On July 1, all distributors that import, distribute or supply packaged goods into Oregon were required to begin paying fees under a recycling mandate enacted by two of the states’ environmental agencies. In response, the National Association of Wholesaler-Distributors (NAW) filed a lawsuit on July 30 challenging that mandate.

To modernize Oregon’s recycling program and encourage a circular economy where materials are reused, repaired and recycled, the state passed the Plastic Pollution and Recycling Modernization Act at the start of 2022, while the recycling component went into effect in July. The act created a program called “extended producer responsibility” (EPR), which makes “producers” (in the act’s definition of the word distributors are considered producers) responsible for the management of the product until the end-of-life. In the industry and by NAW, this recycling mandate is often referred to as the “Oregon EPR law.”

In its lawsuit against the Oregon Environmental Quality Commission and the Oregon Department of Environmental Quality, NAW argues that fees assigned to distributors who bring packaged products into Oregon places an unfair financial and logistical burden on distribution, a segment of the supply chain which has little control over the design or composition of the packaging they distribute.

“While NAW supports the goal of a circular economy, the Oregon EPR law as enacted is unconstitutional, creates new mandates, inhibits interstate commerce and fails at its primary goal of encouraging circularity,” NAW President and CEO Eric Hoplin said in a statement. “Rather than encourage sustainability through a uniform and transparent system where compliance burdens are shared across industries, Oregon chose to shift the burden to the parts of the supply chain that have little to no control over decisions to design, reduce, reuse or recycle a product.”

Earlier this month, some small- and mid-sized businesses operating on thin margins told NAW the fees from this program have been “unexpected and unexpectedly high,” according to the lawsuit.

In its argument, NAW’s lawsuit alleges that with this law Oregon unconstitutionally:

• Delegates control over the EPR program, including the setting of fees wholesaler-distributors must pay to a private, third-party group (the Circular Action Alliance (CAA)), with a financial interest in the program without clear rules or oversight.
• Unfairly targets out-of-state producers, disrupts national markets, and tries to control business outside of Oregon—violating the U.S. Constitution’s limits on state regulation of interstate commerce.
• Mandates producers sign contracts with a single approved private organization (CAA) giving up their economic freedom and due process rights.
• Subjects producers to fees and rules set by CAA without a real chance to object or appeal or transparency in the process.