Oregon Packaging EPR Program Survives Constitutional Challenge

In a lengthy ruling with significant implications for similar schemes across the country, a federal judge has upheld Oregon’s extended producer responsibility (EPR) program for packaging, printing, and food serviceware, holding that it does not violate the U.S. Constitution’s dormant Commerce Clause or Due Process Clause.

Oregon is one of seven states to have enacted a packaging EPR program, which require manufacturers to pay volume- and material type-based fees to cover the costs of managing packaging waste.  Litigation challenging California’s and Colorado’s programs is also ongoing. Those cases involve the same plaintiff, the National Association of Wholesaler-Distributors (NAW), as well as other plaintiffs.

Prior to issuing its August 27, 2026, decision, the court granted a preliminary injunction enjoining enforcement against NAW’s members and conducted a five-day bench trial.  NAW has issued a statement saying that the trade association is “consider[ing] its next steps.”

Dormant Commerce Clause

NAW advanced three theories under the dormant Commerce Clause, arguing that that Oregon’s Recycling Modernization Act (RMA) (1) discriminates against interstate commerce, (2) imposes an unreasonable “user fee,” and (3) places an undue burden on interstate commerce.

Discrimination.  Finding insufficient evidence of purposeful discrimination, the court considered whether the RMA is facially discriminatory.  NAW argued that the scheme grants preferential “small producer” status to certain in-state governmental entities like the University of Oregon but not to similar out-of-state institutions.  As a result, NAW alleged, obligated producers must pay more than their fair share of the program’s costs.

The court rejected this “free riding” argument for several reasons.  Among them, the court found that NAW’s alleged injury would be the same regardless of which entity received the exemption.  The court also held that in-state public entities “are not ‘similarly situated’ to out-of-state public entities, which do not support Oregon’s infrastructure.”

NAW separately argued that other small-producer criteria discriminate in effect.  For example, an interstate business with global revenues above $5 million—but Oregon revenues below $5 million—would not qualify as a small producer, whereas a company solely doing business in Oregon with revenues under that threshold would.  However, even if costs are borne primarily by out-of-state consumers, that does not make a scheme discriminatory in effect, the court held.

Unreasonable user fee.  NAW’s “free rider” theory was also central to its unreasonable fees claim.  The court, however, found the evidentiary record insufficient to establish that the exemptions resulted in an unreasonable fee.  Because “no one” “has attempted to quantify the effects of any exemptions,” the court cannot determine whether these exemptions apply “with significant frequency,” the decision states.

A separate line of attack focused on the fees collected by the Circular Action Alliance (CAA), the nonprofit producer responsibility organization (PRO) that is implementing the program.  While CAA collected $90 million more than it spent in 2025, the court held that is not “clearly excessive” because the excess was due to uncertainties and may reduce future fees.

Undue burden.  NAW argued that the court should employ the balancing test established in Pike v. Bruce Church, Inc., which assesses whether a law’s burdens on interstate commerce are “clearly excessive in relation to [its] putative local benefits.”  However, the court found the test inapplicable, noting that it is generally not applied unless a statute is discriminatory or is shown to impose a substantial or significant burden on interstate commerce.  Anecdotal evidence that NAW’s members will face substantial costs is not enough, the court held, emphasizing that Pike protects the market as a whole—and not specific interstate firms—from burdensome regulations.

In any event, the court concluded that the RMA would survive Pike balancing even if the test applied.  Oregon, the court found, “has a great and longstanding interest in protecting its citizens from the externalities created by waste and products at the end of their life, including plastics and other hard-to-recycle materials.”

Due Process Clause

NAW’s due process claims focused primarily on CAA’s role in administering the regulatory scheme.  Although the RMA permits multiple PROs, CAA is currently the only PRO approved to implement the program.

Assuming without deciding that the RMA implicates a property interest protected by the Due Process Clause, the court first addressed NAW’s argument that the statute improperly delegates regulatory authority to CAA, including the power to regulate competitors.

That argument stems from allegations that CAA is controlled by certain large manufacturers who influence producer fees.  But “because the RMA does not obligate NAW’s members to join CAA, CAA’s self-interestedness, [Oregon’s] review of CAA’s fee-setting methodology, and CAA’s contracts are not relevant to NAW’s due process challenge,” the decision states.

The court emphasized that producers are free to form their own PRO, even if doing so presents “practical difficulties.”  Producers may also take advantage of the RMA’s “private recycling rule,” which exempts products recycled outside the comingled recycling stream and therefore provides an alternative to joining a PRO.  Even with respect to CAA, the court found that Oregon retained sufficient decision-making authority because the state ultimately approved CAA’s fee-setting methodology.

The court also rejected arguments that the RMA fails to provide procedural safeguards against unlawful assessments and exactions of membership fees, holding that NAW’s members voluntarily relinquished their rights by joining CAA.  The court further concluded that the RMA provides sufficient safeguards, noting in part that evidence presented at trial showed that CAA, Oregon, and individual producers “have been able successfully to resolve fee disputes informally.”

The case is National Association of Wholesaler-Distributors v. Feldon, No. 3:25-cv-1334 (D. Or.), filed July 30, 2025.