Coalition of 17 States Sues to Block California Plastic Packaging Law

A coalition of 17 states and a national wholesalers trade group sued California in federal court Monday to block a packaging recycling law they say unlawfully forces companies across the country to follow California’s environmental rules.

The lawsuit, led by Nebraska Attorney General Mike Hilgers, was filed in the U.S. District Court for the Eastern District of California and challenges California’s Plastic Pollution Prevention and Packaging Producer Responsibility Act, known as SB 54. The case names Zoe Heller, director of the California Department of Resources Recycling and Recovery, known as CalRecycle, and Circular Action Alliance, the nonprofit organization approved to help carry out the law.

Nebraska is joined by Alabama, Florida, Georgia, Idaho, Indiana, Iowa, Louisiana, Missouri, Montana, North Dakota, Oklahoma, South Carolina, South Dakota, Texas, Utah, and West Virginia. The National Association of Wholesaler-Distributors also joined the lawsuit, saying its members could be forced to comply with California’s packaging rules even when they do not control how goods are packaged.

SB 54, enacted in 2022, creates a wide-reaching extended producer responsibility program for packaging. Permanent regulations for the program took effect on May 1. Under the law, producers must cut single-use plastic packaging by 25% and make covered packaging and plastic single-use food-service ware recyclable or compostable by 2032.

The states and the National Association of Wholesaler-Distributors claim the law reaches far beyond California by requiring companies that sell packaged goods into the state to change how products are designed, packaged, distributed, recycled, and funded. Court filings argue that the rules will raise costs for businesses and consumers while giving California power over packaging decisions made in other states.

State officials have defended SB 54 as a way to move plastic waste costs from taxpayers and local governments to the companies that sell covered products in California. CalRecycle has said the final regulations are meant to reduce trash, pollution, and local waste costs while pushing producers to change how packaging is designed.

On constitutional grounds, the states argue the program gives California too much control over national packaging choices. The complaint says companies that make, import, ship, or distribute goods into California may have to follow the state’s rules even when many of their packaging and business decisions happen elsewhere.

A central part of the lawsuit relies on the Commerce Clause, the part of the U.S. Constitution that gives Congress power over trade among the states. Courts have also used that clause to limit state laws that place unfair burdens on interstate commerce. The states claim SB 54 crosses that line because businesses outside California may have to change packaging and distribution systems if they want to keep selling goods into the state.

Packaging is often designed, bought, shipped, and distributed through national supply chains. A company may not be able to make one package for California and another for every other state without added cost or disruption. The dispute centers on whether SB 54 regulates California’s own marketplace or unlawfully controls business decisions made elsewhere.

Wholesalers and distributors are central to the challenge because they often move packaged goods without controlling how those goods are packaged. The trade association says its members include companies that import and distribute products in California and could face obligations under the law even when they are not the original makers of the packaging.

Circular Action Alliance’s role gives the lawsuit another constitutional target. California’s program relies on the nonprofit as a producer responsibility organization, meaning it helps carry out parts of the law tied to producer compliance and program costs. The states and the wholesalers group argue that California has given a private organization too much authority over regulated businesses, especially when companies must participate or pay into the system to keep selling covered products in the state.

The filing also raises free speech claims. The states and the trade group argue that SB 54 limits how businesses may identify certain program fees on receipts or invoices and forces some companies to fund messages or policy goals they do not support.

A separate challenge from environmental groups has also been filed over the final regulations. A coalition that includes the Natural Resources Defense Council says the rules were weakened and do not fully carry out the goals of California’s plastics law.

The coalition asks the court to declare California’s law and regulations invalid and unenforceable, and to block the state and Circular Action Alliance from implementing or enforcing the program.