected official’s public responsibilities.

The proposal is also described as preemptive. San José Spotlight reported that lead author Councilmember Peter Ortiz said he was not aware of current councilmembers signing NDAs for data-center projects.

Officials have also raised the value of candid early conversations with developers while projects are still being formed. Any policy would need to define how those discussions can occur, what information can remain confidential under existing law and whether the rules should cover only councilmembers or additional city personnel.

Why data centers are part of the debate

San José is reviewing data centers and other facilities with substantial electricity demands. The city’s Planning Division says data centers are subject to public hearings. It separately describes large-energy-use projects as commercial facilities that usually use 20 megawatts or more, including laboratories, advanced manufacturing facilities and electric-vehicle charging hubs.

The city says those are different categories: a data center’s main business is renting server space to other companies, while electricity at a large-energy-use project supports its primary business, such as manufacturing or research.

The city’s project page, updated September 10, lists applications currently on file with the Planning Division. The page says the list is updated monthly and may not reflect the current status of a permit or project.

Among the listed data-center applications are a proposed approximately 514,000-square-foot facility at 326 Charcot Avenue, a 444,436-square-foot facility at 5601 Great Oaks Parkway, an approximately 152,676-square-foot facility at 865 Embedded Way and an approximately 516,000-square-foot facility at 5977 Silver Creek Valley Road. The city lists the Silver Creek proposal with a maximum electrical load of 99 megawatts.

Those entries show why disclosure rules could matter to residents, developers and businesses, but appearing on the tracker does not mean a project has been approved. The tracker is not a final or static inventory.

What happens next

San José’s meeting calendar lists a joint Rules and Open Government Committee and Committee of the Whole meeting for September 16 at 2 p.m. The meeting is a scheduled point for residents to watch, but the calendar record does not establish that the NDA policy will be finalized or decided that day.

The next steps could include a staff draft, additional committee discussion, possible consideration by the full City Council and opportunities for public input. The final language would determine which officials are covered, how confidential information is reviewed and what disclosure responsibilities remain.

For now, San José has advanced a transparency proposal, not adopted a new restriction. Its practical effect on future data-center and other major-development discussions will depend on the policy options staff develops and any later action by the full council.

Sources

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