Bill to boost Oregon chip production passes Senate

By PETER WONG
Oregon Capital Bureau

The Senate has cleared Oregon’s initial bid to obtain some of the billions available in federal incentives to boost domestic semiconductor manufacturing.

The 21-8 vote on Wednesday sent Senate Bill 4 for an up-or-down vote of the House next week. It won support from 16 of the 17 Democrats – one was absent – and five Republicans, including GOP leader Tim Knopp of Bend.

Key provisions of the bill:

• $190 million to aid businesses and others seeking a share of the $52 billion in federal grants and other incentives for domestic semiconductor manufacturing. The Business Development Department would administer the state money, and for each $1 million granted, a business would have to show a minimum return of $1 million or $1.5 million in state and local revenue, with five years as the dividing line. The bill also specifies that two-thirds of the newly created jobs be at the area median income, which for the Portland metro area would top $70,000.
• $10 million to aid universities obtain federal grants in innovative research and training. The federal law, which Congress passed and President Joe Biden signed last summer, provides $200 billion more for scientific research.
• $10 million to set up a loan fund for local governments to develop industrial sites.

 

The bill is also a top early legislative priority for Gov. Tina Kotek, who included money for it in her proposed two-year state budget.

Along with Knopp, who was one of two lawmakers who sat on the task force that came up with the framework for the bill, the other chief sponsor was Sen. Janeen Sollman, a Democrat from Hillsboro whose district is already home to several semiconductor manufacturing plants. Oregon employment in semiconductor manufacturing (40,300) ranks third among the states, trailing only California and Texas.

Sollman, Senate co-chair of the joint committee that drafted the plan, said the state legislation was necessary to secure Oregon’s place in the competition for federal money and the future high-paying jobs offered in the technology sector.

“But, most importantly, this bill will keep our kids close to home,” said Sollman, a former Hillsboro School Board member. “We’ll create the jobs and opportunities they need to grow their own futures and their own families in our communities — both urban and rural.”

The task force that Knopp and House Speaker Dan Rayfield, D-Corvallis, sat on was formed after Intel – the California company that is Oregon’s largest private employer with 22,000 workers in four plants in Hillsboro and Aloha – announced a multibillion commitment to new plants in Ohio.

Knopp was the top Senate Republican on that joint committee, and he also sits on the Legislature’s joint budget committee, where he spoke for it last week.

“I think it’s necessary for Oregon because I believe we need to have the foresight to be promoting and securing as many high-paying jobs for the future that will help Oregon and our families financially,” he said then. “I cannot think of another policy we can pursue that will bring the rate of return to this state, both in human and financial terms, that this bill does.”

The federal legislation is known as the CHIPS (Creating Helpful Incentives for Producing Semiconductors) and Science Act.

Aside from the state competition, the CHIPS Act is aimed at expanding domestic manufacturing of semiconductors, which were devised in the United States but are made largely in Asia. One key supplier of advanced chips is Taiwan, which China – an economic rival of the United States – regards as a renegade province and has threatened to use military force against it. Other chipmakers are all in Asia: South Korea, Japan and Singapore.

“Only Taiwan and South Korea can match our manufacturing capabilities,” Senate Majority Leader Kate Lieber, D-Beaverton, said in a statement. “But with billions in federal dollars becoming available through the CHIPS Act, other states are already racing to catch us. We can’t let them.”

Because the bill has gone through the budget committee, it is poised for an up-or-down vote in the House.

In addition to Knopp, other Republicans who voted for it were Dick Anderson of Lincoln City, Lynn Findley of Vale, Bill Hansell of Athena and David Brock Smith of Port Orford, who changed his original vote.

The bill also contains a much-debated provision that empowers Kotek, after public meetings in the nearest cities and 20 days of public comments, to redraw urban growth boundaries of cities to allow for eight industrial sites. Two sites must be at least 500 acres each, and six smaller sites, suitable for semiconductor or other advanced manufacturing. A semiconductor fabrication plant usually requires a large site.

Legal challenges to the procedure or the governor’s executive orders would go directly to the Oregon Supreme Court within 60 days, and the justices would have to give priority in deciding such challenges.

It would be the first time under Oregon’s land use planning law, which was passed 50 years ago, that the governor would get such supersiting authority.

Knopp said during the budget committee meeting March 24 that while an initial survey by the Port of Portland turned up no suitable sites, a broader survey of cities and counties – still being reviewed – probably will result in identifying enough smaller sites already within the urban growth boundaries of cities. He said their suitability for development with adequate water, power and street access is still being evaluated. But he said the supersiting authority is necessary to identify the two larger sites.

Language was added to the bill at the last minute, ostensibly excluding from consideration urban and rural reserves in Washington County designated under a 2014 law passed after an Oregon Court of Appeals decision that would have forced the county to go back and redo its justifications for the reserves. Such reserves, which Metro and three Portland area counties were asked to designate under a 2007 law, bar immediate development. Some of the bill’s critics say a large potential site for development was omitted from that protection in Senate Bill 4.