Federal Court Upholds Oregon Recycling Modernization Act

On August 27, the United States District Court for the District of Oregon upheld Oregon's Plastic Pollution and Recycling Modernization Act (RMA), rejecting a broad constitutional challenge brought by the National Association of Wholesaler-Distributors (NAW) and allowing Oregon's packaging extended producer responsibility (EPR) program to move forward.

Key Takeaways for Industry

The NAW decision is a significant win for state-level EPR programs. For producers, distributors, and other regulated companies, the ruling significantly reduces near-term uncertainty surrounding Oregon's EPR regime and signals judicial support for state-led packaging and recycling programs. Oregon can continue implementing the RMA pending the appeal process.

The decision also may influence future and ongoing litigation involving packaging EPR laws in other states, including in California and Colorado. In particular, State of Nebraska et al. v. Heller et al., pending in California federal court, involves similar constitutional arguments rejected by the Oregon court. More broadly, the ruling suggests that courts may be unlikely to strike down packaging stewardship laws on dormant Commerce Clause or Due Process grounds absent clear evidence of discrimination or improper delegation.

Impacted stakeholders can prepare as well as advocate in a variety of ways. For example:

• Companies across the packaging supply chain should continue planning for a growing patchwork of state-specific EPR obligations, including divergent reporting requirements, fee structures, and implementation timelines.
• At the same time, companies should monitor NAW's expected appeal and the parallel litigation in California and Colorado for any shifts in the legal landscape.
• Further, given that Oregon is undergoing its third rulemaking process currently, with DEQ planning to present its proposed regulatory amendments to the Environmental Quality Commission for proposed rule adoption in January or February 2027, companies and coalitions may want to consider engaging in the process to ensure that their positions are considered.

Background

The RMA requires regulated "producers" of packaging materials to pay certain fees, calculated based on the nature and extent of packaging materials attributable to that producer, to an approved nonprofit Producer Responsibility Organization ("PRO") to fund Oregon's current recycling system and future investments to modernize and expand the recycling system. The policy behind the RMA is to share and distribute responsibility for recycling. The approved PRO, which in Oregon is Circular Action Alliance ("CAA"), is tasked with ensuring the RMA is carried out with the Oregon Department of Environmental Quality ("DEQ") oversight.

NAW challenged Oregon's RMA, arguing that the law unfairly burdened interstate commerce, failed to provide a sufficient process to contest membership fees, and improperly delegated regulatory authority to CAA, in violation of the dormant Commerce Clause and Due Process Clause. Following a five-day bench trial, Judge Michael H. Simon ruled for Oregon on all claims.

The Court's Analysis

No Unconstitutional Discrimination Against Interstate Commerce

NAW argued that Oregon's law unfairly burdened out-of-state businesses and imposed unconstitutional fees on producers. The court rejected those arguments across the board.

Judge Simon found no evidence that Oregon enacted the RMA for a discriminatory or protectionist purpose. Instead, the opinion credited the state's specified goals of reducing waste, pollution, greenhouse gas emissions, and burdens on the recycling system.

The court also rejected challenges to exemptions for certain Oregon governmental entities and small producers, including those falling below the gross revenue threshold or those in the "immediate consumption" businesses such as restaurants and food carts. According to the court, NAW failed to show that those exemptions created actual discriminatory effects on interstate commerce.

The opinion likewise upheld the RMA's fee structure, rejecting arguments that exempt entities improperly "free ride" because they will receive the benefits from Oregon's improved recycling system or that CAA's accumulation of reserves during the program's startup phase rendered the fees unconstitutional.

Compliance Burdens Alone Were Not Enough

NAW also argued that the RMA imposed excessive operational and compliance burdens on interstate commerce, including "stock keeping unit"-level reporting obligations, supply-chain complexity, and significant compliance costs.

Although the court acknowledged those burdens, it concluded they were insufficient to invalidate the law. Judge Simon emphasized that increased compliance costs alone generally do not establish a constitutional violation and noted that many state laws affect national supply chains.

Oregon Retained Sufficient Oversight of the PRO

NAW further argued that the RMA unlawfully delegated governmental authority to CAA and failed to provide adequate procedures for challenging producer fees.

The court rejected those claims, concluding that DEQ retains sufficient oversight over CAA's operations, including authority to approve PRO plans, review fee methodologies, require revisions, and enforce compliance. The court characterized CAA as operating in a subordinate role rather than exercising unchecked delegated governmental authority.

Finally, the court held that the RMA provides constitutionally adequate procedural safeguards for contesting fee assessments, including notice-and-cure provisions, administrative hearing rights, and judicial review opportunities.

How Stakeholders Can Engage

• Rulemaking Participation: Stakeholders can participate in DEQ's ongoing third RMA rulemaking by monitoring the advisory committee process, submitting comments during the forthcoming formal public comment period, and signing up for direct updates from DEQ.
• CAA Consultation: Companies can also engage directly with CAA through its 2028–2032 program plan consultation webinar series, which covers topics including eco-modulation, materials and collection, and fee-setting methodology, with the next upcoming session scheduled for September 17, 2026.
• CAA Annual Report Participation: In addition, DEQ's public comment period on CAA's 2025 Annual Report is currently open, with comments due on September 10, 2026. This provides another near-term opportunity for stakeholders to weigh in on program implementation and financial transparency.

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Molly Barker is counsel in DWT's Seattle office, Madeline Marcellino is an associate in the firm's Portland office, and Kristi Wolff is a partner in the firm's Washington, D.C., office. For any questions, please reach out to Molly, Madeline, Krisi, or another member of our energy, natural resources & environmental team. To stay informed, sign up for our alerts.