Gov. Arnold Schwarzenegger on Wednesday signed into law legislation that amends the Public Records Act to forbid enforcement of confidentiality provisions in contracts signed by government agencies.

The bill, SB 1696 by Sen. Leland Yee (D-San Francisco), specifically prohibits a state or local agency from entering into an agreement that makes information confidential or conditions disclosure on the permission of the other party to the contract.

In addition, the bill would specify that regardless of any contract term to the contrary, a contract for the purpose of conducting a review, audit or report between a private entity and a state or local agency is subject to the same disclosure requirements as other public records.

SB 1696 becomes law on Jan 1, 2009.