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A Fayetteville resident is suing his city over public records tied to a drone manufacturer, and the case is drawing attention to a tool governments across Arkansas use to keep business deals out of public view.
That tool is the nondisclosure agreement, or NDA.
Ted Swedenburg filed the lawsuit Tuesday in Washington County Circuit Court. He says the city broke the Arkansas Freedom of Information Act after he asked for records about Swarm Aero, a California company that builds self-flying aircraft.
Swedenburg filed his records request in February. He later narrowed it to files from the mayor’s office, the airport and planning and development services, according to the lawsuit.
The city handed over emails but not the agreement at the heart of the request. The emails, sent in November 2023, show economic development director Devin Howland and airport director Jared Rabren planned to sign NDAs with Swarm Aero.
One email from Howland reads, “Jared- Blake has given us the good to go.” That was a reference to Senior Deputy City Attorney Blake Pennington. Another email shows the two men planned to sign the agreements in person at Drake Field.
Emails also show a Swarm Aero representative sent the NDA, which was forwarded to city accounts. The city marked the request “completed” on Feb. 20 and never produced the signed agreement. A city spokesperson has said the signed NDAs were not kept.
Swedenburg’s suit asks the court to order the city to search its servers and produce the agreement. It also asks the court to rule that the city violated the law and to award his costs and attorney’s fees.
The city says it is committed to transparency and follows state law on records. Mayor Molly Rawn has said the city offered no money to recruit Swarm Aero and that she considers Fayetteville one of the most open cities in the state.
The Swarm Aero fight is one piece of a larger trend. A May investigation by the Arkansas Democrat-Gazette found that NDAs have spread across the state as data center projects pop up.
In West Memphis, city workers pointed to an NDA with a developer when they would not discuss a data center. That project is tied to Google’s $4 billion investment in Arkansas, announced in October. It is the company’s first facility in the state.
In central Arkansas, Little Rock and Conway competed for a data center worth about $1 billion. Both offered to give up two-thirds of the project’s property taxes for 30 years. Little Rock approved an annexation and rezoning under a code name, “Project Boar.”
Earlier this year, state lawmakers approved $300 million in incentives for an unnamed West Memphis plant. Even legislators were kept from learning the company’s name because of an NDA. Some refused to sign off without more details.
Here is the catch. Under Arkansas law, an NDA does not actually make a public record secret.
The state Supreme Court has said a record is public if a government holds it, if it shows official business and if no law shields it. An NDA is a private contract, not one of the law’s narrow exemptions. The state’s FOIA handbook and decades of attorney general opinions say governments cannot sign away their duty to disclose.
The law does have one economic development exemption, but it is narrow. It covers records held by the state’s economic development commission about a company’s plans and site search, and only until the company agrees to release them. It does not cover a city’s own signed contract.
Closer to home, the data-center question is not hypothetical. Local leaders have already handled the small end of it.
In 2023, Baxter County joined dozens of Arkansas counties that passed ordinances limiting the noise from crypto mining operations, a form of data center, before a new state law stripped much of that local power. The city took up crypto mining as well, routing it through a special use variance in its recent zoning overhaul.
What no local government here has faced is the other end of the business. The large data centers that draw NDAs and code names across Arkansas arrive through quiet recruitment, not noise complaints.
That kind of recruiting usually runs through a publicly funded nonprofit, and this area has one. The North Central Arkansas Economic Alliance, known as The Alliance, is the Mountain Home Area Chamber of Commerce’s once-dormant nonprofit.
None of this means The Alliance is chasing a data center. The point is that the same structure used elsewhere to keep big deals quiet already operates here.
Both the city and county were asked to fund it. It sought $80,000 to get going, split between the two.
The City of Mountain Home agreed quickly, signing a $40,000 economic development contract it later renewed. Baxter County balked.
For more than a year, Justice of the Peace Dirk Waldrop led opposition to handing public money straight to the nonprofit without strings. His concern went to the heart of the transparency question.
“Once that money disappears behind the veil of that corporation, there’s no visibility,” Waldrop said.
Rather than fund The Alliance directly, the county set up a $50,000 economic development fund it controls, with rules requiring a business plan, proof of financial backing and a return for the county.
In that arrangement, the nonprofit, not the city or county, would be the one to sign any NDA. The Observer has no evidence that The Alliance has signed one. The concern is structural: the option is there.
Its board includes Mayor Hillrey Adams, Baxter County Judge Kevin Litty, Justice of the Peace Dennis Frank and City Councilman Nick Reed, who the Observer has reported were added for government oversight.
That mix of public money and public officials is what Arkansas courts weigh when deciding whether a private group must follow the open records law. A nonprofit can fall under the law if it takes public funds and is intertwined with government. Attorney general opinions have applied that test to chambers of commerce doing economic development work.
The Alliance does account for the tax money it spends. As part of its city contract, it gives quarterly updates to the Mountain Home City Council on how it used those funds, and its leaders say public dollars are tracked separately from private money and can be disclosed at any time.
The group has also been a hands-on partner for local government, sometimes for free. President Dani Pugsley has put in volunteer work helping the county develop its industrial park, including efforts to open airport land for future business sites.
Its biggest win so far is Aldi, and it shows how this kind of secrecy can work even without an NDA.
For months, the group courted the retailer without naming it. No one involved cited a nondisclosure agreement. The caution was about the deal itself.
Aldi had tried to come to Mountain Home several times and failed, and Pugsley described this as the company’s last attempt. People close to the talks were unsure it would close, and the Alliance did not want to raise hopes it could not meet.
Still, the group kept the name quiet while seeking public money from the city and county to help land the deal. The Observer had identified Aldi but had no one on the record, and the Alliance asked the paper to hold off until it could announce the deal itself.
The name became public when county officials discussed Aldi openly at an Economic Development Committee meeting. Waldrop, who had fought the county funding over visibility concerns, pushed for it, and Judge Litty said he would keep talking about it openly.
The store has since opened and brings in local tax revenue. The point is not that the deal was bad or the caution unreasonable. It is that a publicly funded deal can stay out of public view, which is the same instinct an NDA turns into a rule.
The Fayetteville case may offer an early test. An expedited hearing is set for 2 p.m. June 16, the kind of fast timeline the open records law allows within seven days of a filing.
How the court rules on the Swarm Aero agreement could show how much cover an NDA really gives when the public asks to see what its government signed.
