Chance to host semiconductor factories under CHIPS Act has Oregon reconsidering rules against urban sprawl

For exactly 50 years, the farms and forests that ring Oregon’s metropolitan centers have been protected from urban sprawl by the nation’s first statewide law that placed growth boundaries on cities. Cities cannot expand beyond those borders unless they make a request and justify it. Approval by cities and counties can take months or even a few years (larger expansions also need approval by the Oregon Department of Land Conservation and Development).

But now, a bill being considered in Oregon’s Legislature could authorize the governor to unilaterally expand those boundaries as part of Oregon’s quest to lure chip companies and provide land for them to build their factories. The measure would also provide $200 million in grants to chipmakers.

Farmers and conservationists are deeply worried about the proposal and what it will mean for a state that cherishes its open spaces.

“One of the reasons we bought our farm right here is that we knew that for 50 years we’d be farms, and everyone around us would be farms,” Nichols said. “And now we’re not so sure. Now it’s up to one decision by the governor. And that’s a scarier place to be.”

State officials and lawmakers, on the other hand, are eager to bring more semiconductor factories to Oregon while billions of dollars of federal funding to promote the industry is available.

They were stung by Intel’s decision last year to build a massive $20 billion chipmaking complex in Ohio, and not in Oregon where suitable zoned land is scarce.

Oregon has its “Silicon Forest” — a counterpoint to California’s Silicon Valley — and has been at the center of semiconductor research and production for decades. But Oregon is competing with other states to host multibillion-dollar microchip factories, called fabs. The competition heated up after Congress passed the CHIPS Act in 2022, providing $39 billion for companies constructing or expanding facilities that will manufacture semiconductors and those that will assemble, test and package the chips.

Dramatically expanding semiconductor design and manufacturing in Oregon would create tens of thousands of high-paying construction jobs and thousands of manufacturing and supply chain jobs, the Oregon Semiconductor Competitiveness Task Force, said in a report in August.

But the task force warned that Oregon needs more buildable industrial land near infrastructure, talented workers and specialized suppliers to attract and retain semiconductor businesses, and called for “urgent legislative attention.”

“This is about generational change,” Democratic state Sen. Janeen Sollman, a chief sponsor of the bill, said during a recent tour of an HP Inc. campus in Corvallis, Oregon. “This is the opportunity that students will have for their future in going into these types of jobs.”

Today, thanks to a former Republican governor, you can drive from many cities in Oregon and within minutes be in farm or ranch country, unlike many states where cities are surrounded by expanses of shopping centers and housing developments.

Tom McCall, who served as Oregon’s governor from 1967 to 1975, had successfully championed protections for Oregon’s beaches to ensure they remained public. In 1973, he urged lawmakers to push for a tough new land-use law.

“Sagebrush subdivisions, coastal ‘condomania’ and the ravenous rampage of suburbia here in the Willamette Valley all threaten to mock Oregon’s status as an environmental model of this nation” McCall said in a speech before the Legislature in 1973.

The Legislature complied, passing a bill that established the nation’s first statewide urban growth boundary policy.

Washington state and Tennessee followed Oregon’s lead. In 1982, a ballot measure called for a repeal in Oregon. McCall, who was dying of cancer, campaigned against it. Voters upheld Oregon’s land-use system by rejecting the measure two months before McCall died.

Under Oregon’s system, an urban growth boundary designates where a city expects to grow over the next 20 years. Once land is included in a UGB, it is eligible for annexation to a city. Those UGB lines are regularly expanded. From 2016 through 2021, 35 were approved, according to the Oregon Department of Land Conservation and Development.

But the process takes time. McMinnville, in Oregon’s fabled wine country, battled for 20 years to expand its boundary, said Robert Parker, director of strategy at the University of Oregon’s Institute for Policy Research and Engagement.

Obtaining approval can take months or years, depending on its level of controversy, said Gordon Howard, of Oregon’s land conservation department. Appeals to the courts or a state board cause further delays.

That’s too long a wait for chipmaking companies, especially those that want to take advantage of CHIPS Act funding.

“Other states offer a more streamlined approach that is more in sync with the speed of the market,” according to Oregon’s semiconductor task force, whose members included then-Gov. Kate Brown.

Under the bill, the governor may designate up to a maximum of eight sites for UGB expansion: two that exceed 500 acres (202 hectares) and six smaller sites. Any appeals go straight to the state Supreme Court.

The Oregon Farm Bureau, which represents 7,000 family farmers, said the effort should instead focus on lands already within the urban growth boundary.

“The conversion of agricultural lands into paved industrial lands is a permanent destruction of our natural and working lands,” said bureau Vice President Lauren Poor. “Once it’s paved, the soil and its ability to sequester carbon, support our food system and generate income for Oregonians is gone forever.”

Washington County, where Nichol’s farm is located, produces more clover seed crop than anywhere else in the world, thanks to its unique soil and rainy climate, said Nicole Anderson, an associate professor at Oregon State University’s Department of Crop and Soil Science.

“I hope that science and consideration of our land resources are considered when this bill is voted on,” Anderson told the Legislature’s joint committee on semiconductors on March 13.

On Friday, the ways and means committee sent the bill for a vote on the Senate floor. The Senate will consider the priority legislation this week.

“I am thrilled to see this legislation pass out of committee and look forward to seeing it through to the finish line,” said Rep. Kim Wallan, a Republican and a chief sponsor of the bill.

Parker, the land-use expert, doesn’t believe its passage would mark the start of the end of Oregon’s treasured policy.

“Will there be more challenges and bumps in the road ahead? Yeah, I think so,” Parker said. “But I feel like it is so well established in the state at this point that it has the inertia to carry it through those challenges.”