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CHIPS Act Success Shows Value of Hard Work, Supportive Policy

On March 20, the Biden administration announced an $8.5 billion investment in Intel and promised an additional $11 billion in loans to help build plants in several states. According to The Oregonian, Intel’s award is the largest from the $52 billion CHIPS Act, which Congress approved in 2023.

Intel says it plans to spend more than $100 billion in the United States over the next five years on chipmaking facilities in Arizona, New Mexico, Ohio and, of course, Oregon. Of that total, Intel plans to invest a staggering $36 billion in Hillsboro, where the company develops new chips.

Intel is not alone in its success. Microchip Technology won $162 million in CHIPS Act support in January, including $72 million for an expansion of its Gresham semiconductor factory.

Winning CHIPS Act support is a remarkable achievement for Intel, Microchip Technology and the thousands of Oregonians they employ. Their success validates the hard work many people, including industry and elected leaders, have done over the past two years to improve the state’s sagging competitiveness.

In 2022, the Oregon Semiconductor Competitiveness Task Force urged legislators to position the state to capitalize on CHIPS Act support. The task force’s August 2022 report detailed many competitive deficiencies requiring urgent legislative action, including the state’s shortage of buildable land and its inadequate incentives, including the glaring absence of a research and development tax credit. The report also described a regulatory environment that charitably could be called unproductive.

Many people, including OBI’s government affairs team, worked tirelessly during the 2023 legislative session to address the major problems identified by the task force’s report. The results include SB 4, which, together with a companion bill, provided $240 million in grants and loans for semiconductor and advanced manufacturing companies. SB 4 also gave the governor temporary authority to circumvent land-use rules to make a handful of sites available for semiconductor projects. HB 2009, meanwhile, created a research and development tax credit, though it is too modest and narrowly targeted.

That work continued in 2024 and included HB 4154, the OBI-supported bill that creates a $30 million fund to train workers needed by Oregon’s semiconductor industry.

The job is far from finished. OBI will continue to work in 2025 and beyond to address the tax and regulatory burdens to which the free-market Cato Institute attributes Oregon’s “long-term and sustained” competitive “deterioration.” Oregon, says Cato, “is the second most worsened state since 2000, after Hawaii,” in its Freedom in the 50 States rankings.

That deterioration is echoed elsewhere by various organizations. Between 2022 and 2023, Oregon’s ranking in CNBC’s Top States for Business index fell three places, to 21. Oregon’s place was weighed down by its business friendliness rank (43) and its cost of doing business rank (31). Oregon fared even worse in the nonpartisan Tax Foundation’s 2024 State Business Tax Climate Index, which rates Oregon’s corporate tax regime the nation’s 49th best. Thank goodness for Delaware.

In preparation for the 2025 legislative session, OBI is developing a legislative agenda that builds on the 2023 Growth and Innovation Roadmap. With a particular focus on regulatory modernization, this agenda will encourage legislators to adopt policies that help businesses of all types and sizes and in all parts of the state thrive.

OBI looks forward to working on behalf of its members in developing and implementing this agenda – and to citing Oregon’s CHIPS Act success as evidence that supportive policy does encourage business investment.

Policy and Rulemaking Updates

Climate Protection Program Returns

The Department of Environmental Quality (DEQ) has launched the process to re-establish the Climate Protection Program (CPP), and the first rules advisory committee meeting will take place on April 2. The original CPP, adopted in December 2021, ran afoul of the Oregon Court of Appeals, which invalidated the rules in December 2023 for procedural deficiencies. Rather than appealing the decision, DEQ opted to redo the rulemaking. While this is a new rulemaking process, DEQ’s short timeline indicates that major changes are unlikely. DEQ will hold three RAC meetings (April 2, May 14 and June 25) and is expected to issue the proposed rule package and initiate the public comment period by late July. DEQ has stressed the need to adopt a new rule prior to the end of the year, since a mid-year start of the program could create reporting and other logistical challenges. OBI is working closely with a coalition of affected business interests on the regulatory redo and will be represented on the RAC by policy team member Sharla Moffett. The full advisory committee roster, rulemaking page and meeting documents can be accessed here. OBI and other business interests continue to urge policymakers to undertake a legislative conversation aimed at addressing the program’s structural deficiencies, primarily the lack of reasonable cost compliance pathways in the existing programs. The limited number of costly compliance instruments is expected to cause steep energy cost increases that will affect businesses and all Oregonians.

Governor Shelves Tolling Effort

Having paused Oregon’s tolling program in 2023, Gov. Tina Kotek decided to shelve it this month in favor of what she describes in a March 11 letter to state transportation leaders as “meaningful legislative conversations about alternative revenue sources in the 2025 legislative session.” An omnibus transportation package is expected in 2025. In her letter, Kotek asked the Oregon Transportation Commission to bring the tolling program planned to fund I-205 improvements and an Interstate 5 Rose Quarter interchange to an end. In pulling the plug on what’s known as the Regional Mobility Pricing Project, Kotek expressed concern about a number of issues, including rising project costs, tolling revenue uncertainty, and costs associated with establishing and operating a tolling program. Ultimately, she wrote, it was clear that the state lacked sufficient funding to proceed with the plan as intended. The decision does not affect tolling for the Interstate Bridge Replacement Project, though tolling responsibility will be transferred to the Washington State Department of Transportation. The intent had been for ODOT to administer the bridge tolling program. The Bi-State Tolling Authority, which includes the two state transportation commissions, will continue to set tolling policy for the bridge.

Research and Development Tax Credit Rulemaking Begins

In 2023, the Legislature passed HB 2009, which created a research and development tax available to Oregon-based semiconductor industry manufacturers. This credit will be an important tool to enhance Oregon’s semiconductor footing in the short run. In 2025, OBI will be leading the effort to increase the size of the credit and expand eligibility to all Oregon manufacturers. That’s why OBI is closely watching the process by which the state’s economic development agency, Business Oregon, is developing and rolling out the credit. In adopting rules for this credit, Business Oregon must minimize bureaucratic hurdles for its use. While it’s positive that Oregon now has this tool, so does almost every competitor state. If Oregon’s modest R&D credit is much harder to use than other states’ versions, Oregon will risk losing research opportunities and investments. OBI is advocating for reasonable rulemaking and will support technical legislation in 2025 to simplify the credit structure.

Labor Standards Ruling

Earlier this year, a temporary restraining order enjoined the Oregon Department of Transportation’s (ODOT) recently adopted policy requiring contractors to enter into costly and restrictive project labor agreements for highway construction projects. The ruling became a preliminary injunction on Feb. 29, which will prevent the rule’s implementation until litigation concludes. Though the ruling was made on procedural grounds, the judge also weighed the fact that the policy would unfairly exclude open-shop contractors. Over the past several sessions, OBI and others have argued that imposing such labor standards on public contracts would prohibit many of Oregon’s local contractors from bidding on them. That argument did not prevent legislators in 2023 from broadening apprenticeship requirements on public works projects with HB 2649. Nor did it dissuade them in 2024 from applying strict labor standards to offshore wind projects through HB 4080. However, the resolution of this litigation could strengthen that argument in future sessions.

Notable News

Democratic Leader: Democrats in the Oregon House have a new majority leader heading into an election season where they’ll be looking to expand their ranks. Rep. Ben Bowman, D-Tigard, won the nod from his party colleagues in a closed-door vote on March 20. He beat state Reps. Andrea Valderrama, D-Portland, and Jason Kropf, D-Bend, for the job (Oregon Public Broadcasting).

Governor’s Staff: Oregon Gov. Tina Kotek’s office underwent a shakeup at its highest levels on Friday, with three of the governor’s top aides departing or going on leave. Chief of staff Andrea Cooper, deputy chief of staff Lindsey O’Brien and special adviser Abby Tibbs are all departing the office in the coming weeks (Oregon Public Broadcasting).

Housing Funds: The Oregonian takes a look at the cities and projects that will benefit from the Legislature’s housing, homelessness and substance abuse package.

Portland Population: The Portland area’s population continued to shrink in 2023, but the decline has slowed to a trickle, according to new estimates from the U.S. Census Bureau (The Oregonian).

Bend Fee: Bend’s transportation fee is one step away from adoption following a unanimous vote by the Bend City Council March 20. One more Council vote is required before the fee can take effect. The fee is a monthly utility bill charge for residents and businesses. The city hopes to generate $5 million from the fee’s first year of implementation (The Bulletin).

Conservation Plan: Oregon forestry officials are moving ahead with a controversial plan that will reduce logging on state lands west of the Cascades (Oregon Public Broadcasting).

School Budget Woes: Several districts across Oregon and southwest Washington are dealing with substantial budget problems as they head into the upcoming spring budget season (Oregon Public Broadcasting).

ORESTAR Funding: Oregon Secretary of State LaVonne Griffin-Valade says her office needs more money and employees if it is to overhaul its outdated campaign finance filing system to adhere to new campaign finance rules lawmakers approved this month (The Oregonian).

Senate Races: Half the seats in the Oregon Senate are up for election this year, and voters will send at least six new senators to Salem because of retirements and a law that barred most Republicans from running for reelection after they participated in a six-week walkout (Oregon Capital Chronicle).

Nike Impact: In its third impact report since creating several environmental and diversity goals, Nike says it has made progress on — or met — a majority of its goals (Portland Business Journal).

North Plains: Residents of North Plains will apparently get to vote on the city’s contentious expansion plans after all. The Legislature passed a bill this month blocking public referendums on whether cities can expand their urban growth boundaries. Lawmakers made House Bill 4026 retroactive, hoping to stop a referendum in North Plains already scheduled for May 21. Gov. Tina Kotek signed the bill March 20. But on March 21, a Washington County judge said he will sign a temporary restraining order directing election officials to keep the referendum on the city’s May 21 ballot (The Oregonian).

Metro Housing: The regional planning agency Metro, which administers the supportive housing services tax that’s brought in $577 million since 2021 to help the three Portland-area counties combat homelessness, is greatly expanding its housing division to include 44 employees (Willamette Week).

Legislator Residency: A lawsuit filed this month alleges that legislator Christine Goodwin, a Douglas County Republican, should be ejected from her seat in Oregon’s House of Representatives and disqualified from seeking the nomination for Senate District 2 because she doesn’t actually live in either district (The Oregonian).

Knight Contribution: Nike co-founder Phil Knight has contributed $2 million to a political action committee aimed at electing Republicans to the Oregon Legislature (The Oregonian).

Winery Sale: The company that owns two of Oregon’s three biggest wine brands says it’s now focused exclusively on the Pacific Northwest after selling its last California property. Washington-based Ste. Michelle Wine Estates said March 18 it sold the Sonoma winery Patz & Hall back to one of the winery’s co-founders (Portland Business Journal).

OBI Member Profile: Beaverton Foods

Nineteen twenty nine was an eventful year in American and Oregon history. The stock market crashed. Intel co-founder Gordon Moore was born. And as the Great Depression set in, Italian immigrant Rose Biggi began bottling horseradish in her Beaverton farmhouse.

Nearly a century later, the stock market is booming, and the companies Moore and Biggi created continue to expand in Washington County on opposite sides of U.S. Highway 26. Intel has a bigger footprint, of course. But legions of people wouldn’t dream of eating a sandwich without Beaverton Foods inside.

The company is best known for its Beaver condiment brand, whose distinctive labels will be familiar to anyone who visits supermarkets in the United States or in the 25 foreign countries in which its gourmet mustards, horseradish and other condiments are sold.

Read OBI’s profile here and learn more about Beaverton Foods.

Federal Judge Strikes Down NLRB ‘Joint Employer’ Rule

A federal judge in Texas on March 8 struck down a U.S. National Labor Relations Board rule that would treat many companies as if they employed certain contract and franchise workers, Reuters reports. U.S. Chamber of Commerce President and CEO Suzanne Clark called the ruling “a major win for employers and workers who don’t want their business decisions micromanaged by the NLRB.”

The ruling involves the so-called “joint employer” rule issued by the NLRB in October 2023. The rule changed longstanding guidance under which putative employers must exercise direct and immediate control over the terms and conditions of employment. The updated rule specifies that an entity may be considered a joint employer of a group of employees if each entity has an employment relationship with the employees and they share one or more essential terms of employment, including wages, work hours and work rules, according to the Chamber.

Notably, explains the Chamber, the new rule “considers alleged joint employers’ authority to control essential terms and conditions of employment, whether or not such control is exercised … and without regard to whether any such exercise of control is direct or indirect.”

The impact of the new rule would be to make it easier for the NLRB to declare that joint employment status exists in common business relationships like franchising and contracting. This would create a path for easy unionization of franchises.

According to Reuters, U.S. District Judge J. Campbell Barker deemed the rule too broad, noting that it would treat some companies as the employers of contract or franchise workers even if they lacked any meaningful control over working conditions.

Share Your Thoughts on Oregon’s Business Climate

Is Oregon’s business climate improving, eroding or staying the same?

Do you think state lawmakers care about the success of your business?

What are the biggest challenges you face in operating your business in Oregon?

These are a few of the roughly 20 questions in OBI’s annual business survey, conducted in partnership with the Oregon State Chamber of Commerce and your local chamber. Please take a few minutes and complete it. Your responses will help us make the case for bills that would help promote a healthy private sector and against bills that would limit the ability of businesses to operate.

This survey should take just a few minutes to complete, and an individual company’s answers will remain confidential. Go here to participate.

In the meantime, check out last year’s survey results here.

OBI Accepting Visionary Award Nominations

Is there a person or organization you’d like to nominate for OBI’s highest honor, the Oregon Visionary Award? If so, please let us know.

The Oregon Visionary Award recognizes people, employers and organizations that strengthen Oregon’s economy and contribute significantly to shared prosperity by developing solutions to significant problems. Winners are honored at OBI’s annual Vision Oregon Event, which will take place this year on Oct. 23 at the Portland Art Museum.

The 2023 recipients of the Oregon Visionary Award are Families First Childcare Center and the Oregon Manufacturing Innovation Center (OMIC R&D). Go here to learn more about these organizations. Even better, watch the videos shared at the 2023 Vision Oregon Event. You can find the Families First Childcare Center video here and the OMIC R&D video here.

Please send nominations for the 2024 award to obi@oregonbusinessindustry.com, and be sure to explain how nominees have contributed to shared prosperity by developing solutions to significant problems.

Check Out OBI’s Member Benefits

OBI offers members a range of programs that can save money or help small businesses offer benefits normally available only to much larger companies. Benefit programs include:

  • HealthChoice: Helps businesses with fewer than 100 employees offer comprehensive health-care benefits through our partnership with Regence BlueCross BlueShield of Oregon.
  • CompSAFE: Helps eligible companies enjoy workers’ compensation discounts through SAIF Corporation.
  • Fuel Program: Helps members save fuel costs through our partnership with Ed Staub & Sons.
  • ODP Business Solutions: Helps OBI members save money on office furniture, supplies and other services.
  • LegalPLUS: OBI members receive 15 minutes of free legal consulting per month from Innova Legal Advisors.

Go here to learn about all of OBI’s member benefits.