Last year, Oregon became the first state to start charging companies for some of the end-life waste disposal costs created by their packaging. Then, the state quickly became the first to be sued over it and, this week, the first to go to trial.
Federal Judge Michael Simon on Monday heard arguments from lawyers representing the wholesale product distribution industry in U.S. District Court in Portland, the first day of a five-day trial against the state of Oregon over its Recycling Modernization Act.
The National Association of Wholesaler-Distributors, a trade group representing what it says is the $8.2 trillion wholesale distribution industry, first brought the suit in July 2025. The trade group represents hundreds of companies that buy bulk products, repackage them and resell them to consumers and includes food, beverage and electronics companies.
They filed the suit, which alleges the Recycling Modernization Act is unconstitutional and inhibits interstate commerce, weeks after manufacturers received their first bills under the newly implemented law.
Six other states have since enacted similar packaging laws, which the wholesalers are challenging or joining in challenges brought by other industry groups. The trial in Oregon could impact those cases and the implementation of the other states’ laws.
The Oregon Legislature passed the state’s law in 2021, intending to create statewide standards for what can and cannot be recycled and established new packaging fees for companies that sell products in Oregon.
The fees, based on the weight and recyclability of the material, are meant to require product manufacturers and distributors to cover some of the packaging disposal costs currently borne by businesses and Oregonians, who end up having to pay for the garbage and recycling. The law exempts producers who earn $5 million or less in gross revenue.
Products with less packaging and with reusable packaging carry lower fees than goods packaged in bulky plastics and single-use materials, ideally encouraging producers to choose lighter, more sustainable materials. It follows regulations in Oregon in recent years that require manufacturers to pick up some of the end-of-life costs of paint, mattresses and electronics, or to invest in programs to recycle such products.
The suit names the Oregon Department of Environmental Quality and its director, Leah Feldon, the Environmental Quality Commission and Attorney General Dan Rayfield as defendants.
Since suing in Oregon, the wholesalers have also launched suits in California and Colorado over their similar and newly implemented package recycling laws. Disposable cup manufacturer Lollicup USA also launched a class action lawsuit against Feldon over the Recycling Modernization program in Oregon in June.
Trial day one
A lawyer for the wholesalers spent most of the day questioning Kim Holmes, Oregon director for the Circular Action Alliance, a Washington, D.C.- based nonprofit that Oregon’s environmental department chose to oversee the Recycling Modernization program. The alliance oversees similar programs in California and Colorado and is attempting to lead programs in Maine and Maryland.
Twenty multinational corporations in the food, beverage, retail and consumer goods industries, including Amazon, CocaCola and Nestle, founded the alliance in 2022.
In Oregon, the alliance is in charge of setting and collecting fees for 60 different material categories based on weight and recyclability. The alliance and local governments participate in choosing where to invest the revenue from those fees, though state rules require money go toward projects that improve Oregon’s recycling infrastructure.
The wholesale distributors claim Oregon’s law is unconstitutional because the alliance — a private entity — is effectively doing the work of a government agency, and that the alliance offers very little transparency over how it sets the fees that producers pay and who qualifies as a producer.
Holmes spent much of her testimony defending the relationship between the alliance and Oregon’s environmental quality department, which is responsible for enforcement. She affirmed that enforcement against noncompliant companies is the job of Oregon regulators, that the fee structure has to be confidential because of other groups that do similar work to the alliance and that the methodology was reviewed and approved by Oregon regulators.
Later in the afternoon, Brian Wild, a lobbyist for the wholesalers, faced questions from the association’s lawyers and lawyers for the Oregon Department of Justice.
He said many wholesalers are small, though most are large and some are multi-million-dollar companies, that have very little margins or control over pricing, and that the fees would be detrimental to many.
He said many producers get an invoice for what they’re owed from the alliance with little transparency about what is behind it, and they have no avenue to challenge what they are being charged. Because many of the biggest companies that founded the alliance, and continue to serve on its national board, are also subject to the new recycling fees, Wild said there’s concern that those companies have played an outsized role in developing the recycling fees programs.
He said among many members of the wholesalers association there is a “general belief they wrote those rules in their favor and not our favor.”
Lawyers for the Oregon Department of Justice did little questioning or objecting to plaintiffs questions on Monday. The trial will end Friday, and Simon offered little information about how quickly he might reach a decision.
Commented