Packaging EPR Laws Clear Their First Constitutional Hurdle: Federal Court Upholds Oregon EPR Law

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In a closely watched first for state packaging extended producer responsibility (EPR) programs, a federal court has upheld Oregon’s recycling law on the merits. On August 27, 2026, following a five-day bench trial, the U.S. District Court for the District of Oregon held that Oregon’s Plastic Pollution and Recycling Modernization Act (RMA) does not violate the U.S. Constitution’s dormant Commerce Clause or the Fourteenth Amendment’s Due Process Clause. National Association of Wholesaler-Distributors v. Feldon, No. 3:25-cv-01334-SI, Findings of Fact and Conclusions of Law (D. Or. Aug. 27, 2026). The ruling follows a February preliminary injunction that applied to the National Association of Wholesaler-Distributors (NAW) and its members while the case moved to trial. As the first merits decision to uphold a modern state packaging EPR program against these constitutional challenges, the decision is likely to shape both pending litigation in other states and how producers approach compliance as state EPR programs move from design to enforcement. For producers subject to state packaging EPR programs, this decision adds judicial backing to the expanding regulatory framework of mandatory producer accountability, with direct implications for compliance planning, cost allocation, and financial disclosure.

State Packaging EPR Programs
EPR laws assign producers responsibility for specified end-of-life management costs associated with covered products. The RMA’s statutory producer may be a brand owner or licensee, importer, or first seller, depending on the product category (not necessarily the product’s manufacturer). The opinion described this approach in economic terms as internalizing externalities, a version of the “polluter pays” principle.

States have used EPR laws for batteries, paint, electronics and other products for decades, but comprehensive packaging programs like the RMA are newer. Oregon was the first state to put a comprehensive packaging EPR framework into effect, and it was also the first state to begin collecting producer fees under such a program when its RMA took effect in July 2025. Oregon’s program—like programs that have since been enacted in California, Colorado, Maine, Maryland, Minnesota and Washington—relies on a producer responsibility organization (PRO) to administer key program functions under state oversight. Nonexempt producers of packaging, printing and writing paper, and food serviceware generally must join a qualifying PRO, report Oregon volumes, and pay fees based on material and volume. At the time of trial (and today), Oregon had only one approved PRO, the Circular Action Alliance (CAA).

A Bellwether Decision for State Packaging EPR Programs
Oregon’s case has been watched closely because it is the first full merits decision testing the constitutionality of a modern packaging EPR program. The court treated waste management and public health as legitimate state interests and described EPR as a means of requiring product prices to reflect end-of-life costs that the state characterized as otherwise borne by third parties. The court’s conclusion that the RMA survives constitutional review is consequential not because every state’s statute is identical, but because it judicially validates central features common to many packaging EPR programs: producer registration, PRO participation, fees based on material and volume, state review of program plans, and state enforcement authority.

The RMA Survived Its Core Constitutional Challenges
The court had previously dismissed NAW’s federal equal protection and unconstitutional conditions claims—the latter of which NAW conceded was “just a different analysis of the Commerce Clause or Due Process Clause”—and its Oregon constitutional claims. Though those dismissals were without prejudice, NAW did not replead them. The trial therefore focused on two federal constitutional theories: the dormant Commerce Clause and procedural due process.

Dormant Commerce Clause: Compliance Costs Alone Were Not Enough
NAW argued that the RMA discriminates against interstate commerce, imposes an unreasonable user fee, and places excessive burdens on interstate commerce under the Pike balancing test. The court rejected each argument. It found no protectionist purpose; no actionable facial or effects-based discrimination; and no proof that statutory exemptions or the program’s fee structure materially disadvantaged out-of-state interests.

The facial challenge to the public body exemption failed because NAW did not prove Article III injury, its asserted interest fell outside the dormant Commerce Clause’s zone of interests, and Oregon public bodies were not similarly situated to private companies. The court also rejected NAW’s challenges to the gross revenue and immediate consumption exemptions due to lack of evidence of discriminatory effects. As to NAW’s user fee theory, no witness quantified alleged free rider effects and the record did not show that program fees were clearly excessive in relation to the costs and needs of the recycling system. Although CAA’s 2025 Annual Report showed the organization had collected about $145.5 million and spent about $56.5 million, the court credited evidence that timing, reserves and possible future fee reductions could account for the difference.

Most significantly for multistate producers, the court held that evidence of substantial compliance costs, supply-chain changes or possible price increases with respect to individual companies did not by itself establish a substantial burden on interstate commerce. Instead, the claim required quantification of the effect on the interstate market, as the dormant Commerce Clause protects the interstate market, not particular interstate firms, from burdensome regulations. The court therefore found no threshold burden under Pike and, alternatively, no burden clearly excessive in relation to Oregon’s waste management and public health interests.

Due Process: State Oversight and Available Process Were Central
NAW also challenged the role of CAA, asserting that the law impermissibly delegated regulatory authority to a private, potentially self-interested entity and did not afford adequate process for contesting fees. As a threshold matter, the court held that, unlike challenges to federal delegations under Article I, a private nondelegation challenge to a state law under the Fourteenth Amendment requires the plaintiff to identify a protected liberty or property interest before reaching the merits. The court ultimately assumed without deciding that NAW had satisfied this threshold, but the holding itself may be significant for future private nondelegation challenges to state EPR laws.

On the merits, the court held that a private entity may assist an agency when it remains subordinate and the agency retains meaningful supervision and ultimate decision-making authority. Although DEQ had not reviewed CAA’s proprietary fee-calculation algorithm or the thousands of underlying datapoints used to generate the cost-to-manage values, DEQ reviewed CAA’s disclosed methodology and values, compared them with its own models, required changes during the plan-approval process, and approved the final plan.

The court further stressed that participation in CAA is not the only statutory route: Producers may form another qualifying PRO, and producers may avoid PRO membership entirely by privately recycling all covered products for which they are responsible. Those routes may present practical difficulties, but the court concluded that options existed. For DEQ enforcement, producers receive notice and an opportunity to cure, may seek an administrative hearing and judicial review, and need not pay a civil penalty until appeals are exhausted.

Potential Influence on Related Litigation
The Oregon opinion will likely be cited by defendants in NAW’s pending challenges to California’s Senate Bill 54 and Colorado’s Producer Responsibility Program for Statewide Recycling Act. The Oregon court’s analysis rejecting arguments that a producer-focused fee system, a PRO-administered model, and multistate compliance impacts are inherently unconstitutional provides a roadmap for states defending analogous regimes.

But the ruling is not binding outside the District of Oregon, and several of its holdings turned on statute-specific features: the availability of compliance alternatives under the RMA (forming a competing PRO or privately recycling covered products), DEQ’s retained oversight of CAA’s fee methodology, and the evidentiary showing at trial. The California and Colorado complaints assert additional and differently framed claims that the Oregon court did not reach.

In State of Nebraska et al. v. Heller et al., No. 2:26-at-01047 (E.D. Cal.), a 17-state coalition and NAW challenge California’s Senate Bill 54 on Commerce Clause, Import-Export Clause, First Amendment, due process, private delegation, and California constitutional free-speech grounds. The California plaintiffs also allege that SB 54’s recyclability standards, treatment of imported goods, and fee-disclosure restrictions create distinct constitutional infirmities not present in the Oregon statute.

In National Association of Wholesaler-Distributors v. Ryan, No. 1:26-cv-03460 (D. Colo.), NAW pleads private delegation, unconstitutional conditions, and dormant Commerce Clause claims alongside First Amendment challenges to Colorado’s prohibition on producers disclosing compliance costs to consumers at the point of sale and to the statute’s compelled-association requirements.

The related litigation extends beyond these cases. The Independent Lubricant Manufacturers Association filed a challenge in Colorado state court to the Act, and an Oregon class action challenging the RMA, Lollicup USA, Inc. v. Feldon, No. 3:26-cv-01287-SI (D. Or.), also remains pending before the same judge who issued the opinion in NAW v. Feldon. That class action, which raises substantially overlapping claims, will need to contend with the court’s reasoning in NAW v. Feldon.

The persuasive force of the Oregon decision in these parallel proceedings will turn on whether the other programs provide comparable agency oversight, meaningful compliance alternatives, and adequate procedural safeguards for producers contesting fee assessments. Even so, the ruling gives state defendants a substantial new authority to invoke in resisting constitutional challenges to packaging EPR laws.

Considerations for Producers
The ruling materially strengthens Oregon’s position as it continues to implement and enforce the RMA. Producers should expect DEQ and CAA to proceed with greater confidence on registration, reporting, fee, and related compliance obligations. For companies subject to Oregon’s program—and for those building multistate EPR programs—this is a time to confirm that producer determinations, reporting data, internal controls, and contractual arrangements are current.

  • Confirm producer status and scope. Map the entities, brands, products and packaging that may trigger producer obligations. Definitions and producer hierarchies vary across state programs and can pull distributors, private-label sellers, importers, and licensors into the analysis.
  • Review compliance calendars and controls. Revisit Oregon registration, reporting, data verification, and fee payment processes. For multistate operations, maintain a jurisdiction-by-jurisdiction calendar rather than relying on a single national workflow.
  • Strengthen packaging and data governance. EPR obligations depend on defensible packaging data, supplier information, material classifications, and sales or volume allocation. Clarifying ownership and validation procedures before a report or fee calculation is due can reduce later compliance friction.
  • Evaluate contractual allocation. Review supplier, brand, distributor, and customer arrangements to determine who will furnish data, bear EPR costs, manage reporting, and address inaccuracies or program changes. Operational responsibility and statutory liability may not align.
  • Understand enforcement and fee-dispute processes. Document data sources, assumptions, and communications with the PRO. Identify applicable cure periods, agency-review mechanisms, contractual dispute procedures, and any limits on passing through or disclosing fees.
  • Continue to monitor litigation and implementation. An appeal in Oregon remains possible, and California and Colorado may produce decisions on different claims (or even diverging decisions on similar claims). Those developments should inform compliance strategy as state programs continue to evolve.

Looking Ahead
The Oregon decision is an important merits ruling on the constitutionality of state packaging EPR programs, but it does not resolve the broader legal landscape, particularly as several claims failed for lack of proof and the pending California and Colorado cases involve different statutory schemes and additional claims. NAW has until at least the end of September to file a notice of appeal to the Ninth Circuit, depending on whether post-trial motions are filed. Even so, the decision provides further reason for producers to treat EPR compliance as an operational priority rather than a theoretical risk that can be deferred pending litigation, and for producers to integrate EPR compliance into their operational and financial planning rather than treat it as a theoretical risk that can be deferred pending litigation.

Pillsbury’s Environmental & Natural Resources team continues to track the rapidly evolving landscape of state EPR legislation, regulatory implementation, and constitutional litigation. As courts, regulators, and industry stakeholders navigate the implications of this ruling and parallel challenges in California and Colorado, we will provide timely updates on developments that may affect producer compliance obligations and broader ESG strategies. For questions about how these developments may impact your organization, please contact the authors.