Mike Hilgers and the National Association of Wholesaler-Distributors have turned California’s packaging regime into a federalism test for businesses selling into the US’s largest state economy.
The coalition of 17 state attorneys general filed suit in the US District Court for the Eastern District of California on 22 June, seeking to block the Plastic Pollution Prevention and Packaging Producer Responsibility Act and its implementing regulations on constitutional grounds.
The challenge lands less than two months after California’s final Senate Bill 54 regulations took effect on 1 May 2026. The law, signed by Governor Gavin Newsom in 2022 and administered by the California Department of Resources Recycling and Recovery, known as CalRecycle, requires producers to reduce single-use plastic packaging and ensure covered packaging is recyclable or compostable by 2032.
Circular Action Alliance, approved as California’s producer responsibility organisation, is central to the scheme’s implementation, while CalRecycle director Zoe Heller is named as a defendant in the lawsuit.
The practical consequence for in-house counsel is immediate: packaging compliance can no longer be treated as a California-only operational issue. Companies that manufacture, distribute, import, ship or brand goods for sale into California may need to reassess product design, supplier contracts, reporting systems and price-disclosure controls against a live constitutional challenge.
Holland & Knight has already warned producers that registration, baseline data and future fee obligations follow from the final regulations, while Freshfields has described SB 54 as one of the most expansive US state packaging EPR regimes, with more than 5,000 producers potentially in scope.
The claimants argue that California has conditioned market access on packaging design, production and disposal changes that reach well beyond its borders. Their complaint alleges violations of the Commerce Clause, the Import-Export Clause, the First Amendment, the Fifth Amendment, the Fourteenth Amendment and the California Constitution’s nondelegation doctrine.
Utah Attorney General Derek Brown framed the case as a challenge to California regulating the national economy through a private organisation, while NAW president and CEO Eric Hoplin said California was not entitled to pronounce nationwide policies.
CalRecycle has said it does not comment on pending litigation, while Circular Action Alliance has said it is monitoring the case as it continues implementation work. California officials have defended the law as a shift of waste-management responsibility from taxpayers and local governments to producers.
A successful injunction would disrupt CalRecycle’s timetable, while a failed challenge would give other states firmer ground to pursue producer-funded packaging regimes of their own.
The US District Court for the Eastern District of California will now have to decide whether CalRecycle’s packaging regime is a permissible state environmental programme or an unconstitutional burden on interstate commerce, a ruling that will shape compliance advice for producers, distributors and national retailers selling into California.