Community Workforce Agreements as “Rules”: ODOT Must Follow Oregon APA Notice-and-Comment Procedures

Introduction

This case, Oregon-Columbia Chapter AGC of America v. Department of Transportation (S071452), centers on the validity of a “Community Workforce Agreement” (CWA) that the Oregon Department of Transportation (ODOT) negotiated with various building trades and labor unions. Under ORS 279C.308, the legislature authorized contracting agencies to designate certain highway improvement projects as “community benefit projects” and to include specific training, apprenticeship, and health‐insurance provisions in their contracts. ODOT formalized those provisions in a CWA covering eight federally funded projects. The Oregon-Columbia Chapter of the Associated General Contractors of America (AGC) challenged the CWA as an unpromulgated “rule” under Oregon’s Administrative Procedures Act (APA), contending that ODOT was required to follow APA notice-and-comment rulemaking procedures before adopting it. The Supreme Court of Oregon, in an en banc decision, agreed with AGC and invalidated the CWA for lack of proper rulemaking procedures. Justice Bushong delivered the majority opinion; Justice Masih dissented.

Summary of the Judgment

The Supreme Court of Oregon held that:

The CWA is a “rule” within the meaning of ORS 183.310(9) because it is an ODOT statement of policy that prescribes standards of general applicability for all designated “community benefit projects.”
ODOT failed to comply with the APA’s mandatory notice-and-comment rulemaking procedures (ORS 183.335) before adopting the CWA.
Accordingly, the CWA is invalid as an unpromulgated rule, and ODOT may not rely on it in soliciting or awarding community benefit contracts unless and until it follows proper APA rulemaking procedures.

Analysis

1. Statutory and Regulatory Framework

The case arises under the Public Contracting Code (ORS chapters 279A–279C) and the Oregon APA (ORS chapter 183). Key provisions include:

ORS 279C.308 authorizes contracting agencies to designate “public improvement projects” as “community benefit projects” and to include in those contracts terms requiring apprenticeship usage, employer-paid family health insurance, and any other provisions the agency “sets forth” in an ordinance, rule, or other measure.
OAR 731-005-0900 implements ORS 279C.308 for ODOT and expressly permits ODOT to negotiate a “Community Workforce Agreement” with labor organizations setting material contract terms.
The APA (ORS 183.310(9)) defines a “rule” to include “any agency directive, standard, regulation or statement of general applicability that implements, interprets or prescribes law or policy.” It further requires notice-and-comment rulemaking for any such rule (ORS 183.335).

2. The Community Workforce Agreement (CWA)

After ORS 279C.308 took effect in 2021, ODOT negotiated a CWA with multiple labor unions and trades councils. The initial CWA (October 2022) and its Amended and Conformed version (September 2023) contained 22 articles addressing:

Union recognition and labor peace (Articles 3, 19)
Health insurance (Article 7) and wages/benefits (Article 6)
Apprenticeship goals and training requirements (Article 11)
Dispatch procedures, hiring, and priority workers (Article 13)
Safety (Article 5) and other administrative provisions

Article 1, Section 2, required ODOT to “ensure that compliance with [the CWA] is a term of the ODOT Contract” on each identified “Covered Project.” Eight highway improvement projects were listed; future projects designated under ORS 279C.308 would also become “Covered Projects.”

3. Procedural Posture

AGC filed a petition in the Court of Appeals under ORS 183.400, challenging the CWA as an invalid rule adopted without APA notice-and-comment procedures.
ODOT did not dispute that it had failed to undertake notice-and-comment rulemaking, but maintained that the CWA is not a “rule” subject to APA procedures.
The Court of Appeals certified the rule‐challenge to the Oregon Supreme Court, which granted review.

4. Precedents Cited

The majority relied on prior decisions interpreting “rule” under ORS 183.310(9):

Fremont Lumber Co. v. Energy Facility Siting Council (331 Or 566 (2001)) — Held that an EFSC rule applying to any federal cooperative cleanup agreement was “generally applicable” and thus a “rule.” The fact that only one project was active at a time did not defeat general applicability.
PNW Metal Recycling, Inc. v. DEQ (371 Or 673 (2023)) — Distinguished because DEQ’s reinterpretation of its statutory authority was an “interpretive decision,” not a statement of policy of general applicability. The Court emphasized that only “generally applicable expression[s]” of policy can become rules under the APA.
Homestyle Direct, LLC v. DHS (354 Or 253 (2013)) — Confirmed that whether something qualifies as a “rule” under the APA does not alone determine whether an agency was required to use notice-and-comment rulemaking, and that exemptions (including for public contracting, ORS 183.335(10)) may apply. The authority to require a particular procedure must be found in the agency’s substantive statutes.

5. Legal Reasoning

The majority’s core analysis turned on three points:

Under ORS 183.310(9), a “rule” includes any “statement of general applicability that prescribes *policy*.” The CWA prescribes ODOT’s policies for its community benefits program and applies to all current and future designated projects.
As a statement of policy with general applicability, the CWA is a “rule” unless it falls within one of the APA’s enumerated exceptions (ORS 183.310(9)(a)–(f)). ODOT did not claim any such exception.
ODOT’s own community benefit rule (OAR 731-005-0900) is separate and does not exempt the CWA from rulemaking; nor did any statute remove ORS 279C.308 from the APA’s notice-and-comment requirements. While solicitation and award statutes (ORS 279C.360–.380) are exempt from notice and comment, the CWA is not itself a procurement but the policy framework governing procurement.

In relying on the APA’s purposes—public participation, transparency, predictability, and minimizing arbitrary decision-making—the majority concluded that formal notice-and-comment rulemaking was required. Without notice and comment, the CWA could not serve those objectives.

6. Impact

This decision has significant implications for state agencies that negotiate template agreements with private parties or labor organizations in advance of calling for bids:

Any “policy” or “template” intended for broad use in future procurements may now constitute a “rule” requiring notice, public comment, and formal adoption under the APA.
Agencies will need to analyze whether their enabling statutes mandate notice-and-comment rulemaking or provide an exemption for specific categories of contract-related provisions.
The decision underscores the need for clear legislative guidance when agencies are to use contract negotiations—rather than rulemaking—to set uniform contract terms.
Contractors and trade groups may challenge similar agreements in other agencies, arguing that they are unpromulgated rules.

Complex Concepts Simplified

Administrative “Rule” (ORS 183.310(9)): Not just written regulations. Any agency policy or directive of general application that tells people what the agency will do or require—the CWA is such a policy.
Notice-and-Comment Rulemaking (ORS 183.335): Before adopting a rule, an agency must publish a proposal, allow the public to review and comment, consider those comments, and then adopt the final rule. It ensures transparency and input.
Public Contracting Exemptions (ORS 183.335(10)): Many statutes governing how agencies write bid specs or award contracts are exempt from APA procedures. But that exemption covers the procurement statutes themselves, not the pre-procurement policy statements (like the CWA).
Community Benefit Contract (ORS 279C.308): A public improvement contract that expressly includes apprenticeship goals and health-insurance requirements, among other negotiated terms.

Conclusion

The Oregon Supreme Court’s decision in Oregon-Columbia Chapter AGC v. ODOT establishes that a Community Workforce Agreement negotiated in advance of bidding and applied uniformly to designated projects is a “rule” under the APA. Agencies must therefore satisfy all APA notice-and-comment requirements before relying on such agreements to set contractual terms. The ruling reaffirms the importance of public participation and procedural safeguards in the formulation of uniform agency policies—even when those policies are embedded in procurement and contracting arrangements. Going forward, legislative clarity will be key to permitting contract negotiations as a substitute for formal rulemaking when agencies seek to establish program-wide contract terms.