The Problem:

Large corporations have increasingly employed nondisclosure agreements (NDAs) in economic development deals, preventing officials from divulging a host of relevant details to the public, including the very identity of the corporation in line to receive subsidies.

These agreements have been signed by mayors, city council members, governors, and officials at economic development boards all across the country.[1] As one local Illinois official said regarding Amazon’s use of NDAs in and around Chicago: “It’s customary now, when mega-Fortune 500 companies come, that they prefer that you not divulge what they’re doing. … It happens all the time.”[2]

Nondisclosure agreements in subsidy deals cause concrete harms to local businesses and workers.[3] They also undermine local democracy, preventing voters from having a say over how public resources are spent or from holding elected officials accountable for crafting too-generous deals with corporate leaders.[4]

According to a June 2022 poll conducted by GBAO on behalf of Fight Corporate Monopolies, 71 percent of respondents said that they were more likely to support a candidate who favors banning backroom subsidy deals negotiated without public input; 42 percent said it made them much more likely. The results were similar across party identification, race, age, education, and region.

The Policy:

States should ban public officials from signing nondisclosure agreements when negotiating economic development deals. Such a ban passed the New York State Senate with a bipartisan vote of 61-0 in 2022. 

Model bills: S1196/A9092, New York, 2021-2022

Notes:

[1] Ban Secret Deals, “Secret Deals Database,” https://bansecretdeals.org/the-secret-deals-database.

[2] Lippert, John and Natalie Moore, “Amazon’s Massive Chicago-Area Expansion Was Fueled By $741 Million From Taxpayers,” WBEZ, Oct. 26, 2020, https://www.wbez.org/stories/amazons-massive-chicago-area-expansion-was-fueled-by-741-million-from-taxpayers/300fa829-1b71-4d9e-a2f4-1776e88d4cb3.

[3] Garofalo, Pat and Katelyn Coghlan, “Ban Secret Deals: How Secret Corporate Subsidy Deals Harm Communities, and What to Do About It,” American Economic Liberties Project, July 2022 http://www.economicliberties.us/wp-content/uploads/2022/07/2022-July-BanSecretDealsBrief-FINAL.pdf

[4] Garofalo, Pat, “None of Our Business? How Corporate Power Corrupts Local Economies and Democracies,” American Economic Liberties Project, June 2021, https://www.economicliberties.us/wp-content/uploads/2021/06/Working-Paper-Series-on-Corporate-Power_9_6.28.pdf.