California’s Extended Producer Responsibility (EPR) packaging law, Senate Bill 54 (SB 54), formally known as the Plastic Pollution Prevention and Packaging Producer Responsibility Act is at the center of a significant federal lawsuit that could shape the future of EPR and packaging regulation nationwide.
On June 22, 2026, a coalition of 17 states led by Nebraska Attorney General Mike Hilgers filed suit in the United States District Court for the Eastern District of California in State of Nebraska et al. v. Heller et al., Case No. 2:26-at-01047. The lawsuit comes shortly after California finalized permanent SB 54 regulations. CalRecycle’s permanent regulations became effective on May 1, 2026, following an extended and heavily contested rulemaking process.
The complaint reflects growing national opposition to California’s increasingly expansive environmental regulatory programs, particularly where those programs may affect the supply chain beyond California’s borders. Packaging laws such as EPR present particular challenges for food and agriculture businesses because the industry depends heavily on packaging systems designed to preserve food safety, shelf life, transportation stability, and regulatory compliance.
What Is SB 54?
EPR is an environmental policy approach that holds companies that produce packaging materials financially responsible for helping manage the waste generated from those materials after consumers discard them. SB 54, enacted in 2022, created one of the nation’s most expansive EPR programs. Currently, 6 other states (Washington, Oregon, Minnesota, Maine, Colorado, and Maryland) also have EPR laws, and some, such as Oregon’s, are also being challenged in court.
The law applies broadly to manufacturers, importers, distributors, and certain sellers of packaged goods in California. Supporters view SB 54 as a major environmental initiative intended to reduce plastic pollution and improve recycling rates. Opponents, however, argue that the law creates substantial operational burdens and effectively establishes de facto national packaging standards through California regulation.
Under the law, producers must ultimately ensure that by 2032:
- 100% of covered packaging is recyclable or compostable;
- 65% of single-use plastic packaging is recycled; and
- Covered plastic packaging is reduced by 25% compared to 2023 levels.
The law also requires producers to fund a $500 million annual mitigation program intended to address environmental impacts associated with plastic pollution.
Because the regulations are now effective, businesses face immediate pressure to begin compliance planning even while the legality of portions of the program remains under judicial review.
The Nebraska-Led Challenge to SB 54
The lawsuit was filed by attorneys general from 17 states, including Nebraska, Texas, Florida, Georgia, Indiana, Iowa, Louisiana, Missouri, Montana, Oklahoma, South Carolina, South Dakota, Utah, and West Virginia. The National Association of Wholesaler-Distributors (NAW) joined the suit as the sole business plaintiff.
The defendants include California officials responsible for implementing SB 54, including California Department of Resources Recycling and Recovery (CalRecycle) Director Zoe Heller and the Circular Action Alliance (CAA) which is the Producer Responsibility Organization (PRO) currently associated with California’s program as well as other states.
Interstate Commerce Concerns
The plaintiffs in this case are seeking to block enforcement of California’s SB 54 regulatory program while the litigation proceeds. The central question of the case is whether California can effectively impose nationwide packaging standards through a state regulatory program that requires producers across the country to comply with California-specific rules, reporting requirements, and fee obligations.
According to the plaintiffs, by effectively forcing out-of-state companies to redesign packaging systems and comply with California-specific requirements even when products are sold throughout the country, SB 54 improperly attempts to regulate interstate commerce. The states argue that businesses cannot realistically maintain separate packaging systems for California and non-California markets.
Challenges to California’s Producer Responsibility Structure
As mentioned above, the lawsuit also targets California’s use of a Producer Responsibility Organization (PRO) under SB 54; CAA. A PRO is a private entity that administers compliance obligations on behalf of participating companies. California approved CAA to serve as the state’s PRO for SB 54 compliance.
According to the plaintiffs, California improperly delegated significant regulatory authority to a private organization that can impose fees and compliance obligations on businesses nationwide. The lawsuit reportedly challenges the confidentiality of the fee-setting process and the broad authority granted to the PRO structure.
Critics argue that businesses may face substantial costs without sufficient transparency regarding how fees are calculated or how compliance standards will ultimately be enforced.
Looking Ahead for Food and Agriculture Companies
Food and agriculture companies may face some of the most significant operational impacts under SB 54.
Unlike many consumer products, food packaging often serves critical safety and preservation functions. Packaging materials are frequently designed to prevent contamination, preserve freshness and shelf life, maintain temperature stability and reduce spoilage during transportation. In addition, food packaging must also comply with rigorous federal food safety regulations.
As a result, food and agriculture companies may face difficult tradeoffs between sustainability goals and operational realities. Packaging redesigns also may require extensive testing, supply chain modifications, labeling updates, and regulatory review.
Further, the industry operates on relatively narrow margins in many sectors, meaning increased compliance costs, reporting obligations, and producer fees may significantly affect operational expenses.
California has anticipated these unique issues faced by the food and agriculture industry and has exempted some packing materials from the requirements of SB 54. Specifically, packaging or packaging components used by a food or agricultural commodity if it is not reasonably possible to use alternative packaging due to FDA or USDA regulatory constraints.
As the case proceeds, food and agriculture businesses should continue monitoring both the litigation and California’s ongoing implementation efforts to assess potential compliance risks and long-term operational impacts.
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We hope this proves useful. Please contact Kyla Kaplan ([email protected]) and Nicole Bayne ([email protected]) if you have questions regarding California and/or EPR.
