An extensive recycling law in Oregon is under legal scrutiny from businesses that express concerns about the potential impact of the state’s environmental regulations, fearing increased costs for both companies and consumers nationwide.
The Plastic Pollution and Recycling Modernization Act, as outlined by the state’s Department of Environmental Quality (DEQ), mandates that certain businesses contribute to Oregon’s recycling system financing through fees collected by a nonprofit organization. The National Association of Wholesaler-Distributors (NAW) has challenged a federal court ruling that upheld the law, claiming it interferes with interstate commerce and gives overly broad authority to the nonprofit regarding fee assessments.
The law, which passed in 2021 and will take effect in July 2025, requires businesses that produce packaging, paper products, and food serviceware sold in Oregon to support enhancements to the state’s recycling infrastructure. Those affected will need to register with the Circular Action Alliance (CAA), report the materials they provide, and pay fees determined by the organization’s program.
In contrast to standard state taxes collected by government agencies, Oregon’s producer fees are managed by CAA, a nonprofit that has received approval from state regulators. This organization plays a crucial role in directing funds for expanding recycling access, modernizing processing facilities, and aiding local recycling initiatives.
The legal dispute became more heated after a federal district court upheld the law following a five-day trial, dismissing constitutional concerns related to interstate commerce and due process. Following this, NAW appealed to the Ninth Circuit Court of Appeals.
NAW contends that this law imposes an unreasonable burden on wholesalers operating across the nation, particularly those who neither manufacture the packaging subject to fees nor control the final destination of their products. They argue that some companies have begun to rethink their distribution strategies, with some opting to redirect their goods away from Oregon to evade compliance costs.
Additionally, the organization claims that Oregon regulators predicted that companies would pass some of the program costs onto customers outside the state, thereby imposing the financial burden of Oregon’s recycling system on people who don’t live there.
Another significant concern for NAW lies in the authority granted to CAA. The association believes that the nonprofit exercises control over mandatory fee calculations using a confidential methodology, with any disputes regarding these charges settled through binding arbitration.
On the other hand, Oregon officials argue that the program aims to allocate recycling costs to the businesses that produce and sell the materials in question, thereby financing improvements that might otherwise disproportionately affect local recycling systems. The state’s environmental agency emphasizes that the law intends to broaden recycling access, enhance facility modernization, and mitigate environmental damage. It’s important to note that qualifying small producers and certain products are exempt from the program’s stipulations.
Oregon is the first state to implement this kind of producer responsibility program aimed at packaging and paper, although other states, like California and Colorado, have similar systems in place. The outcome of the appeals court ruling could have broader implications as businesses and regulators adjust to differing recycling requirements across various states.
