Oregon's Packaging EPR Law Faces First Constitutional Trial Challenge

A five-day bench trial, where a judge rather than a jury will decide the case, opened Monday, July 13, in U.S. District Court in Portland in National Association of Wholesaler-Distributors v. Feldon. It's the first constitutional challenge to a state packaging extended producer responsibility (EPR) law to reach trial. The case tests Oregon's Plastic Pollution and Recycling Modernization Act (RMA), the producer-funded recycling program that launched July 1, 2025.

NAW's suit, filed in August 2025, originally swung much wider, including equal protection claims and arguments under the Oregon Constitution. In February the court dismissed most of them, but it let two federal claims proceed, finding they raised “serious questions” about the law's constitutionality, and granted a preliminary injunction on that basis. The first argues that Oregon unconstitutionally delegated governmental power—fee setting, material classification, auditing, and dispute resolution—to Circular Action Alliance (CAA), the private nonprofit serving as the state's sole approved producer responsibility organization (PRO), in violation of the Constitution's Due Process Clause. CAA is also the approved PRO in California, Colorado, Maryland, and Minnesota.

The second, potentially more substantial pillar argues the law's fee-and-compliance regime violates the dormant Commerce Clause, the doctrine barring states from discriminating against or unduly burdening commerce that crosses state lines. Because both claims attack the structure of the program rather than any plaintiff's place in it, the outcome matters to every producer paying fees in Oregon. It could also serve as precedent in the six other packaging EPR states.

"The law isn't fully in effect (or at least not fully being enforced) for everyone right now, though. In February, the court granted NAW a preliminary injunction, marking the first time a court has blocked enforcement of a state packaging EPR law.But the order protects only NAW's member companies, which represent a small percentage of parties considered obligated producers. Obligated parties mostly consist of brands and CPGs, not distributors or contract packagers. Oregon's Department of Environmental Quality (DEQ)—whose director, Leah Feldon, is the named defendant—continues to enforce the law against all other covered producers.

NAW: 'These should be meant for a government entity'

“Laws are supposed to be enacted by legislatures and administered by agencies, all of which are accountable to the public. And this nonprofit is really not at all,” attorney Karen Harned, NAW's director of litigation and legal policy, told Packaging World on a call last week. “I think this is the worst kind of delegation.” She points to the fee methodology, a portion of which remains under seal in the case record: “Sure, we know the rates. If you use plastic, you're going to get charged this; if you use glass, you're going to get charged this. But how were those numbers derived? The methodology has not been transparent.” Her argument: had a government agency set the fees, the methodology and the agency's logic would be public record. Together with the law's binding arbitration requirement for fee disputes, she argues, “all of these really should be meant for a government entity, not for a nonprofit, not for a private firm.”

Harned confirms the objection is not to CAA specifically—even a hyper-transparent PRO would draw the same challenge, because in NAW's view the power belongs in public hands. At the February hearing, she recalls, one of the judge's first questions to Oregon was why the state didn't run the program itself. “They could have created the infrastructure. It would've been expensive, but it could have been done,” she says. And asked whether a restructured program—published methodology, judicial review, DEQ setting fees—would satisfy NAW: “We just do not think it's workable or fixable, quite frankly. To accomplish the stated policy objectives of this legislation, it needs to be completely scrapped and started over.”

On the dormant Commerce Clause issue, Harned argues the law discriminates against out-of-state businesses that must restructure products, shipping, and reporting (and pay fees) to sell into the state. Cross-state fund flows under a single national PRO compound the problem, she says. “It's very much a rob-Peter-to-pay-Paul situation in some instances, where you've got fees going in from Colorado consumers to help support the Oregon programs.”

The precedent Oregon is expected to lean on in defense of its law is National Pork Producers Council v. Ross (2023), in which the Supreme Court upheld Prop 12, California's law setting confinement standards for pork sold into the state, despite its nationwide effects on producers. But Harned distinguishes the RMA from the pork producer law at issue in that case: Prop 12 arose from a moral interest in animal welfare, which courts found impossible to weigh against economic costs, while Oregon's law imposes direct, measurable economic fees—a basis for a constitutional challenge she says Ross left open. “This is like the poster child for a Commerce Clause violation, in our opinion,” she says, adding that at least one NAW member has stopped selling into Oregon because fees exceeded its margins there.

Why are wholesaler-distributors in the fight at all? NAW members qualify as producers under the RMA mainly in two ways: through private-label brands carrying the distributor's name, and through the bulk and shipping packaging—pallets, stretch wrap, cases—they introduce when moving goods into the state, even though they have no say over the primary or secondary packaging within. “We have very, very little control over the packaging that's going into the state that we're accountable for paying fees on,” Harned says, noting distributor margins run far thinner than they do for brand owners. “This is a tax on our members. If those are the programs that everybody collectively wants, the electorate should be asking for that in these states. That's the only way you're going to get true buy-in.”Distributors buy, store, repackage, and deliver goods they largely didn't design or package. Oregon's producer definition captures them through private-label brands and the shipping packaging they add.Graphic: NAW.

The Recycling Partnership: a high bar and demonstrated benefits

The Recycling Partnership (TRP), which was actively engaged in the design and passage of the RMA, filed a friend-of-the-court (amicus) brief on June 29 in support of the RMA, aimed squarely at the dormant Commerce Clause claim. “We see the dormant Commerce Clause questions as being pretty existential to EPR across the different states,” says John Hite, TRP's senior director of public policy and government affairs. A ruling on those grounds, unlike a due process ruling tied to Oregon's particular structure, could be exported to challenges against every state program. TRP already sees those arguments surfacing elsewhere: in the federal lawsuit NAW and 17 state attorneys general filed in June against SB 54, California's packaging EPR law, and in a suit by the Independent Lubricant Manufacturers Association (ILMA) challenging Colorado's Producer Responsibility Program for Statewide Recycling Act in Denver District Court, arguing the law delegates unlawful regulatory power to private entities and imposes unworkable packaging fees on smaller manufacturers.

The brief leans on the Supreme Court's own caution. It quotes Ross—“companies that choose to sell products in various States must normally comply with the laws of those various States”—and notes courts must be “particularly hesitant” to strike down laws governing waste disposal, a traditional local government function. It also points to the governing legal test, known as Pike balancing after a 1970 Supreme Court case: when a law treats in-state and out-of-state businesses evenhandedly, a challenger must show the law's burdens on interstate commerce are “clearly excessive” compared to its local benefits—a standard so demanding, the brief observes, that the Supreme Court has not struck down a law under it in 38 years.

“The statute treats producers in Oregon the exact same as it treats producers that are outside of the state,” Hite says of the discrimination question. As for the balancing test, he says, “It is not enough for a plaintiff to come forward and say, 'We're burdened and therefore this is a violation.'” The state need only show real in-state benefits, which the brief itemizes: fee structures that incentivize recyclable packaging design, funded education that cuts contamination, landfill diversion, and infrastructure investment budgeted at $38.3 million through 2025, rising to $92.1 million in FY2026 and $125.2 million in FY2027.

“Until the gavel comes down on a final decision, and that could be two, three, four years from now, the program is going to continue to operate,” Hite says. Appeals are all but certain either way, and a Supreme Court endgame could stretch to 2029 or 2030. That timeline shapes his response to producers weighing whether to pause packaging redesign or compliance investment until the case resolves. “I would not make that decision with the possibility that there's going to be resolution in the next six months to a year. These court cases might wind up taking three or four years to have any sort of final resolution… The Clean Water Act and the Clean Air Act are still getting sued. We're 40, 50 years later and these laws are still getting sued.” As for the trial itself: “We feel pretty confident that the judge is going to side with the state on this one,” Hite says.Six-month results from Oregon's EPR program as reported by Circular Action Alliance, the PRO administering it.CAA 2025 Oregon Annual Report

CAA: year-one results on the ground

CAA declined to comment for this article, citing the pending litigation. But its first Oregon annual report, released July 2, supplies the program's own account of what producer fees have funded. 

In the program's first six months, CAA reports more than 2,900 participating producers reporting over 409,000 tons of covered materials; 20 new RecycleOn drop-off centers, putting more than 605,000 Oregonians within 15 miles of one; more than 42,000 recycling carts and 12 collection trucks funded; more than 144,000 tons of recyclables processed; and a statewide education campaign reaching 89% of Oregon adults in 12 languages.

“Producer funds are already being put to work across Oregon, from new recycling carts and collection equipment to expanded access points and local program support,” says Kim Holmes, executive director of CAA Oregon. The report calls 2025 a “build year,” notes costs came in lower than projected due to implementation timelines rather than reduced scope, and targets completion of major system investments by the end of 2027.

CAA adds that unspent 2025 funds remain committed, with deployment following contracting and project readiness. “The first six months of 2025 were a build year, not the full measure of program activity. Funding timelines, including for major infrastructure investments, reflect contracting, procurement and project readiness,” CAA said in the July 2 report. “As a result, some planned 2025 investments will be deployed in 2026 and 2027 as projects move from agreements to delivery. Unspent 2025 dollars remain dedicated to these obligations and will be used to fund approved investments as they come online.”

Uncertainty as its own cost

Packaging World reached out to several brand owners who say they are aware of the case and are keeping an eye on it, but all declined to comment directly. One company that occupies an unusual position did talk. Packaging suppliers generally aren't obligated as producers under EPR laws since those obligations fall on the brand owners whose products the packaging carries. Innovativ Holdings sits on both sides of that line. It develops fiber-based packaging, barrier coatings, and recyclable and compostable materials for consumer brands, but it also owns a consumer brand of its own, matter, which sells into Oregon and Colorado—making Innovativ a covered producer that incurs, reports, and pays EPR fees under the same programs its brand customers are navigating. From that vantage point, the litigation's most immediate effect may be the very hesitation Hite advises against.

“The packaging industry doesn't innovate well in an environment of uncertainty,” says Mike Marcinkowski, packaging specialist at Innovativ. “We innovate when the performance targets are clear, measurable, and consistent.” The math of packaging development explains why: development cycles run 18 to 36 months, while manufacturing assets and tooling are expected to serve a decade or more. “The industry isn't necessarily looking for less regulation—it is looking for technically sound, predictable regulation,” he says.

Marcinkowski also urges that EPR programs “reward actual environmental performance rather than simply material substitution,” evaluating packages on lifecycle impacts, recovery rates, and food waste prevention rather than material category alone. As for the outcome: “If the framework remains consistent, companies can continue optimizing designs around those requirements. If significant elements of the program change, many organizations will likely pause or revisit development programs.”

Packaging World's Legal Side columnist weighs in

We asked resident Legal Side columnist Eric Greenberg to weigh in. Here's what he has to say about the NAW suit.

“As is often the case, whenever states step into a legal realm that affects businesses nationwide, the industry can be significantly burdened by having to comply with multiple states' requirements, especially when the states' requirements don't match one another,” Greenberg says. “Here, in addition, the advocates of EPR programs seem to have chosen a possibly unconstitutional system for achieving their stated goals.”

What happens next

A decision is expected in the months after trial, and both sides anticipate appeal regardless of the result. Harned says she is confident NAW members would receive relief if the association prevails, but the breadth of any remedy beyond NAW's membership “is going to depend on what the judge wants to do.” Meanwhile, the litigation map keeps expanding: a producer class action, Lollicup USA v. Feldon, filed in June seeks to extend Oregon relief to producers outside NAW's membership, and the California SB 54 challenge is just getting underway; that state's EPR regulations took effect May 1. Unless and until a court orders otherwise, Oregon's program, and producers' reporting and fee obligations, will continue.