A Marion County judge has ruled that an executive order issued by Oregon Gov. Tina Kotek requiring union labor agreements on many state-funded construction projects is unconstitutional, marking a major development in an ongoing dispute between state leaders and construction industry groups.
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The ruling, delivered from the bench Thursday by Marion County Judge Thomas Hart, determined that Kotek exceeded her legal authority when she issued the directive in late 2024. The executive order had required state agencies to use union-backed project labor agreements, known as PLAs, for many construction projects funded by the state.
The decision follows months of legal arguments from construction firms that claimed the policy would unfairly reshape the state’s contracting system and potentially increase construction costs.
Judge Hart concluded that the governor’s executive order, known as EO 24-31, overstepped the authority granted to the executive branch.
The lawsuit challenging the order was brought by a coalition of construction companies, led by the Oregon chapter of the Association of General Contractors. The group argued that the governor’s directive effectively created new legal requirements for state contracts without legislative approval.
“It unilaterally imposes new legal requirements on state contracting, effectively creating law—an act reserved for the Legislature,” the plaintiffs wrote in a motion asking Hart to invalidate the order.
The court had already temporarily blocked the executive order in March 2025 while the case moved forward. Thursday’s decision now makes that injunction permanent, meaning the order will not take effect.
An attorney representing the construction industry plaintiffs told OPB that a formal written ruling from the court is expected to be issued in the coming weeks.
Meanwhile, the Oregon Department of Justice, which defended the governor in the case, said it is reviewing the ruling and considering possible next steps.
Although the court ruled against the order, Kotek said she still believes the policy was the right approach for Oregon’s workforce and construction sector.
“I continue to believe that this was the right policy for the state at the right time,” Kotek said in a statement to OPB. “I am resolved to continue to find pathways to encourage fair, living wage jobs that meet the needs of Oregon families while our state grows.”
Kotek originally issued the executive order in December 2024, requiring state agencies to adopt project labor agreements for many projects where labor costs accounted for at least 15% of overall construction expenses.
Project labor agreements are contracts between a project owner and labor unions that establish working conditions for an entire construction project. These agreements typically set standards for wages, benefits, dispute resolution procedures and hiring practices.
Supporters argue PLAs create more predictable labor conditions, reduce the risk of labor disputes and support union-run apprenticeship and training programs.
The governor previously argued that these agreements would improve workforce development and provide more stability for large state construction projects.
Opponents of the policy, however, have long argued that PLAs can limit competition by discouraging bids from contractors that do not normally employ union labor.
Industry groups say this can reduce the number of bidders on public projects and ultimately increase construction costs for taxpayers.
Oregon construction firms were caught off guard when the order was first announced, and the directive quickly faced criticism from Republican lawmakers and industry groups who viewed it as an overreach of executive power.
The Oregon Department of Justice defended the order during the case, arguing that the governor’s action was within her authority to set policy for state agencies.
“The Court should not read the executive order to be a proclamation of law or an attempt at legislation,” lawyers for the state wrote, adding that Kotek viewed the order as “a constitutional expression of her role as the chief executive and not an attempt to usurp the authority of the legislative branch.”
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The court’s ruling also arrives during a challenging period for Oregon’s transportation infrastructure funding.
The Oregon Department of Transportation is currently facing a significant structural funding gap. Lawmakers recently concluded a legislative session without fully resolving the agency’s budget challenges.
Officials estimate the department needs to address a roughly $300 million shortfall, while proposals to raise gas taxes and other transportation fees are still awaiting public consideration.
Internal analyses by the transportation department suggest that project labor agreements could potentially reduce the number of competing bids on infrastructure projects and increase construction costs.
Some internal projections have suggested that PLAs could increase project costs by 10% to 20%, though the exact financial impact remains a subject of debate among policymakers, economists and industry experts.
With the judge’s decision now striking down the executive order, the future use of project labor agreements on Oregon state construction projects may ultimately depend on whether the Legislature chooses to take up the issue through new legislation.
Originally reported by Dirk VanderHart in OPB.
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