Little-Known Green Law Becoming Thorn In Side Of Businesses

A sweeping Oregon recycling law is facing a federal legal challenge from businesses that warn the state’s environmental regulations could impose new costs on companies and consumers across the country.

Oregon’s Plastic Pollution and Recycling Modernization Act requires covered businesses to help finance the state’s recycling system through fees collected by a private nonprofit organization, according to the state’s Department of Environmental Quality (DEQ). The National Association of Wholesaler-Distributors (NAW) appealed a federal court decision upholding the law, arguing that Oregon is interfering with interstate commerce and granting sweeping authority to a private organization responsible for determining what businesses must pay.

The law, passed in 2021 and implemented beginning in July 2025, requires producers of packaging, paper products and food serviceware sold into Oregon to fund improvements to the state’s recycling infrastructure. Businesses subject to the requirements must register with Circular Action Alliance (CAA), report the amount of covered materials they supply and pay fees calculated under the organization’s program.

Unlike traditional state taxes collected directly by government agencies, Oregon’s producer fees are administered by CAA, a nonprofit organization approved by state regulators.

The organization is responsible for managing funding intended to expand recycling access, modernize processing facilities and support local recycling programs.

The legal battle intensified after a federal district court upheld Oregon’s law following a five-day trial, rejecting constitutional challenges based on interstate commerce and due process. NAW subsequently appealed the decision to the Ninth Circuit Court of Appeals.

NAW argues that the law places an unfair burden on wholesalers operating nationwide, including businesses that do not manufacture the packaging subject to Oregon’s fees or control where their products ultimately end up.

The trade association contends that some companies have been forced to reconsider their distribution networks and, in certain cases, route products around Oregon to avoid additional compliance costs.

The organization also alleges that Oregon regulators anticipated companies would recover some program expenses from customers outside the state, potentially spreading the cost of Oregon’s recycling system to Americans who do not live there.

NAW’s second major objection concerns the authority delegated to CAA. The association argues that the nonprofit controls mandatory fee calculations using a methodology it considers confidential, while disputes over charges are subject to binding arbitration.

Oregon officials maintain that the program shifts recycling expenses toward the businesses responsible for producing and selling covered materials, helping finance improvements that would otherwise fall more heavily on local recycling systems.

The state’s environmental agency says the law aims to expand recycling access, modernize facilities and reduce environmental harm. Qualifying small producers and certain products are exempt from the program’s requirements.

Oregon became the first state to implement this type of packaging and paper producer responsibility program, although other states, including California and Colorado, have adopted similar frameworks.

The appeals court’s eventual ruling could carry implications beyond Oregon as businesses and regulators navigate competing approaches to recycling requirements across state lines.

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