[5]
By Oregon Business and Industry [6]
Policy and Rulemaking Updates
Governor’s Prosperity Council: On Jan. 8, Gov. Kotek announced the full membership [7] of the newly formed Governor’s Prosperity Council, having previously announced that Ampere Computing founder Renée James and Port of Portland Executive Director Curtis Robinhold would serve as co-chairs. The position of chief prosperity officer, which the governor announced last year with her Oregon’s Prosperity Roadmap [8], has not yet been filled. Details about process and deliverables for the council have not yet been announced, though the governor’s original statement indicated a six-month time frame. OBI will provide members with opportunities to shape the information OBI will present to the council.
Transportation package repeal: Gov. Kotek announced at the Oregon Transportation Forum’s annual meeting Jan. 7 that she will seek a repeal of HB 3991, the transportation funding package that passed during the September special legislative session she called. News of the repeal follows the secretary of state’s announcement that a referendum on the revenue-raising elements (increases in the state gas and transit taxes as well as DMV fees) of HB 3991 had qualified to appear on the November ballot. Collection of new revenue has been paused pending the outcome of the election. The governor said that it would be irresponsible to leave a bill in place that requires money to implement without new funding. She now plans to redirect funding from the previous transportation package, HB 2017, to operations and maintenance activities until a new funding package can be considered during the 2027 legislative session. The practical effect of redirecting HB 2017 funding for operations and maintenance is that hundreds of millions of dollars earmarked for large infrastructure projects such as the Rose Quarter interchange and replacement of the I-5 bridge would not be spent as intended. Repeal also would irresponsibly eliminate components voters did not refer to the ballot, including improved accountability measures and an important provision that aligns historically overcharged freight rates with constitutional requirements. Read more about the governor’s announcement in OPB’s story [9] published Jan. 7.
Unemployment for striking workers: In rules proposed last fall to implement SB 916 [10], which makes striking workers eligible to receive unemployment insurance benefits, the Oregon Employment Department proposed to exempt such recipients from the federal Social Security Act provision that requires unemployment insurance claimants to search actively for work. In early December, OBI submitted comments arguing that such a rule would violate federal law and likely put Oregon at risk for losing federal funds. Before the employment department filed a final rule, the U.S. Department of Labor (USDOL) reached out with concerns, and the rule was put on hold. On Jan. 8, the USDOL sent a memo sent to all states [11] expressing the same concerns OBI had raised. The memo says that “an individual who is on strike must engage in activities that demonstrate to the state UI agency that he or she is able and available for work and actively seeking work under State law … States may not provide blanket exemptions from the work search requirements.” OBI will continue to work with the employment department and USDOL and will monitor the implementation of this new law closely.
Lost competitiveness opportunity: Throughout the 2025 legislative session, OBI led an effort to extend and expand a program that provides federal tax savings to pass-through businesses (entities that pass income, losses and related items through to owners as individuals), which are often among Oregon’s smallest. The program imposes an entity-level tax on pass-through businesses and allows their owners to claim a tax credit equal to the amount of the tax imposed on the business. Allowing the owners of eligible businesses to pay at least some of their state taxes in this way lowers their federal tax burden without reducing Oregon revenue. It also enables businesses to use the money they save to hire workers, increase wages or invest in their Oregon operations. During the 2025 session, OBI advocated for a bill that would have extended eligibility to businesses that are currently excluded, including many in agriculture and manufacturing. Unfortunately, the bill died, and the program expired at the end of 2025. OBI raised the matter with the governor’s office and received assurances from influential legislators that it would be restored, but a renewal of the program was not included among the bills the revenue committees have published for introduction during the 2026 session. Failing to renew the program would represent a missed opportunity to help Oregon’s businesses and improve the state’s economy. To keep that from happening, OBI is working to grow its coalition in support of program renewal.
Air toxics rulemaking: The Department of Environmental Quality has indicated that it will initiate rulemaking today (Jan. 12) to modify the Cleaner Air Oregon [12] (CAO) program, which regulates emissions of toxic air contaminants from industrial and commercial facilities. Adopted in 2018, CAO is considered one of the nation’s most stringent air toxics regulatory programs and has contributed to the shuttering of at least four Oregon-based manufacturing entities. The rulemaking effort contemplates changes to toxicity reference values (TRVs) for more than 300 chemicals, which will establish many new or more conservative health-based benchmarks for a program that is already extremely protective. A TRV is a conservative benchmark used to evaluate potential chemical exposures. The rulemaking effort also is expected to significantly increase the program’s stringency, complexity and cost of compliance.
Last year, OBI pointed to several problems with the rulemaking that prompted changes to DEQ’s approach. The rulemaking timeline was lengthened to provide greater analysis of the scientific underpinnings of the proposal, many of which are weak or inaccurate. In response to OBI’s requests, DEQ agreed to allow facilities already called in to CAO to complete the process under existing rules. It also agreed not to engage additional facilities in the program until the new rules are adopted. OBI appreciates DEQ’s willingness to accommodate these requests, which will provide greater regulatory certainty for affected businesses, though OBI remains concerned about the overarching rulemaking’s scope and scientific basis. OBI is serving on the rulemaking advisory committee.
I-5 bridge height: On Jan. 9, OBI submitted a letter [13] to the U.S. Coast Guard in support of a design for an I-5 bridge replacement that would not include a lifting span. Though the planning effort to replace the bridge has been underway for several years, the maximum height of the bridge has not been determined. The current bridge includes a lifting span, which acts as a randomly occurring stop sign on a major interstate. OBI argues in favor of a single span, as a lifting span would continue to stop freeway traffic periodically. It also would be more expensive to operate and maintain, as it would have to be staffed continuously and include moving parts that require significant upkeep.
Camping law repeal: OBI’s ballot initiative to repeal HB 3115, an outdated law that restricts local governments’ ability to respond to unsanctioned public camping, continues to make progress toward the November ballot. The attorney general’s office issued a draft ballot title on Dec. 19, 2025, and accepted public comments on the draft through Jan. 6. OBI submitted comments suggesting improvements to the title, alongside several opponents of the initiative. Next, the attorney general’s office will issue a final, possibly revised, ballot title based on public comments.
In the meantime, OBI’s strategic priority remains passing a repeal or modification of HB 3115 during the 2026 legislative session. Sen. Mark Meek, D-Gladstone, is drafting legislation to that end, and OBI is coordinating with local government representatives and other allies to make a strong push for the bill when the Legislature convenes later this year. For more information about this effort, go here [14].
Manufacturing prevailing wage: The Bureau of Labor and Industries has published an initial draft of rules [15] related to HB 2688 [16], which requires manufacturers to pay the prevailing wage rate for the production of custom – or “bespoke” – items for specific public works projects. Among other things, the draft rules define “bespoke” and create exemptions for that definition. There are still many questions to address involving work processes in affected facilities. The rules advisory committee will meet on Jan. 20 and Jan. 28.
Paid leave rules: The Oregon Employment Department has filed final rules [17] for the latest update to the state’s paid family and medical leave program, Paid Leave Oregon. By and large, the new rules implement statutory changes. However, they also require employers with equivalent plans to update notices whenever the employment department updates the notice requirements. This same update requirement does not apply to employers covered by the state plan, however, which seems fundamentally unfair. Meanwhile, employers should carefully review the rules for information involving contributions and place of performance.
Cost growth target: The Oregon Health Authority has set the health care cost growth target at 3.75% for the 2026–30 period. This percentage reflects a blend of historic Oregon median wage growth and inflation over a five-year period, with a one-point subtraction intended to slow the rise in costs. Most members of the 2026–30 cost growth work group [18] recommended a 5.5% target for acceptable growth. However, OHA adopted a lower target supported by a minority of the group’s membership. Health care payers and providers regulated by the cost growth program may incur fines as early as 2028 if they exceed the target without a reasonable explanation.
Health market oversight: The Oregon Health Authority’s Health Care Market Oversight Program is proposing new rules [19] and fees that would significantly increase the cost of mergers and acquisitions involving state health care entities. The proposed rules would increase the cost of a preliminary review of a potential transaction from $2,000 to $30,000 and the cost of a comprehensive review from $100,000 to $350,000. Additionally, the program seeks a new follow-up review fee and new civil penalties for failing to provide documentation in a timely manner. OBI plans to submit a comment letter to the agency. The public comment period closes Jan. 16. According to OHA [20], the program “reviews proposed health care business deals to make sure they support Oregon’s goals of health equity, lower costs, increased access, and better care.”
Primary care committee: OHA announced this month it is launching a Primary Care Strategy Committee [21] to lead a “coordinated effort to stabilize, strengthen and align Oregon’s primary care system.” The committee will examine workforce, payment and affordability, and delivery system issues. It is seeking payers, providers, purchasers and employers to serve as members. Applications are open through Feb. 6. Go here [22] to learn more.