California’s experiment with extended producer responsibility (EPR) has finally met significant resistance.

Seventeen states, joined by the National Association of Wholesaler Distributors, have filed suit in federal court challenging California’s Plastic Pollution Prevention and Packaging Producer Responsibility Act, which was SB 54. The case, State of Nebraska et al. v. Heller et al., Case No. 2:26-at-01047 (E.D. Cal.), seeks to block enforcement of one of the most aggressive and far reaching environmental laws ever enacted by a state.

The plaintiffs include Nebraska, Alabama, Florida, Georgia, Idaho, Indiana, Iowa, Louisiana, Missouri, Montana, North Dakota, Oklahoma, South Carolina, South Dakota, Texas, Utah, and West Virginia, along with NAW. Their central argument is straightforward: California cannot use access to its market to impose its preferred environmental policies on the rest of the nation.

This lawsuit begins, “In a blatant and unprecedented attempt to impose its own policy preferences on the entire nation, California has enacted the Plastic Pollution Prevention and Packaging Producer Responsibility Act, .. In essence, the Act conditions access to California markets on revolutionary changes to the way manufacturers, distributors, and companies (large and small) design and package their products, as well as how plastic or plastic-containing packaging waste is disposed of.”

And then there’s the other lawsuit filed by environmental groups in state court contending the implementing regulations do not go far enough to carry out the Act’s environmental mandates.

More Than an EPR Law

We have previously blogged about the expansion of EPR laws across the United States. In their simplest form, EPR programs shift responsibility for managing waste from taxpayers and local governments to the producers of products and packaging.

California’s law, however, goes much further.

SB 54 requires producers selling products into California to participate in an extensive regulatory regime covering packaging and single use food service ware. The law seeks to reduce plastic packaging, increase recyclability and compostability, and dramatically reshape packaging design and distribution practices throughout the supply chain of nearly everything.

The regulations became effective on May 1, 2026, and immediately triggered registration and reporting obligations for affected businesses. Producers were required either to register with California’s designated Producer Responsibility Organization, Circular Action Alliance (CAA), comply independently, or seek an exemption.

For many businesses operating nationally, redesigning packaging for California alone is not economically practical. As a result, California’s standards effectively become national standards. That is precisely the concern underlying this lawsuit.

The Constitutional Issues Are Significant

The complaint alleges that the new law violates multiple provisions of the U.S. Constitution, including the Commerce Clause, the Import Export Clause, the First Amendment, and the Due Process Clause.

The strongest claim may be that California is attempting to regulate conduct occurring entirely outside its borders. According to the complaint, the law conditions access to California markets on how products are designed, manufactured, packaged, and distributed throughout the country, if not the world.

The U.S. Supreme Court has repeatedly recognized limits on a state’s ability to project its regulatory preferences beyond its borders. California’s size does not grant it the authority to establish national environmental policy.

Nebraska Attorney General Mike Hilgers summarized the issue: “California cannot reach across state lines and force businesses in Nebraska, or any other state, to adopt California’s preferred environmental policies.”

Whether one agrees with California’s environmental goals is beside the point. The constitutional question is whether a single state can effectively dictate nationwide business practices.

Delegating Government Power to a Private Organization

Perhaps the most troubling aspect of the Act is California’s delegation of substantial authority to the Circular Action Alliance.

CAA was designated as California’s sole Producer Responsibility Organization and is responsible for administering much of the program. Producers must register, report data, and fund the system through the organization. CAA is also charged with developing the program plan that will govern implementation.

The plaintiffs argue that the Act is an unconstitutional delegation of regulatory authority to a private organization, in violation of the Fourteenth Amendment’s Due Process Clause and the California Constitution’s nondelegation doctrine.

Regardless of where one stands on environmental policy, businesses should be concerned whenever regulatory power is exercised by private organizations that are insulated from traditional governmental checks and balances.

Challenge by Environmental Groups

Two environmental groups filed a complaint against the California Department of Resources Recycling and Recovery and Director Zoe Heller, in California state court, arguing that the Act’s implementing regulations are unlawful because they weaken or contradict the statute. The plaintiffs allege the “final regulations are invalid because or to the extent they are inconsistent with the .. Act.”

Of import this challenge targets regulatory under reach, not the statute itself, so it is more about reshaping compliance obligations in out years when the plaintiffs’ requested relief is “a writ of mandate or injunction directing Respondents/Defendants Department of Resources Recycling and Recovery and the Director of Resources Recycling and Recovery to correct the invalid final regulations forthwith ..”

Oregon May Be a Preview

The state plaintiffs enter this federal litigation with some momentum.

Earlier this year, a federal court issued an injunction blocking enforcement of Oregon’s structurally similar EPR law after finding serious constitutional questions involving due process and interstate commerce. The merits trial in that case is scheduled for July 13, 2026, in Portland.

While the California case presents its own unique facts, the Oregon ruling demonstrates that courts are willing to scrutinize these emerging EPR programs rather than simply accepting them as the latest environmental trend.

The Stakes for Business Owners

Extended producer responsibility has become the environmental policy fad of the moment, embraced by lawmakers eager to appear innovative while shifting costs onto private enterprise and consumers. Yet a recent study of two decades of EPR programs in the EU found waste levels have still risen, recycling rates stagnated, and reuse rates have actually fallen drastically over this time, all at lower rates than in the U.S. (which did not have EPR at the time).

Despite the fact that EPR is bad environmental public policy, Maryland, Colorado, Maine, Minnesota, Oregon, Washington, and others are phasing in their own EPR programs, some of which, like Maryland’s (.. including its reliance on the same CAA as the single Producer Responsibility Organization), are as egregious as California’s Act.

California’s SB 54 may prove to be a bridge too far.

Protecting human health and the environment is, of course, an important public policy goal. But good intentions do not excuse constitutional overreach and otherwise bad public policy. California’s Act is not simply an anti plastic law; it is an attempt by a single state to reshape packaging, manufacturing, and distribution practices across the entire country. The courts exist in part to prevent exactly that type of extraterritorial regulation.

This dynamic legal environment will no doubt impact the emergent space of ERP. Business owners should watch these cases closely because the outcome may determine whether these state environmental mandates remain local laws or become de facto national regulations.