PORTLAND — A groundbreaking five-day bench trial concluded last Friday. Plaintiff National Association of Wholesaler-Distributors (NAW) sought to expose constitutional flaws in Oregon's packaging extended producer responsibility (EPR) program, while the state environmental regulator overseeing the program defended it. Legal observers view the case as the first substantive judicial review of a packaging EPR law in the nation.

In less than a year, NAW filed suit, successfully obtained a preliminary injunction to temporarily halt enforcement actions against its members, and presented arguments before Judge Michael H. Simon last week. NAW alleges the program has due process issues, unduly burdens interstate commerce, and raises objections to the role of producer responsibility organization Circular Action Alliance (CAA) in the program.

NAW told Packaging Dive on Monday that it is eagerly awaiting the court's ruling.

"The legal issues focus on whether a private company can be granted the power to impose mandatory fees on business enterprises, with no public process behind the amounts and no independent avenue for challenge," said Brian Wild, NAW's chief government relations officer, in an emailed statement. Wild said NAW supports environmental goals but believes the program's structure is unconstitutional and its effectiveness uncertain.

A key point that impressed attorneys observing the trial was that Oregon's Department of Environmental Quality (DEQ) suggested it did not truly consider impacts on other states when crafting the law. "I don't think they necessarily realized, when creating this program, the breadth and depth of scrutiny the Oregon EPR program would receive," said L. Claire Hansen, an attorney at Bergeson & Campbell.

Post-trial briefs are due by July 31, and any motions for further oral argument must be filed by August 3.

Next steps

Attorneys from Bergeson & Campbell documented the trial day by day. They noted that the judge raised six specific questions for post-trial briefing, primarily centered on NAW's procedural due process claims.

Post-trial briefs will apply the testimony to the law, covering the basis for both sides' arguments, explained Jennifer Kwapisz, a partner at Arnold & Porter. "Courts often pay very close attention to post-trial briefs and the authorities cited therein when drafting opinions," she said. "Post-trial briefs are where we will see the most comprehensive presentation of arguments and evidence."

The court may wish to avoid further testimony to rule as quickly as possible. "There is no specific timeline," Kwapisz noted. She said the judge clearly wants to keep the case moving, which also influenced the decision not to allow other parties to join the NAW case. "Given that context, I believe the court has strong incentive to rule as soon as possible."

Further implications

Producers face concerns during compliance that Oregon's program could be partially or fully overturned, and that companies may not be able to recover fees already paid. These concerns stem in part from comments by Oregon DEQ attorneys at the February preliminary injunction hearing, said Stacey Halliday, a partner at Arnold & Porter.

During the trial, DEQ detailed how it divides enforcement responsibilities with CAA: while CAA must publish lists of noncompliant producers, it is DEQ that determines and exercises enforcement authority. Halliday noted that CAA published its first list of noncompliant producers this spring, but DEQ has not publicly announced any penalty cases.

"What I'm watching is the extent to which CAA and DEQ will increase transparency in the enforcement process to clearly delineate their respective roles, especially amid growing scrutiny of their EPR program oversight during litigation," Halliday said.

The case also has implications for a class action filed by Lollicup USA in Oregon in June. That case is also assigned to Judge Simon and is considered related because it overlaps with NAW's arguments. Last week, the court granted a motion to extend deadlines and file a joint status report, due by September 10.

Insights from the NAW trial could also surface this year in CAA's California program, whose public comment period is open through August 14. Halliday expects the revised plan to consider issues exposed during the Oregon trial.

Given litigation in other states and heightened attention to interstate commerce burdens, the idea of a federal packaging EPR framework has also resurfaced, attorneys at Bergeson & Campbell noted. "I do think we will see more federal funding allocated to these efforts," said Catherina Narigon, an attorney at Bergeson & Campbell.