Federal Court Upholds Oregon Packaging EPR Law, Providing Important Early Roadmap for EPR Challenges

On August 27, 2026, the U.S. District Court for the District of Oregon upheld Oregon's packaging extended producer responsibility (EPR) law, the Plastic Pollution and Recycling Modernization Act (RMA), rejecting constitutional challenges brought by the National Association of Wholesaler-Distributors (NAW) under the dormant Commerce Clause and the Due Process Clause. National Association of Wholesaler-Distributors v. Feldon, No. 3:25-cv-01334-SI (D. Or. Aug. 27, 2026). The 71-page decision followed a five-day bench trial and represents the first reported full-record decision addressing constitutional challenges to a state packaging EPR law.

The decision is particularly significant because similar constitutional theories are being asserted against packaging EPR programs in California and Colorado. The Oregon decision is not binding on other district courts, but it may be persuasive authority. Appellate review is possible. An appeal would go to the U.S. Court of Appeals for the Ninth Circuit, whose decision could have substantial consequences for EPR programs in Oregon, California, Washington, and other states within the Circuit.

Key Takeaways

• The decision provides legal support for state packaging EPR laws, but not necessarily the last word. After initially finding “serious questions” sufficient to preliminarily enjoin enforcement against NAW members, the court rejected NAW’s remaining claims after a full trial record. An appeal could allow the Ninth Circuit to address the constitutional limits on state packaging EPR programs.
• Dormant Commerce Clause challenges will likely require evidence of discrimination or market-wide interstate burdens, not simply substantial compliance costs. The court concluded that increased costs, supply chain effects, and impacts on particular interstate businesses did not establish a substantial burden on interstate commerce under relevant case law.
• The court's due process analysis provides a potential roadmap for structuring PRO-based programs. Although a producer responsibility organization (PRO) may be controlled by private companies with interests that differ from those of regulated producers, the court held that such a private arrangement is permissible when the state establishes governing standards and retains ultimate decision-making and enforcement authority.
• The decision is relevant, but not dispositive, to the pending challenge to California’s SB 54. California's permanent SB 54 regulations took effect May 1, 2026, and Circular Action Alliance (CAA) submitted its PRO plan in June. Also in June, a 17-state coalition and NAW filed suit challenging the law and moved for a preliminary injunction this month. That case includes Commerce Clause and private-delegation theories similar to those rejected in Oregon, but also raises California-specific claims under the Import-Export Clause, First Amendment, extraterritoriality principles, and the void-for-vagueness doctrine. Notable differences in SB 54 may impact the court’s analysis.
• For regulated businesses, the decision reinforces the importance of compliance and record development while litigation continues. Companies considering or supporting future challenges will benefit from developing quantitative evidence on fee incidence, discriminatory effects, multistate supply chain impacts, and the practical availability of compliance alternatives rather than relying primarily on anecdotal evidence of high costs.

Background 

Oregon enacted the RMA in 2021 to shift a portion of the costs of managing packaging, printing and writing paper, and food serviceware to producers. Covered producers generally must participate in a PRO, report the volume and composition of covered products introduced into Oregon, and pay material-specific fees intended to reflect the costs associated with those materials. CAA is currently Oregon's only approved PRO. Oregon's Department of Environmental Quality (DEQ) approves the PRO's program plan and retains authority to enforce producers’ statutory obligations.

NAW challenged the RMA in 2025. In February 2026, Judge Michael H. Simon granted NAW members preliminary relief on their dormant Commerce Clause and due process claims under the Ninth Circuit's "serious questions" standard. The case then proceeded to a five-day trial. NAW presented extensive evidence concerning the burdens faced by wholesalers and distributors, including the difficulty of determining which entities are responsible for particular packaging, collecting material-composition data across thousands of SKUs, absorbing EPR fees on thin margins, and passing those costs through to customers. In one example discussed by the court, a distributor with approximately $5.2 million in Oregon-related sales and $1.2 million in gross profit received an EPR invoice of approximately $884,000.

Despite recognizing these practical burdens, the court ultimately held that the RMA violates neither the dormant Commerce Clause nor due process/nondelegation principles.

Analysis

Dormant Commerce Clause

The opinion addresses a series of dormant Commerce Clause arguments advanced by NAW. First, the court found no discriminatory purpose, rejecting NAW’s reliance on statements by agency staff after enactment as not relevant and not demonstrating discriminatory intent. The court then rejected facial and discriminatory-effects challenges to several RMA exemptions. For example, Oregon exempts “small producers,” including state, local, and “special” governmental entities, including public universities. NAW argued that this favored Oregon public entities over otherwise comparable out-of-state public entities. The court held that NAW had not established standing because it had not demonstrated that the exemption actually increased its members' fees, and that, in any event, the dormant Commerce Clause permits some degree of differential treatment of local governmental entities.

The court also rejected NAW’s discriminatory-effects arguments. The court repeatedly found that NAW had identified plausible mechanisms by which exemptions or fee structures, such as an exemption for small businesses, could disadvantage interstate businesses but had not quantified whether those effects were actually occurring. It similarly rejected NAW's argument that EPR fees were excessive "user fees" because the record did not establish the magnitude of any purported free-rider problem or demonstrate that program revenues were excessive in relation to anticipated program costs. The decision emphasized the lack of concrete evidence to support NAW’s discriminatory-effects arguments, suggesting that this may be a key consideration in future challenges to similar State programs. 

Finally, the court rejected NAW's claim under the Pike balancing test. Applying National Pork Producers Council v. Ross, 598 U.S. 356 (2023), the court distinguished evidence of burdens on particular interstate companies from a showing of substantial burden on the interstate market. Evidence that the RMA could increase prices, require supply-chain changes, or cause companies to reroute operations did not establish the necessary market-wide burden. The court also concluded that even if NAW had crossed that threshold, Oregon's interests in waste management, pollution prevention, and public health were sufficient to prevent the burdens from being "clearly excessive."

For future challenges, this analysis suggests that the strongest dormant Commerce Clause cases may depend less on demonstrating that EPR programs are costly and more on establishing differential treatment or measurable distortion of interstate commerce. Detailed evidence comparing in-state and out-of-state competitors, tracing the incidence of exemptions, and quantifying effects on interstate markets could therefore become increasingly important.

Due Process and Private Delegation

NAW's due process challenge focused principally on the role of CAA, a private nonprofit whose governing boards include large producers that may compete with companies required to participate in its program. NAW argued that allowing CAA to develop fee methodologies and collect mandatory fees amounted to an unconstitutional delegation of regulatory authority to economically interested private parties, invoking Carter v. Carter Coal Co., 298 U.S. 238 (1936).

The court recognized that delegating governmental power to a self-interested competitor can raise serious constitutional issues. But it concluded that the RMA falls on the permissible side of the line drawn by Carter Coal and FCC v. Consumers' Research, 606 U.S. 656 (2025). In Consumers' Research, the Supreme Court reaffirmed that private entities may assist in administering a regulatory program when they operate under the government’s supervision and the government retains final decision-making authority.

Two aspects of Oregon's system were critical. First, the court emphasized that the RMA does not require producers to join CAA specifically; producers may establish another qualifying PRO or, for qualifying materials, use a private recycling exemption. The court acknowledged that establishing another PRO may be costly and difficult but concluded that those practical obstacles did not make CAA participation equivalent to the coercive arrangement invalidated in Carter Coal.

Second, and more broadly important, the court held that DEQ retained sufficient control over the PRO's regulatory functions. CAA developed proprietary inputs for calculating material costs, and DEQ had not reviewed the underlying algorithm or the thousands of data points used to generate those values. Nevertheless, DEQ had reviewed CAA's methodology and outputs, required changes during the plan-approval process, conducted its own proportionality analysis, and ultimately approved the program plan. Relying on Consumers' Research, the court held that this governmental oversight was constitutionally sufficient: the Constitution did not require DEQ to reconstruct or independently verify every calculation made by the private entity.

The court separately rejected NAW’s argument that producers lacked sufficient procedures to contest erroneous fees. The RMA provides notice and an opportunity to cure before DEQ enforcement; an administrative hearing at which DEQ bears the burden of proof; administrative and judicial review; and no obligation to pay a state penalty until appeals have been exhausted. The court treated CAA's contractual arbitration provisions and late fees largely as private contractual arrangements rather than elements of the state's enforcement system.

This portion of the decision could be influential in future challenges because most packaging EPR statutes rely on private PROs. At the same time, it is likely to receive particular attention if the case reaches the Ninth Circuit. Among other issues, an appellate court could examine the district court's characterization of PRO participation and fee payments as effectively voluntary, the practical significance of alternatives to CAA membership, and the extent of substantive governmental review is necessary before a private entity can be said to remain subordinate to an agency.

Implications for California SB 54 and Other State EPR Programs

The most immediate implications may be in California. CalRecycle’s regulations implementing SB 54 became effective May 1, 2026. CAA has been approved as California's first PRO, and it submitted its proposed program plan to the SB 54 Advisory Board on June 15, 2026. California also permits qualifying producers to seek approval to comply as independent producers rather than participate in the PRO.

On August 19, the plaintiffs in Nebraska v. Heller filed an amended complaint and moved for a preliminary injunction against SB 54; the district court currently has the motion set for hearing on January 15, 2027. The timing makes Judge Simon’s decision particularly relevant. The California plaintiffs can no longer point only to the Oregon preliminary injunction as evidence that the PRO structure raises serious constitutional questions; there is now a full merits decision rejecting those arguments after extensive factual development.

The Oregon ruling nevertheless does not determine the outcome in California. SB 54 differs materially from Oregon's law, including through its source-reduction, recyclability, and recycling-rate mandates. California's PRO plan also remains at an earlier stage of implementation, meaning that the factual record concerning CalRecycle's ultimate supervision of fee-setting and other PRO decisions is less developed than the record Judge Simon considered after trial. And the amended California complaint asserts theories that were not before the Oregon court, including the Import-Export Clause, First Amendment, and vagueness claims.

NAW may appeal this decision to the Ninth Circuit. If the Ninth Circuit issues a decision addressing the Oregon ruling, however, its treatment of Pike, extraterritorial effects, private delegation, and the degree of governmental oversight required for a PRO could become binding precedent in the California case. By contrast, the pending Colorado litigation is in the Tenth Circuit, where the Oregon decision and any eventual Ninth Circuit ruling would remain only persuasive authority (NAW's preliminary-injunction motion in the Colorado case remains pending).

From a regulatory perspective, the decision may encourage states to emphasize features that Judge Simon found constitutionally significant: express statutory standards governing PRO decisions, meaningful agency approval of PRO plans and fee methodologies, state-controlled enforcement procedures, and alternatives to participation in a particular PRO. For businesses, however, the decision does not resolve many of the underlying practical concerns raised at trial—including fee predictability, access to fee-setting information, allocation of responsibility within complex supply chains, and the cost of complying with differing state systems.

Next Steps

• Continue compliance while challenges remain pending. The Oregon program has been upheld, but the judge’s decision may be subject to review on appeal. Also, although the Oregon program has been upheld, businesses may still be able to invoke arbitration provisions and other procedures for challenging individual decisions under the Oregon program (and those in other states). 
• Develop quantitative evidence of EPR impacts. Companies should consider tracking state-specific fees, compliance costs, packaging changes, distribution adjustments, competitive effects, cost pass-through, and the incidence of statutory exemptions. Feldon demonstrates the limits of relying on anecdotal evidence when constitutional standards turn on actual discrimination or interstate market effects.
• Participate in PRO and agency proceedings. Comments on draft program plans, fee methodologies, exemptions, and implementing regulations can both influence program design and create an administrative record regarding practical or legal concerns.
• Monitor appellate and parallel litigation. Any Ninth Circuit appeal in Feldon, the pending preliminary-injunction motion in Nebraska v. Heller, and the Colorado litigation could materially affect the legal framework for packaging EPR programs nationwide.