New Oregon Law Impacts Data Center Development Statewide

Effective June 5, 2026, new data centers in Oregon are barred from accessing the state's largest property tax incentive program, marking a pivotal moment in an increasingly complex regulatory landscape. A moratorium included as part of House Bill 4084 makes new data centers ineligible for property tax breaks through Oregon's Enterprise Zones tax incentive program. The moratorium remains in effect until 90 days after the 2027 Oregon legislative session adjourns sine die, potentially extending into fall 2027 or later.

Advocates of the moratorium say it will give Governor Kotek's Oregon Data Center Advisory Committee time to study the expansion of new data centers and their impact on Oregon's economy, environment, and energy supply before the 2027 legislative session. The committee has held four meetings and two listening sessions to date, engaging numerous stakeholders across the state. On July 31, 2026, the committee is set to discuss and deliberate its draft report. The final report and policy recommendations follow in October 2026. With the legislative session approaching, the window to engage and shape policy outcomes is narrow.

Oregon has had one of the nation's largest data center industries, in part due to its beneficial tax structure, with tech companies saving more than $450 million in total state tax breaks each year. Data centers that are already receiving tax breaks, and new data centers that are in the planning or construction phase but were already approved for such tax breaks, will still collect them. Importantly, data centers will also remain eligible for property tax breaks through Oregon's Strategic Investment Program, which is a separate state property tax incentive unaffected by the moratorium.

Oregon is also seeing increasing opposition to data centers at a local level. On June 2 and 9, 2026, the City of Hillsboro City Council held work sessions to provide council members and residents with information about data centers and the city's Enterprise Zones program.The city plans to further evaluate potential changes to the city's land use code related to data centers and is exploring requiring environmental and economic development assessments. The city also plans to further evaluate the community impact fee generated through the city's Enterprise Zones Program.

The message from municipalities across the state is becoming increasingly clear: Changes to data center development are coming, and community engagement is no longer optional for data center developers.

These recent developments in Oregon reflect a broader trend toward ensuring that rapid growth in digital infrastructure is accompanied by thoughtful planning around energy, water, and community impacts. Companies that proactively address these issues may be better positioned to navigate these evolving stakeholder expectations and emerging regulatory frameworks.

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Elaine Albrich is a partner in DWT's Portland office and serves as co-chair of the firm's energy, natural resources & environmental practice. Caroline Cilek is an associate, also located in our Portland office. For guidance on how these developments may affect your data center projects, please contact the authors or a member of DWT's data center & digital infrastructure team. To stay informed, sign up for our alerts.