In a heated legal battle, the National Association of Wholesaler-Distributors is challenging Oregon's 2021 recycling law, arguing that it's not about recycling but revenue generation. This $8.6 trillion industry, represented by the association, is making a strong case in federal court, claiming the law imposes excessive fees on businesses and interferes with interstate commerce. The association's members, who import, distribute, or supply packaged goods to Oregon, have already secured a preliminary injunction, halting the law's implementation until the trial's outcome. This is a significant development, as Oregon became the first of seven states to adopt a packaging recycling law, requiring producers to bear some of the costs for collecting and recycling certain packaging materials.
The law, which took effect in 2022, mandates that companies report the quantity of packaging they distribute in Oregon and pay fees based on weight. These fees fund investments in recycling infrastructure, including technology upgrades, transportation costs, and new collection systems for local governments. However, the association argues that the law is targeting the wrong industry, as they receive products from manufacturers and move them through the supply chain, rather than producing packaging directly.
One of the main constitutional objections raised by the association is that the law violates due process by delegating regulatory authority to the Circular Action Alliance, a nonprofit controlled by the largest companies impacted by the regulations, including Coca Cola, Walmart, and Amazon. The association claims that this outsourcing of authority without meaningful input or recourse runs roughshod over fundamental due process rights. Additionally, the group contends that the law violates the Dormant Commerce Clause by exempting Oregon public agencies, small retail businesses, restaurants, and food carts while forcing out-of-state suppliers to absorb program costs.
Eric Hoplin, president and CEO of the association, argues that the state took in $167 million in recycling taxes last year but only spent $55 million on recycling, implying that the law is more about revenue generation than environmental protection. The association also claims that the fees are shockingly high, exceeding profit margins on affected products, and that the system is complex, with steep civil penalties for non-compliance. They argue that Oregon conducted no comprehensive economic impact analysis beyond a limited review for small businesses.
However, state lawyers defended the law, arguing that it requires companies to participate in reducing environmental impacts from products they sell. They also note that fees are calculated based on tonnage of packaging reported the previous year and that companies can seek judicial review to challenge invoices or penalties. Kimberly Holmes Kantrowitz, executive director of Circular Action Alliance Oregon, testified that her group works to ensure compliance with the state's packaging and paper recycling programs, and that certain companies are exempted from fees, including nonprofits, public bodies, manufacturers of certain beverage containers, small restaurants, and companies with gross revenue of less than $5 million.
The trial, which began on Monday and is expected to last five days, will be decided by the judge, not a jury. The outcome of this case will have significant implications for the future of packaging recycling laws in the United States, as similar suits have been filed in California and 17 other states. The Recycling Partnership, a nonprofit that helped draft the law, has urged the judge to reject the challenge, citing U.S. Supreme Court precedent and arguing that any regulatory burden is outweighed by benefits including waste reduction, revenue generation, infrastructure investment, cost stabilization, and reduced environmental and health impacts.
In my opinion, this case raises important questions about the balance between environmental protection and economic interests. While the association's concerns about excessive fees and lack of transparency are valid, the state's argument that the law is necessary for reducing environmental impacts is also compelling. The outcome of this trial will likely shape the future of packaging recycling laws in the United States, and it will be fascinating to see how the judge weighs these competing interests.
