LANSING – Efforts in Michigan to reform the use of nondisclosure agreements in taxpayer-subsidized economic progression projects have some allies: the lawmakers themselves who signed the agreements.
“I gained nothing by signing one knowing how damaged the procedure is,” said Sen. Mallory McMorrow, D-Royal Oak, who signed a nondisclosure agreement last spring but is now proposing “desperately needed” safeguards as chair of the Economic Commission and Community Development Committee.
Forty-four Michigan lawmakers have signed five-year nondisclosure agreements with the Michigan Economic Development Corporation since 2021, when Gov. Gretchen Whitmer Whitmer signed bipartisan spending to create the Strategic Outreach and Attraction Reserve Fund, an incentive program.
That includes 32 of the state’s 146 existing lawmakers, according to records received through Bridge Michigan through a Freedom of Information Act request. Bridge applied for the documents in October, but the procedure was slowed due to delays from MEDC, the state’s main economic progress arm.
The use of the agreements has sparked controversy and unsuccessful efforts to ban their use in states such as Illinois, New York and Florida.
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While some argue the confidentiality deals are necessary to lure job creators intent on keeping plans under wraps, critics contend they’re inappropriate for government officials asked to fund and approve lucrative tax incentives.
“You’ve just promised to keep your constituents in the dark, not to answer questions honestly from the media, and to keep secrets that you can’t or possibly wouldn’t share with your colleagues,” said Rich Studley, the association’s former executive director. Michigan Chamber of Commerce that led a 2022 ballot initiative that will soon require lawmakers to disclose their personal finances.
Michigan voters want “more transparency, more accountability – and what politicians in Lansing are doing is just the opposite,” Studley said.
Records show Whitmer and her full executive office team are subject to a confidentiality agreement signed in 2019 and subsequently amended to cover more than 20 potential developments, many referenced only by code names like Project Copper, Zaney Bread, Peregrine Falcon, Elephant and Elektra.
Whitmer defended the move, telling reporters that “a lot of private data is being shared as states compete” for primary economic progression projects that can generate “massive investments” and jobs.
Michigan has finished some of those developments, such as the Zaney Bread project, an electric vehicle battery plant in the Lansing domain that GM and South Korean battery maker LG Energy Solution are building with the $666 million SOAR incentive.
But the state has missed out on projects, such as “Project Copper,” a proposed semiconductor production campus for central Michigan that has spawned several nondisclosure agreements, adding nondisclosure agreements signed through U. S. Rep. Elissa Slotkin and former U. S. Rep. Peter Meijer.
Idaho’s Micron Technology decided to build in New York despite Michigan’s big $27 billion incentive it will offer for the first time through The Detroit News.
Many of the nondisclosure agreements signed through state legislators were broad and prohibited them from discussing “any potential progression tasks known as confidential, orally or in writing, through the MEDC or its staff. “
They were signed through some of the toughest leaders in the state legislature controlled by Democrats and Republicans: Senate Majority Leader Winnie Brinks, House Speaker Joe Tate, House Minority Leader Matt Hall, former Senate Majority Leader, Mike Shirkey, and former Speaker of the House of Representatives, Jason Wentworth. .
Some of the lawmakers who later voted to fund the SOAR program with the $500 million a year chant. And lawmakers who sit on the tough House or Senate appropriations committees, plus existing presidents who have both signed nondisclosure agreements, vote for both. and both SOAR awards are ultimately distributed by the state.
Signing an NDA was a mistake, according to Sen. Thomas Albert, a Lowell Republican who agreed to a confidentiality deal in 2021 when he served as House Appropriations Committee chair.
“Instead of encouraging authentic communication with lawmakers, NDAs tie their hands and introduce them to a culture of secrecy,” Albert said last fall, proposing a law that would prohibit states from signing them.
But confidentiality agreements have value, allowing officials to be informed about potential projects of importance to the state, but giving companies space to discuss the projects “without shouting out their competition or talking about certain technologies they own or are in the process of acquiring,” Brinks, D-Grand Rapids, told Bridge.
The Senate majority leader, however, indicated his preference for reforms. So did Tate, speaker of the House and D-Detroit, who told Bridge he thought it was an “interesting discussion” to hold.
“I understand the considerations that other people raise about transparency,” Brinks said in a year-end interview in December. “I’m really willing to have a verbal exchange about the most productive way forward. I don’t think we should just assume that NDAs are the most productive way forward. “
As lawmakers reform the NDA, one of Michigan’s largest employers has already warned them not to go overboard.
“If there’s not confidentiality” to protect proprietary information, “we will not come in and have those discussions,” General Motors Inc. lobbyist Brian O’Connell said in committee testimony last fall. “If there are leaks in the process, it jeopardizes a project and we just simply walk away.”
GM issued the warning as the legislature began debating a conceivable overhaul of the SOAR program, which Whitmer created with former GOP legislative leaders in 2021 to attract “critical” industries to the state and fund site preparation.
The Democrats who now sit in the Legislature need to add a third element: benefits for local communities. A plan unveiled last fall would dedicate 20 percent of grants to revitalizing the network.
As part of that ongoing debate, Senate Democrats floated a possible amendment that would limit which state officials could sign non-disclosure agreements, rather than prohibiting them altogether, as GM has warned against.
McMorrow, the Senate Business Committee chair, suggested restricting NDAs to two lawmakers who would be given non-voting seats on the Michigan Strategic Fund Board, which approves SOAR incentives before they reach the Legislature.
It’s possible that these two lawmakers are “trusted and authorized” to serve as “visceral control” for colleagues who wouldn’t sign an NDA but still need to know everything imaginable about an appropriation before voting on incentives, McMorrow said.
“It’s a balance that has to be found,” he admitted.
In his experience, McMorrow said the NDA he signed didn’t give him access to data he wouldn’t have been able to read in a newspaper. But regardless of whether SOAR advances or not, NDA reform is “necessary,” he said.
“More and more legislators, even those who signed on in the past, are coming forward and saying, ‘I don’t know if there’s any advantage to doing this,'” McMorrow said. “So I’d rather not do it because it erodes what my constituents accept as true. “
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