Federal court upholds Oregon’s packaging EPR law in first-of-its-kind trial: Key takeaways for producers

On August 27, 2026, the United States District Court for the District of Oregon held that Oregon’s Plastic Pollution and Recycling Modernization Act (RMA) does not violate the dormant Commerce Clause or the Due Process Clause of the US Constitution.

The decision in National Association of Wholesaler-Distributors (NAW) v. Feldon is the first federal merits ruling on the constitutionality of a state packaging extended producer responsibility (EPR) law, with related challenges pending in Oregon, Colorado, and California.

The ruling is significant because 1) it represents the first federal merits decision upholding a major EPR statutory scheme, and 2) in evaluating the plaintiff’s challenge, the court required evidence of discrimination or market-wide burdens rather than individual producer compliance costs to sustain a Commerce Clause challenge.

The court also placed substantial weight on Oregon's regulatory oversight of the producer responsibility organization (PRO) structure, suggesting that agency control could remain a key factor in evaluating non-delegation challenges to similar programs elsewhere.

Similar challenges are pending in several states as packaging EPR programs are implemented. The NAW v. Feldon decision may become a central reference point in these and future challenges.

Companies are encouraged to continue to assess compliance obligations, maintain accurate volume reports, allocate EPR costs contractually, and monitor any appeal and parallel challenges in other states.

In this alert, we discuss the background of the case, the court’s findings, and next steps for producers.

Background

EPR laws shift end-of-life waste-management costs from municipalities and taxpayers to producers. Oregon enacted the RMA in 2021, covering packaging, printing and writing paper, and food serviceware. Under the law, producers must join a PRO, report volumes of covered materials sold into Oregon, and pay membership fees tied to the costs those materials impose on Oregon’s solid-waste system.

The PRO is a producer-governed nonprofit that administers the EPR program by collecting producer fees, managing reporting and compliance, developing and implementing stewardship plans, and funding or overseeing the collection, recycling, and end-of-life management of covered products or packaging.

Circular Action Alliance (CAA) is currently the only PRO approved by the Oregon Department of Environmental Quality (DEQ). CAA bases its fees on proprietary cost-to-manage values for each covered material. DEQ approved those values as part of CAA’s program plan, though it did not review the underlying confidential formula.

Oregon is one of seven states, alongside California, Colorado, Maine, Maryland, Minnesota, and Washington, to have enacted packaging EPR since 2021. Numerous additional states are actively considering packaging EPR legislation that could further increase compliance obligations for producers. Across the country, 35 states have enacted more than 146 EPR laws spanning a range of product categories.

The litigation challenging the RMA’s constitutionality

NAW, a trade federation representing approximately 35,000 wholesaler and distributor companies, challenged the RMA under the dormant Commerce Clause, Due Process Clause, Equal Protection Clause, unconstitutional-conditions doctrine, and Oregon Constitution. In February 2026, the court dismissed all claims except the federal Commerce Clause and Due Process theories and preliminarily enjoined enforcement against NAW and its members.

The court conducted a five-day bench trial from July 13 to 17, 2026, with 13 witnesses, 57 exhibits, and nine briefs from 16 amici curiae. NAW argued that 1) the RMA’s fees disproportionately burden thin-margin wholesalers, 2) CAA’s fee methodology is opaque and controlled by competitors, and 3) statutory exemptions create “free riders” that shift costs to covered producers. NAW also challenged CAA’s fee cadence, the two-year interval between volume reporting and invoicing, as denying producers a meaningful opportunity to adjust their conduct.

The court’s findings

Dormant Commerce Clause

The Commerce Clause gives Congress power over interstate commerce, while the dormant Commerce Clause implicitly bars state laws that discriminate against or unduly burden interstate commerce. A central principle of the dormant Commerce Clause is anti-protectionism: States may not favor in-state interests by burdening out-of-state competitors.

NAW argued that the RMA discriminates against interstate commerce, imposes unreasonable user fees for Oregon’s recycling system, and fails the balancing test under Pike v. Bruce Church.

The court rejected NAW’s discriminatory-purpose and discriminatory-effect theories, concluding that the record established neither protectionist intent nor differential treatment of out-of-state producers.

As part of its discrimination analysis, the court examined legislative purpose, facial discrimination, and discriminatory effects.

• Purpose: The RMA’s environmental objective was not economic protectionism; a post-enactment DEQ statement about spreading costs did not establish protectionist legislative intent.
  
  
• Facial discrimination: NAW lacked standing to challenge the public-entity exemption because it offered no evidence that the exemption increased members’ fees. The court also noted that Oregon public bodies fund Oregon’s waste infrastructure and are not similarly situated to out-of-state counterparts.
  
  
• Effects: The gross-revenue and immediate-consumption exemptions apply without regard to producer location, and NAW offered hypothetical scenarios rather than evidence that they disadvantage out-of-state businesses.

On the user-fee theory, the court found no evidence quantifying the effect of exemptions or showing material free riding. It attributed CAA’s surplus to startup underspending, with lower fees projected for 2026 and 2027.

Finally, NAW failed to show the “substantial or significant burden on interstate commerce” required for Pike balancing. Citing National Pork Producers Council v. Ross, the court rejected NAW’s argument that the RMA impermissibly regulates extraterritorial activities. Even if a burden were assumed, Oregon’s interest in mitigating waste pollution was not clearly outweighed.

Due Process Clause

The court rejected both Due Process theories. Applying the framework from Federal Communications Commission v. Consumers’ Research, it concluded that CAA plays an advisory role because DEQ approves the program plan and fee methodology, can require changes, and “retains ultimate decision-making authority.”

It also held that the fee cadence is rational and that DEQ provides adequate procedural safeguards, including a notice-and-cure process, hearings, agency and judicial review, and deferral of civil-penalty payments until appeals are exhausted. The challenged arbitration clause arises from CAA’s contract, not the RMA.

Implications and next steps

The ruling binds only the parties to that litigation. However, because it is the first merits decision addressing a packaging EPR program, the decision could shape how producers, regulators, and legislatures approach future disputes.

• For the national EPR landscape: By sustaining the RMA after a full trial, the decision offers the six other states with packaging EPR laws, and states considering similar legislation, a potential roadmap for defending constitutional challenges. Challengers may develop new arguments to distinguish the holding. The court emphasized that states are “laboratories of democracy” and declined to intervene where Congress has not pre-empted state law.
  
  
• For Commerce Clause challenges: The court’s application of Ross and Pike suggests that interstate supply-chain costs alone may not constitute a “substantial burden” sufficient to invalidate EPR fee structures. Future challenges could require stronger evidence tying a fee structure to discrimination or market-wide burdens.
  
  
• For program design: The Due Process holding was not a blanket approval of private fee-setting. It turned on several Oregon-specific features of the program, including DEQ’s active review of the plan, DEQ’s authority to require changes, and producers’ statutory options to form a competing PRO or recycle covered products privately. Programs that give agencies less control or regulated parties fewer alternatives could face a different result.
  
  
• Parallel litigation: Challenges to packaging EPR laws are pending in Colorado and California, and NAW v. Feldon is expected to be cited in both. In Oregon, Lollicup USA Inc. has a stayed putative class action challenging RMA fees as an impermissible tariff on interstate commerce; the ruling may have significant implications for issues raised in that case.
  
  
• Appeal: NAW will likely appeal to the US Court of Appeals for the Ninth Circuit.

Constitutional conclusions would receive de novo review, while factual findings would be reviewed for clear error, a distinction that may prove significant because the decision turned heavily on gaps in NAW’s proof.

For now, producers are encouraged to plan for continued compliance. Companies may wish to maintain records supporting their reported volumes and documenting any fee disputes, stay alert for a Ninth Circuit appeal, monitor the Colorado and California cases, and revisit contractual allocation of EPR costs across the supply chain.

For more information on EPR laws and related litigation issues, please contact the authors.