The $8.2 trillion U.S. wholesale distribution industry went on trial this week against Oregon's Recycling Modernization Act, as U.S. District Judge Michael Simon began five days of arguments Monday in Portland.

The National Association of Wholesaler-Distributors (NAW) filed suit in July 2025, weeks after manufacturers received their first invoices under the 2021 Oregon law. NAW says it represents hundreds of companies that buy in bulk, repackage and resell across food, beverage and electronics channels.

The complaint alleges the law is unconstitutional and restrains interstate commerce. At issue: whether a private nonprofit can lawfully administer a state fee system with limited transparency on methodology and producer eligibility.

What does Oregon's Recycling Modernization Act actually charge?

Oregon's 2021 statute created statewide standards for what is and is not recyclable, and imposed packaging fees based on weight and recyclability across 60 material categories. Lighter and reusable packaging carries lower fees; bulky single-use plastics carries more. Producers earning $5 million or less in gross revenue are exempt.

The Circular Action Alliance, a Washington, D.C.-based nonprofit founded in 2022 by 20 multinational corporations including Amazon, Coca-Cola and Nestle, runs the Oregon program. Oregon's Department of Environmental Quality picked the alliance to set and collect fees and deploy revenue with local governments into recycling infrastructure. The alliance runs parallel programs in California and Colorado and is pursuing work in Maine and Maryland.

Six other states have enacted similar packaging laws. NAW has now sued California and Colorado over theirs. Lollicup USA, a disposable cup maker, filed a class action against Oregon DEQ Director Leah Feldon in June.

Why are wholesale distributors challenging a packaging fee?

The wholesalers' central claim is structural: a private entity performs the core work of a state agency with weak transparency on fee schedules and producer status. Brian Wild, a lobbyist for the association, told the court Monday that many wholesalers operate on thin margins with little pricing power.

"There is a general belief they wrote those rules in their favor and not our favor," Wild said, referring to the multinational founders that remain on the alliance's national board while paying the same fees they helped design.

Day-one questioning centered on Kim Holmes, the alliance's Oregon director. She affirmed Oregon regulators handle enforcement, that the state reviewed and approved the fee methodology, and that fee schedules must remain confidential because peer organizations operate competing programs.

What does the trial change for distribution channels?

The case names the Oregon Department of Environmental Quality, the Environmental Quality Commission and Attorney General Dan Rayfield as defendants. If Simon rules for Oregon, the fee regime stands and the six-state template gains weight. A ruling for NAW could gut Oregon's program and ripple through California, Colorado and the pending states.

Producers designated under the law receive invoices, then absorb fees or pass them through depending on contract terms with retail customers. Gross-margin pressure falls hardest on distributors with limited pricing leverage; vertically integrated alliance founders internalize the cost differently. Inventory turns tilt slightly toward lighter, more recyclable SKUs because the fee schedule favors them.

Oregon Department of Justice attorneys conducted minimal questioning or objection on opening day. Simon gave no signal on timing; the trial closes Friday.