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The Oregon Supreme Court, in a split decision on Thursday, struck down an Oregon Department of Transportation rule requiring use of community workforce agreements.

The court ruled that ODOT did not follow proper public notice and comment processes in making the rule.

The 4-3 majority decision, written by Justice Stephen Bushong, found the CWA requirement 鈥渋s a rule and notice-and-comment rulemaking was required.鈥�

Contractors hailed the court鈥檚 decision.

鈥淚t is a victory for fair and open competition in our state, and it鈥檚 a victory for process,鈥� said Mike Salsgiver, executive director of the Associated General Contractors鈥� Oregon-Columbia chapter. 鈥淧rocess matters, and the majority agrees with that opinion.鈥�

ODOT argued the CWA requirement is not a 鈥渞ule鈥� under Oregon鈥檚 Administrative Procedures Act. The court rejected that argument, finding that it 鈥渋s an invalidly promulgated rule.鈥�

The agency鈥檚 CWA rule is now invalid. ODOT has the option to begin a new round of rulemaking that allows public notice and comment. Spokespeople for ODOT and Gov. Tina Kotek鈥檚 office did not respond to a message seeking comment Thursday.

ODOT鈥檚 rule stemmed from Senate Bill 420 in 2021. The bill allows contracting agencies to designate public improvement projects as community benefit projects requiring CWAs.

CWAs have 22 sections addressing union recognition, safety, wages and benefits, hiring procedures, labor peace and other issues.

Contractors say they were shut out of discussions on CWA rulemaking, while labor groups were consulted. Salsgiver said it was unfair for state officials to listen to labor interests, but not contractors.

鈥淵ou鈥檝e got to involve everybody,鈥� he said. 鈥淵ou can鈥檛 just have the state talking to one interest or one side of interests. Our voice needs to be heard. It鈥檚 just not OK to do things that affect so many people and employees and their communities and not involve us.鈥�

A dissent joined by three justices argued that rulemaking was not mandatory for CWAs under state law. The dissent, written by Justice Aruna Masih, also found that the 鈥減urpose underlying the notice-and-comment procedures and the legislative intent to grant agencies flexibility to contract for community benefit projects were both satisfied in this case.鈥�

The case was argued on Dec. 9, 2024.

Joshua Dennis of Schwabe, Williamson & Wyatt PC argued on behalf of the contractors, and Assistant Attorney General Jona Jolyne Maukonen argued for the state.

In addition to the AGC, Hamilton Construction, HP Civil Inc. and K&E Excavating joined the suit challenging the rule.

State-required labor agreements are playing out in other cases, including a closely watched suit in Marion County Circuit Court challenging a Kotek executive order that requires project labor agreements be used for large-scale state projects. In that case, contractors won a preliminary injunction in March.

鈥淭his issue of mandated project labor agreements, mandated community workforce agreements, mandated community benefit agreements 鈥� whatever you call them 鈥� is being fought on a national scale,鈥� Salsgiver said. 鈥淚t鈥檒l just take time to play out.鈥�