Two New Lawsuits Challenge California and Oregon’s Plastic Recycling and Reduction Laws

In what appears to be a growing trend, two new lawsuits have recently been filed challenging California and Oregon’s extended producer responsibility (EPR) laws that seek to reduce the amount of plastic and other types of non-compostable packaging entering the states’ waste streams.

In State of Nebraska v. Heller, seventeen states and the National Association of Wholesaler-Distributors (“States”) have sued the California Department of Resources Recycling & Recovery (CalRecycle) and the Circular Action Alliance (CAA), claiming that California’s SB 54, the Plastic Pollution Prevention and Packaging Producer Responsibility Act (“SB 54”), violates a myriad of state and federal constitutional provisions, including violations of the Commerce Clause, the Import-Export Clause, Free Speech clauses of the U.S. and California Constitutions, the Fifth and Fourteenth Amendment Due Process Clauses, and California’s non-delegation doctrine. The suit also claims that SB 54 infringes upon state sovereignty by attempting to impose California’s policy preferences on other states.

Broadly, the lawsuit argues that California is using its economic power to create a nationwide policy related to management of plastics. The States claim that by imposing mandatory changes on how manufacturers and distributors both design and package their products, as well as how they deal with plastic waste streams in California, SB 54 will not only unfairly burden interstate commerce, it will adversely affect manufacturers and consumers nationwide. Additionally, the States claim that California improperly vests power to enforce SB 54 with an unelected and unaccountable private organization—CAA. By forcing manufacturers and distributors to pay fees to a private organization with whom they disagree, and also limiting their ability to explain why costs will increase as a result of the law, California is allegedly violating their rights of free speech and due process.

The States have requested that the court declare SB 54 invalid and unenforceable and permanently enjoin Director Heller, CalRecycle, and CAA from implementing SB 54 or any associated regulations. Thus far, the States have not moved for immediate relief from the Act.

Lollicup USA, Inc. is attempting to build on the success of the National Association of Wholesaler-Distributors (NAWD) in obtaining a temporary injunction against enforcement of Oregon’s Plastic Pollution and Recycling Modernization Act (OR RMA) against its members (see National Association of Wholesaler-Distributors v. Feldon), by filing a similar suit in federal court against the Oregon Department of Environmental Quality (ODEQ). The new lawsuit, Lollicup USA, Inc. v. Feldon, was filed on June 25, 2026, on behalf of Lollicup and a proposed class of manufacturers constituting all regulated “producers” that were not covered by the NAWD injunction. It seeks to have OR RMA declared unconstitutional and for the court to enjoin ODEQ from enforcing the law against Lollicup and the rest of the class.

Like the Heller suit does with CA SB 54, Lollicup claims that OR RMA burdens nationwide commercial activity and disproportionately impacts producers involved in interstate commerce. Lollicup alleges that the sweep of the law affects pricing and manufacturing decisions on products that never reach the state. Lollicup also argues the law delegates regulatory authority to a private interest—again the CAA—to set fees, conduct audits, and make enforcement referrals, among other things, without meaningful procedural protections. By creating such a structure, Lollicup claims, the law violates the Dormant Commerce Clause and the Fourteenth Amendment’s Due Process Clause.

Lollicup has asked the court to extend the preliminary injunction granted in National Association of Wholesaler-Distributors to all producers regulated under OR RMA and ultimately strike down the law in its entirety.

In National Association of Wholesaler-Distributors, the Oregon court granted a preliminary injunction based on the balance of hardships and the likelihood of irreparable injury to the plaintiffs, but has not yet acted on the Dormant Commerce Clause and Due Process Clause claims. With respect to those two issues, the court may find for the purposes of injunctive relief that they also balance in favor of the plaintiffs in the Lollicup case, although it is not clear how the court will treat the purported class.

The parties have not filed any motions in State of Nebraska v. Heller, and it is unclear whether the California court would embrace the same reasoning as the Oregon court, even though many of the claims are similar.  Although the National Association of Wholesaler-Distributors is one of the plaintiffs in Heller, the remaining plaintiffs are states, which are arguably not manufacturers exposed to potential immediate harm from enforcement of SB 54. Therefore, the likelihood of the court in Heller granting injunctive relief is less certain than in Lollicup.

The chances of success for the Dormant Commerce Clause arguments in both cases is uncertain. Claims in other cases related to Dormant Commerce Clause and violations of sovereignty associated with burdensome state regulations have not met with wide success. For example, in National Pork Producers Council v. Ross, 2023, the Supreme Court rejected a per se rule against nondiscriminatory state regulations that may affect out-of-state interests. The Court indicated that even where a state law might create a substantial burden on interstate commerce, it might be permissible under balancing tests based on benefits or other constitutional considerations. In this case, the plaintiffs will have to show that SB 54 does not just burden producers in other states, but it does so in a way that is not “narrowly tailored to advance a legitimate local purpose” or otherwise violates the Plaintiffs’ constitutional rights. As more states are passing plastics and packaging reduction and recycling legislation, it may become increasingly difficult to show that such laws are somehow affecting or otherwise burdening producers that are not engaged in commerce in those states.

Please let us know if you would like help understanding how packaging requirements and other EPR laws may affect your business.