The Modular Building Institute (MBI) is an international trade association representing the off-site and modular construction industry. Its members build components and whole building modules in factories before shipping them to project sites for assembly. Modular construction allows for reduced project timelines and limited waste production, which means more affordable construction for housing, schools, and other facilities.
The State of Oregon is threatening those efficiencies and, with them, MBI members’ competitive advantage. Oregon has long required contractors on public projects to pay a state-set wage to workers on the job site, but in 2025, state lawmakers decided that wasn’t enough. House Bill 2688 extends Oregon’s wage rules to fabrication work performed outside of Oregon—at factories in other states and countries—so long as the final product finds its way to an Oregon public project.
Worse, businesses have no reliable way to know in advance whether their work falls under the new requirement. The rule doesn’t define which off-site fabrication is covered, leaving manufacturers to guess—and risk being penalized for guessing wrong.
Oregon cannot reach across its own borders to control how another state’s factory operates any more than one business can decree how its competitors run. The Constitution does not allow states the power to set national—and international—standards. That’s the job of Congress.
A win in this case would confirm that Oregon’s authority ends at its own border, and that businesses are entitled to know what a regulation requires of them before the government can punish them for it. Oregon’s 2025 law forces out-of-state modular builders to follow its wage rules, and MBI argues that oversteps state power.
What’s At Stake?
- A state cannot regulate wages and working conditions in other states simply because the resulting products are eventually sold within its borders. Allowing it to do so would let each state impose nationwide labor policies.
- The government cannot punish businesses under rules so vague that no one can tell what they require. Vague laws invite arbitrary enforcement and leave regulated parties to guess at what the law demands.
