Oregon Plastic Packaging Recycling Law on Partial Hold Following Federal Court Ruling

In a first-of-its-kind ruling on Oregon’s Plastic Pollution and Recycling Modernization Act (RMA or the Act), U.S. District Court Judge Michael Simon on February 6 ordered the Oregon Department of Environmental Quality (DEQ) not to enforce the RMA against a trade association, the National Association of Wholesaler-Distributors (NAW), and its members. NAW filed suit last fall to block implementation of Oregon’s revamped recycling program that assesses producers of packaged goods for the costs of recycling in Oregon. The injunction, however, only applies to NAW members and lasts only until the court issues a ruling following an expedited trial this July. Non-NAW members still must comply with the registration, data submission, and fee payment requirements of the RMA.

Background

Although Oregon’s RMA is one of many state-level efforts to develop recycling alternatives after China and other foreign countries stopped accepting U.S. material, it is the farthest along in implementation. Oregon’s law delegates to one or more state-approved producer responsibility organizations (PROs), which collect data from covered producers, issue assessments to each producer based on the reported weight and character of the packaging material shipped into Oregon, and use the funds collected from assessments to assist Oregon communities with recycling programs.

The statutory requirements for a PRO to obtain approval are significant enough that so far only one PRO—the Circular Action Alliance (CAA)—has been approved in Oregon. The CAA is a nonprofit formed by some of the largest producers of packaged goods in the world. CAA has not provided the basis for the fees it assesses, claiming it is proprietary and confidential, although DEQ has reviewed and approved the fees. Producers were required to enter into a contract with CAA, register with the program, and submit data. The contract provided for only private non-appealable arbitration should a dispute arise between CAA and a producer. Failure to register as a producer, submit data to CAA, or pay fees when due can result in DEQ levying penalties of $25,000 per day.

When covered producers began receiving CAA’s fee invoices last July, some of the assessments exceeded the producers’ profit margins. NAW, on behalf of its members who are subject to the RMA, filed a lawsuit in federal court in Portland alleging that the RMA violates the Commerce Clause of the U.S. Constitution because it discriminates against out-of-state producers, unduly burdens national markets for products and packaging, and controls commerce occurring wholly outside Oregon; imposes unconstitutional conditions by requiring producers to contract with the sole PRO in order to do business in Oregon; and violates due process by subjecting producers to binding fee assessments with the sole avenue for relief being private, non-appealable arbitration.

NAW sought a preliminary injunction to bar DEQ from enforcing the RMA and to defer obligations of NAW members to pay fees under the Act. DEQ simultaneously moved to dismiss NAW’s complaint. DEQ argued that the RMA does not discriminate against interstate commerce, impose unconstitutional conditions, or otherwise substantially burden interstate commerce. DEQ also argued that the RMA provides adequate procedural protections because DEQ oversees how CAA calculates fees and all regulations are subject to public notice and comment.

Hearing

At the February 6 hearing, Judge Simon opened by stating that he found this a “fascinating dispute.” During the three-hour hearing, the judge questioned counsel for both sides about the scope of the program, Oregon’s implementation of it, and the impact on producers. At the conclusion of the hearing, Judge Simon ruled from the bench, granting NAW’s motion for a preliminary injunction. The judge said there were serious questions regarding Oregon’s RMA, there was a substantial likelihood of irreparable harm because of substantial penalties for non-compliance, and the balance of equities sharply tipped in NAW’s favor, particularly because he was setting a July 13, 2026, trial on the merits.

Impact

The judge’s ruling only bars DEQ from enforcing the RMA against non-compliant NAW members. Any covered producer who is not an NAW member still must register with CAA, submit data of its 2024 covered packaging, and pay fees assessed by CAA. Judge Simon had asked DEQ whether it would suspend accrual of penalties or enforcement orders pending trial, but DEQ declined because it would effectively suspend the entire program. DEQ’s lawyer did say that the agency would not assess penalties against non-compliant NAW members retroactive to the February 6 hearing should DEQ prevail at trial. That, however, does not apply to non-NAW members.

Attorneys in Ballard Spahr’s Environment and Natural Resources Group are closely monitoring the development of Oregon’s, and other states', Extended Producer Responsibility laws. Future court rulings may create uncertainty, but we can help businesses navigate these complex and rapidly changing regulatory schemes by providing guidance on compliance strategy or representation in enforcement actions. 

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