By Frank Chmelik of Chmelik Sitkin & Davis, P.S. – October 2020
Over the years, one can see trends in the law. I think this happens when lawyers read the proposed agreements from other lawyers and think “well that is a good idea”. Like a rising tide, the new idea starts to show up in proposed agreements and then becomes a “standard” document for many businesses. This month’s column discusses the rising tide of requests to port districts for “confidentiality and non-disclosure agreements”.
Confidentiality and Nondisclosure Agreements. These agreements have been around for years in one form or another. The agreements are typically used where a business wants to keep confidential the mere fact that a business was considering a business transaction and where the business wants to keep documents provided confidential. In the last few years, it seems that these confidentiality and non-disclosure agreements having increasingly been presented to ports as a condition of business discussions.
Washington Law. At most port districts, agreements (other than standard documents like leases or easements) are approved by the port commission in an open public meeting. This presents a challenge when a business seeks a confidentiality agreement extending to the mere fact that the business is talking to the port. In addition, as we all know, the Public Records Act mandates that virtually any document received by a port is a “public record” and its status as a public record cannot be changed by agreement. This means that any documents provided to the port district even with a confidentiality and non-disclosure agreements become public records and cannot be returned. Simply stated confidentiality agreements and nondisclosure agreements fall to Washington law.
Best Practices. Assuming that a port district wants to accommodate a potential business partner, here are several suggested “best practices.”
- Consider now whether the port will execute confidentiality and non-disclosure agreements. It may be helpful to consider if the port will agree to execute confidentiality and non-disclosure agreements. It may be helpful to develop a form agreement that the port would be willing to execute.
- Inform the business partners early on of the port district’s statutory responsibilities. Experience shows that most businesses can adapt to the statutory responsibilities if port staff makes a point of discussing the statutory structure early on. While port staff can agree to keep the negotiations confidential, port staff cannot agree not to disclose public records if a public records request is received. Often, when the statutes are explained the business representatives elect not to insist on an agreement.
- Amend the delegation of powers resolution. Next time the delegation of powers resolution is amended include authority for the executive director, with approval of the port attorney, to execute confidentiality and nondisclosure agreements. I say “with attorney approval” because the agreements (which are usually proffered by the business) need to be modified to comply with Washington law. This will allow an executive director to execute an agreement (which will be a public record) without commission action.
- Reserve the right to decide what should be provided in response to a public records request. Before executing any agreement, it is important to insert a reference to the Public Records Act and note that the port reserves the right to decide if any exemption applies and if a record needs to be disclosed. Also, the agreement should not require the port to contest any public records request.
- If a Public Records Act request is received inform the business and provide a reasonable time to respond. Typically, the agreement should provide that if a public records request is received the port will provide notice to the business so the business can seek judicial protection if it so desires.
Like most things legal, forethought and planning pays off with smooth business transactions. As always, please contact your port counsel with any questions regarding this topic. If you have a particular question or topic for a Knowing the Waters , please e-mail me at email@example.com.