Challenge to Oregon’s Packaging Extended Producer Responsibility Law Races to Trial While Other Legal Battles Brew

Over the course of the last decade, a growing number of states have introduced extended producer responsibility (EPR) laws, which impose requirements for the end-of-life management of products like batteries, electronics, mattresses, and textiles. In the face of growing challenges over management of plastics and packaging waste, seven states — Oregon, Colorado, California, Maine, Maryland, Minnesota, and Washington — have enacted EPR laws targeting product packaging. Similar bills have been introduced in at least 10 additional states. Packaging EPR laws generally require companies that market, distribute, or sell packaged consumer products (“producers”) to pay fees meant to fund states’ waste management and/or recycling programs, in theory shifting the costs of such programs from taxpayers and states to producers. States implementing these EPR programs have assigned the responsibility of assessing fees to non-governmental organizations, commonly referred to as producer responsibility organizations (PROs). Depending on the specific state’s requirements, producers may be required to join or form PROs, which assess fees based on factors such as the type of materials in the producer’s packaging, the packaging’s recyclability, and the volumes of packaging attributed to the producer in the state.

Packaging EPR laws have drawn criticism for both their fees and the PROs that set them. The laws tend to give PROs wide-ranging discretion to impose potentially exorbitant fees on a huge range of packaged products — even where the wholesaler or distributor has no control over the packaging, and where such packaging is required to allow for safe shipping. Producers have decried the fee assessment process as non-transparent and the fees as arbitrary and potentially business-ending, particularly for small- and medium-sized companies. Further, many producers are forced to engage with a single state-approved PRO in which they have little input or insight. Through their contracts with producers, PROs may also restrict dispute resolution mechanisms to arbitration, leaving producers without the ability to challenge fee assessments through the courts or state administrative processes.

Unsurprisingly, litigation challenging packaging EPR laws has quickly followed their implementation. Oregon’s packaging EPR law — one of the first such programs to begin issuing producer invoices for PRO-assessed fees — is headed to trial in federal court this July, following the grant of a preliminary injunction in February. While the preliminary injunction in that case bars enforcement of the law against the specific plaintiff association and its members, the court denied intervention by multiple similar organizations, who are now caught waiting for the outcome of the July trial while Oregon barrels forward with enforcement. The case is the first merits test of how far states will be permitted to go in requiring companies to fund packaging and recycling programs administered through private PROs.

Oregon is not the only battleground for packaging EPR laws. In Colorado, an industry group filed a lawsuit earlier this year challenging that state’s implementation of its packaging EPR program. In California, on the other hand, environmental groups have signaled their intent to challenge the state’s packaging EPR regulations as not being stringent enough, while a broad coalition of industry groups challenges the state’s “truth in recycling” law, which imposes strict limitations on representations that companies can make about their products’ recyclability, with related implications for recycling targets set under California’s EPR scheme.

This Advisory addresses the upcoming trial in Oregon and the brewing legal battles in Colorado and California. Together, these cases reflect the next phase of packaging regulation: The question is not whether states will pursue EPR mandates to address packaging disposal challenges, but rather how those programs must be structured to withstand legal scrutiny.

Oregon: The First Packaging EPR Trial

In 2021, Oregon enacted the Plastic Pollution and Recycling Modernization Act (RMA). The law requires producers of covered product packaging, food service ware, paper goods, and other items to join or form a state-approved PRO, enter into a contract with the PRO, pay membership fees, and provide the PRO with information about the materials used in the producer’s business and their volumes, which are then used to assess fees. The law defines producers to include manufacturers that sell packaged products in Oregon and wholesalers and distributors that bring such products into the state. Small producers — generally defined as producers under $5 million in revenue or as responsible for under one metric ton of covered product — are considered exempt. In addition to assessing fees, the PRO has authority to establish incentives for, and to penalize, certain producers. Currently, Oregon’s only approved PRO is the Circular Action Alliance (CAA), a nonprofit organization specifically formed to administer packaging EPR programs. (The CAA is currently an approved PRO in six of the seven states with EPR laws.) The CAA’s methodology for assessing fees has been designated confidential under a plan that Oregon approved. Contracts between producers and the CAA provide that fee assessments may only be challenged through binding arbitration. CAA began issuing invoices to producers in May and June 2025, with payments beginning in July 2025.

On July 30, 2025, the National Association of Wholesaler-Distributors (NAW), a trade association representing wholesalers and distributors conducting business across the United States, filed a lawsuit before the U.S. District Court for the District of Oregon, challenging Oregon’s RMA on constitutional grounds. The Amended Complaint names the director of the Oregon Department of Environmental Quality (Oregon DEQ) as the defendant. According to NAW, the costs for producers to form their own PRO are prohibitively high, and invoices issued by CAA to producers under Oregon’s EPR program have been “shockingly high,” particularly for small- and medium-sized businesses. NAW alleges that in many cases the assessed fees actually exceed the margins associated with the underlying packaged products, and that they are being imposed on distributors who lack control over the packaging or the ability to pass the fees on to those who do. NAW describes the fees as effectively acting as a ban on certain products in the Oregon market, or a penalty on packaging needed to transport goods in interstate commerce, “at the whim of a non-public entity.” NAW further alleges that although the fees are supposed to pay for state waste management program costs, no such program yet exists in Oregon, making the fees all-the-more arbitrary. In its Amended Complaint, NAW asserted claims under the federal dormant commerce clause, and the state and federal due process clauses, the state and federal equal protection clauses, the federal doctrine of unconstitutional conditions, and the non-delegation doctrine under the Oregon Constitution.

In December 2025, Oregon DEQ moved to dismiss NAW’s claims for lack of subject matter jurisdiction and failure to state a claim. Specifically, it argued that the Eleventh Amendment of the U.S. Constitution deprives the federal court of jurisdiction to order state actors to comply with state law (i.e., the Oregon Constitution) and that NAW failed to plausibly allege its federal claims.

The Court’s Preliminary Injunction Ruling

In November 2025, NAW filed a motion seeking a preliminary injunction to bar the state from enforcing the RMA and its implementing regulations. At a February 6, 2026 hearing on NAW’s motion, the court’s questioning focused particularly on whether Oregon’s EPR program provides sufficient due process, given the central role that the private PRO plays in fee-setting and program administration. Counsel were asked about the confidentiality of CAA’s fee methodology, the role of CAA’s board, the extent of Oregon DEQ’s oversight, the availability of agency or judicial review, and whether producers have a meaningful ability to understand and challenge their fee obligations.

At the end of the hearing, the court granted NAW’s motion, albeit issuing a preliminary injunction narrower than what NAW requested. The court enjoined Oregon DEQ from taking steps to enforce the act only as against NAW and its members. (In a subsequent order, the court clarified that the injunction only applied to entities who were members of NAW as of the date that the preliminary injunction was entered.) In doing so, the court declined to find at this stage that NAW was likely to succeed on the merits. However, it nonetheless concluded that the case presented “serious questions” as to the merits of NAW’s claims, that NAW had shown likely irreparable harm in light of potentially expansive penalty fees, and that the balance of equities tipped “sharply” in NAW’s favor. The court noted that the balancing might be different, however, if the case were going to be delayed for a year or several years, as that might tip the equities more strongly toward the state. The court then set a July 13, 2026 trial date, ordering the parties to begin expedited discovery immediately.

The court later denied motions to intervene filed by additional trade associations, explaining that intervention could delay the July trial and undermine the balance of equities supporting the preliminary injunction. In doing so, the court observed that these trade associations’ interests would not be prejudiced: If Oregon were to prevail, the ruling would not have preclusive effect on non-parties. And if NAW were to prevail, the ruling would be to those trade associations’ benefit.

In April 2026, Oregon DEQ stepped up its enforcement efforts against producers that have not yet met the RMA’s requirements, issuing a list of allegedly noncompliant producers on April 10, 2026, and sending warning letters threatening penalties for noncompliance. Noncompliance under the RMA includes fines of up to $25,000 per day per violation.

The Court’s Ruling on Oregon’s Motion to Dismiss

At the February 6 hearing, the court also granted in part and denied in part Oregon DEQ’s motion to dismiss the Amended Complaint. The court denied the motion as to NAW’s claims under the federal dormant commerce clause and federal due process clause, finding those claims had been plausibly alleged. Those claims will go to trial in July.

The court granted the motion with respect to the remainder of NAW’s claims. The court dismissed NAW’s state law claims, agreeing with Oregon DEQ that the Eleventh Amendment bars such claims against a state from being heard in federal court. Importantly, the court did not find that a nondelegation theory inherently lacks merit; rather, the ruling simply underscores that such claims may need to be brought in state court, which the court noted during the February 6 hearing.

The court also dismissed NAW’s federal equal protection claim, which was premised on the argument that mid-sized wholesalers and distributors were being disproportionately burdened by the RMA, while smaller producers were treated as exempt and larger producers stood to benefit from the law’s incentive structures. Although the court did not elaborate on its reasoning, the dismissal suggests that equal protection may add little where the core challenge to an EPR law is about interstate commerce, private fee-setting, and due process, rather than differential treatment of covered producers. Moreover, as Oregon DEQ argued in its motion to dismiss, and NAW itself conceded, NAW’s equal protection challenge was subject only to rational basis review — a low bar.

The court dismissed NAW’s unconstitutional conditions claim without prejudice. NAW argued that the RMA impermissibly conditioned access to the Oregon market and the receipt of incentives on producers’ agreement to relinquish core constitutional rights through their contracts with the CAA. The court indicated that it was skeptical that NAW could plead a specific unconstitutional condition since NAW’s members “arguably could form their own PRO,” but allowed NAW an opportunity to attempt to replead. The court further observed that the theory appeared to stand or fall with NAW’s due process and dormant commerce clause claims. NAW ultimately declined to replead the claim.

Issues to Watch at Trial

The July trial in Oregon may provide an early merits ruling on issues likely to recur as packaging EPR programs move from enactment to implementation. NAW’s claims raise questions of first impression about the degree of transparency required when states authorize PROs to assess fees, the procedural mechanisms that should be required to allow producers to weigh in and challenge fee assessments by PROs, and the impact of packaging EPR laws on commerce as a broad array of manufacturers, wholesalers, and distributors are subjected to these laws. Underlying these issues is the question of how much authority states may assign to private or nonprofit PROs that collect data, set budgets, assess fees, and contract for waste disposal services, and with what level of oversight. A ruling for NAW could prompt states to revisit PRO governance, agency oversight, fee-setting transparency, and appeal rights. For producers directly impacted by the RMA, the ruling could determine not only whether they remain subject to the fees that Oregon has imposed and continues to impose, but as a practical matter whether they are able to continue to operate within the state or operate at all.

Under the court’s May 28, 2026 amended trial-management schedule, several key pretrial deadlines are approaching. The parties’ statements of the case and joint status report identifying issues for the pretrial conference are due June 26, 2026. The pretrial conference is scheduled for July 1. Motions in limine are due July 3, with responses due July 6. These filings likely will provide additional insights as to the parties’ theories of the case and how these theories are to be presented at trial.

Colorado: Similar Challenges to PRO-Managed EPR Program

In 2022, Colorado enacted its own packaging EPR law, the Producer Responsibility Program for Statewide Recycling Act. The Colorado EPR program is similar to Oregon’s in its designation of a state-approved PRO to assess fees for producers of covered packaging and paper products. Also, like Oregon, CAA has been selected as Colorado’s PRO. Colorado’s law provides that additional PROs may not be considered until at least January 1, 2029. The act does allow producers to submit “individual program plan proposals” to the state which, if approved, allow producers to assume responsibility to comply with the act individually.

In March 2026, the Independent Lubricant Manufacturers Association (ILMA), a national trade association of independent lubricant producers and wholesale distributors, filed a lawsuit in Colorado state court challenging the Colorado Department of Public Health and Environment’s (Colorado DPHE) implementation of the EPR law as applied to non-lubricant and lubricant packaging. With respect to non-lubricant packaging, ILMA raises many of the same challenges to CAA and its fee assessment process that have been raised in Oregon. ILMA additionally alleges that Colorado illegally approved an individual program plan proposal from the Lubricants Packaging Management Association (LPMA) and then required producers of petroleum and automotive products to register with LPMA, making such producers subject to LPMA’s reporting requirements and fee assessments. ILMA claims that LPMA effectively acts as a PRO — in violation of the law’s prohibition on consideration of additional PROs until 2029 — and was formed by large industry players who are direct competitors to ILMA’s members.

In its Amended Complaint, ILMA alleges that Colorado’s program unlawfully shifts regulatory authority from Colorado DPHE to CAA and LPMA. ILMA alleges that the state’s program violates the due process clause of the state and federal constitutions and the nondelegation doctrine of the state constitution, and that the state acted unlawfully in approving LPMA to issue fees and in enforcing fees assessed by both LPMA and CAA. These claims echo themes from the Oregon litigation, including challenges to mandatory contracting with private entities, lack of a meaningful process for fee review, fees disconnected from state-specific recycling costs, and disproportionate impacts on small- and mid-sized companies. (ILMA’s complaint discusses the Oregon claims and the federal court’s grant of NAW’s preliminary injunction in the Oregon case.) In addition, ILMA asserts a distinct First Amendment claim, challenging provisions of the Colorado act that prohibit producers from charging point-of-sale or point-of-collection fees to consumers to recoup EPR compliance costs. ILMA alleges that this restriction limits producers’ ability to communicate the cost of the program to customers and may encourage cost-spreading outside Colorado in states that will receive no benefit from Colorado’s planned recycling programs.

Colorado DPHE recently moved to dismiss ILMA’s claims. That motion remains pending as of writing. The court’s ruling may provide early insight into how other courts are likely to evaluate constitutional challenges to packaging EPR programs outside of Oregon, including due process and nondelegation claims.

California: Challenges From Multiple Directions

On May 1, 2026, California approved regulations implementing its packaging EPR law, the Plastic Pollution Prevention and Packaging Producer Responsibility Act, also known as SB 54. The act requires producers to participate in an approved PRO plan or submit an independent producer application. CAA has been approved to serve as the state’s first PRO.

California SB 54 is distinctive, however, in that it combines the PRO structure with statewide substantive performance mandates, including source-reduction targets, recycling-rate targets, and a 2032 requirement that covered single-use packaging and plastic food service ware be recyclable or compostable. In addition to Oregon-style challenges to PRO fee-setting and private administration of the EPR program, California may also face challenges related to these targets and requirements as well. For example, SB 54’s mandates may raise questions about whether the regulations go too far, or not far enough, in implementing the statute’s reduction and recycling goals; whether compliance pathways are feasible for producers subject to the law; and whether state-specific packaging requirements impose practical burdens on national packaging and distribution systems.

California’s EPR program is already facing the prospect of litigation in the near term, but at least initially from a different direction than in other states. Environmental groups have announced plans to challenge California’s new EPR program’s implementing regulations, arguing that the regulations create loopholes that undermine the act’s plastic reduction and recycling goals.

In addition, SB 54 incorporates California’s “truth in recycling” framework under SB 343 for purposes of determining which covered material categories are deemed “recyclable in the state.” Under SB 54, California’s Department of Resources Recycling and Recovery (CalRecycle) must publish and update lists of covered material categories that are recyclable or compostable, and recyclability determinations are tied to Public Resources Code section 42355.51, a provision of SB 343. In March 2026, a broad coalition of industry groups filed a lawsuit challenging SB 343, including Public Resources Code section 42355.51, in California state court. Plaintiffs argue that SB 343’s criteria for what is considered recyclable in the state are ambiguous and difficult to apply, depriving businesses of notice as to what is considered recyclable or not. Plaintiffs have sought a preliminary injunction to halt enforcement of the law while the case proceeds, and a preliminary injunction hearing is scheduled for June 3, 2026. This litigation could have practical implications for SB 54 even though it does not directly challenge the EPR program, as it may affect how CalRecycle classifies covered material categories, how producers evaluate compliance with SB 54’s recyclability requirements, and how companies approach packaging design and labeling for the California market.

What Companies Should Watch

Companies that produce, distribute, sell, import, or use packaging in Oregon, Colorado, California, and other states with EPR laws should monitor packaging EPR litigation closely. The first packaging EPR trial in Oregon will not answer every question, but it may establish important guideposts for how states may structure packaging EPR programs, and how implicated companies can prepare for a regulatory landscape that is becoming more complex, expensive, and contested. The litigation may affect not only the validity of specific state programs, but also the design of future EPR laws and the obligations placed on regulated entities.

Implementation milestones in other states may also become pressure points for additional litigation. Maine is worth watching because, like Oregon, it is one of the earliest states to adopt a packaging EPR law and is now moving from program design toward implementation; its final program rules were adopted in 2024, and the program will move into full operation in 2027. Faced with impending invoices for PRO-assessed fees, companies may face the same kinds of decisions now playing out in Oregon, including whether to reserve rights while attempting to comply, to attempt to seek administrative relief, or to pursue litigation. Oregon also underscores that enforcement may continue while litigation is pending absent a court order or standstill agreement providing otherwise, and that any relief may be limited to the parties before the court. Companies pursuing litigation may need to be prepared to proceed on an expedited track to obtain interim relief. Further, those considering a formal adversarial posture also would be well-advised to consider whether their compliance conduct, agency and PRO communications, public statements, and reservation-of-rights language are consistent with the arguments they may later need to make about irreparable harm, inadequate remedies, or the practical burdens of compliance.

In the near term, companies should consider reviewing state-by-state covered-material obligations under existing and proposed packaging EPR laws, preserving records supporting fee calculations and supply-chain assumptions, evaluating contractual provisions for EPR cost allocation and indemnity, and assessing whether positions on recyclability remain defensible under evolving labeling rules. 

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.