MONROE TOWNSHIP, NEW JERSEY, UNITED STATES – OCTOBER 25 – Governor of Pennsylvania Josh Shapiro speaks at an early vote rally in support of Candidate for New Jersey Governor Mikie Sherrill on the first day of early in person voting at Monroe Township Senior Center in Monroe Township, New Jersey, United States on Saturday, October 25, 2025. (Photo by Kyle Mazza/Anadolu via Getty Images)
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Governor-elect Abigail Spanberger’s (D-Va.) win in Virginia’s 2025 general election, coupled with Democrats retaking a majority of the statehouse in Richmond, means that Virginia will likely soon rejoin the Regional Greenhouse Gas Initiative (RGGI), the cap-and-trade program comprising 10 northeastern and mid-Atlantic states. While Governor Glenn Youngkin (R-Va.) pulled Virginia out of RGGI by executive action in 2023, in November 2024, a circuit court judge ruled that termination of Virginia’s membership in RGGI requires legislative approval. Though the case’s final outcome is pending an appeal, that legal challenge is likely irrelevant now that Democrats are set to reassume total control of the commonwealth’s government in 2026 and are poised to reinstate Virginia’s RGGI membership.
Just as a judge ruled that Governor Youngkin unlawfully removed Virginia from RGGI without the requisite legislative approval, a Pennsylvania judge ruled in 2023 that Governor Josh Shapiro’s (D-Pa.) effort to enter Pennsylvania into RGGI also requires legislative approval, something that Shapiro had not sought. Governor Shapiro had been pursuing an appeal, but that effort came to an end today. Under the terms of the new state budget agreement announced this afternoon, Governor Shapiro will cease his effort to join RGGI by dropping his appeal, which was still pending before the Pennsylvania Supreme Court.
The Commonwealth Foundation, a Pennsylvania-based think tank, noted that the threat of RGGI had “stifled energy development in Pennsylvania, with a dearth of new generation over the last five years due to the uncertainty and fears of RGGI.” The end of the attempt to impose RGGI in Pennsylvania, the Commonwealth Foundation budget analysis added, “protects Pennsylvania families from energy cost increases while providing certainty to businesses, opening the door for investment in Pennsylvania and unshackling energy production.”
“One of the triumphs of this budget is the removal of the state from RGGI, saving Pennsylvania families from a 30% increase in energy costs,” said Nathan Benefield, chief policy officer at the Commonwealth Foundation. “With the threat of RGGI off the table, a more prosperous future for Pennsylvania’s energy sector can move forward. That, combined with ‘deemed approved’ permitting reform, will improve Pennsylvania’s economic outlook.“
Meanwhile in Europe, whose cap-and-trade program predates RGGI and the other U.S.-based cap-and-trade programs in California and Washington State, emissions caps are coming under fire for the way in which they depress economic growth, strain household budgets, and put Europe at a competitive disadvantage in the global economy.
During a third quarter earnings call for BASF, the world’s largest chemical maker, company CEO Markus Kamieth criticized Europe’s expanded carbon emissions limitation and pricing regulations as an “attack on Europe’s industrial foundation.” Kamieth explained how this costly regulatory regime acts as a “destruction mechanism” for European businesses, whose global competitors are free from such regulatory impediments.
Europe’s experience deserves the attention of U.S. policymakers, given that progressive politicians and interest groups continue to push for the adoption of cap-and-trade on this side of the Atlantic. Yet cap-and-trade isn’t the only cost-increasing regulatory regime that U.S. progressives would like to import from Europe. The same goes for Europe’s Extended Producer Responsibility regulations for plastic packaging.
The Other European Regulatory Regime State Lawmakers Seek To Import
Whereas businesses are charged fees based on their carbon emissions under cap-and-trade, under Europe’s Extended Producer Responsibility (EPR) rules companies pay fees based on how much plastic packaging is utilized by their products. Not only has EPR already come to the U.S., it’s meeting less resistance thus far than has been the case for cap-and-trade. The lack of opposition to EPR, however, is more than likely due to lack of public awareness.
When reporting on the state tax changes that took effect on July 1, 2025, the first day of the new fiscal year in most states, the Tax Foundation noted that “several states are beginning to implement their extended producer responsibility (EPR) programs to encourage producers to be responsible, either financially or operationally, for the end-life of their products,” adding that these programs typically entail the imposition of new fees. These new EPR laws are the result of a well-funded, multi-year campaign to adopt European-style EPR programs in the U.S.
Four years after Maine became the first state to enact EPR, it’s now on the books in seven states, though only one has implemented it. Though EPR appears to be gaining momentum in the U.S. based on the growing number of states that have adopted it in recent years, legal and implementation challenges raise questions about the viability for nationwide expansion of EPR.
Take the lawsuit filed against Oregon’s EPR program, the only one of seven existing state-level EPR programs that is operational. That lawsuit, which the National Association of Wholesalers-Distributors (NAW) filed in late July, challenges the workability of Oregon’s EPR law. The arguments made by the plaintiffs in that case demonstrate the sort of impediments that are likely to slow the spread of EPR in the U.S.
The NAW lawsuit challenges the constitutionality of Oregon’s Plastic Pollution and Recycling Modernization Act, the state’s EPR law. “Unfortunately,” noted the press release announcing the lawsuit, “as enacted the act misses the target and threatens the viability of the wholesale distribution industry nationwide – the cornerstone of America’s supply chain.”
“While NAW supports the goal of a circular economy, the Oregon EPR law as enacted is unconstitutional, creates new mandates, inhibits interstate commerce and fails at its primary goal of encouraging circularity,” added Eric Hoplin, NAW’s President and CEO. “Rather than encourage sustainability through a uniform and transparent system where compliance burdens are shared across industries, Oregon chose to shift the burden to the parts of the supply chain that have little to no control over decisions to design, reduce, reuse or recycle a product.”
NAW is contesting the constitutionality of the way in which Oregon’s EPR law delegates power, “including the setting of fees wholesaler-distributors must pay to a private, third-party group (the Circular Action Alliance (CAA)), with a financial interest in the program without clear rules or oversight.” The NAW lawsuit also contends that Oregon’s EPR law unfairly ”targets out-of-state producers, disrupts national markets, and tries to control business outside of Oregon—violating the U.S. Constitution’s limits on state regulation of interstate commerce.”
The NAW lawsuit also alleges that Oregon’s EPR law is forcing producers to ”sign contracts with a single approved private organization (CAA) giving up their economic freedom and due process rights.” The NAW also challenges the way in which Oregon’s EPR law allows the CAA, non-governmental organization staffed by unelected individuals, to establish rules and fees ”without a real chance to object or appeal or transparency in the process.”
While the legal process plays out in the lawsuit challenging Oregon’s law, EPR proponents continue to lobby for the enactment of legislation to create EPR programs in additional states. Hawaii, Illinois, Massachusetts, and Rhode Island already have studies exploring the enactment of EPR. While EPR bills have gained more traction in blue states, one was filed in Tennessee last year that could be reintroduced in 2026. States where EPR legislation will likely be considered in 2026 include Connecticut, New Jersey, Massachusetts, Illinois, and New York. In fact, since the lead sponsor of the Empire State’s EPR bill is retiring at the end of session next year, a particularly aggressive push to enact it is expected in New York.
Dr. Calvin Lakhan at York University recently published updated analysis of the economic impact of New York’s EPR bill. Lakhan projected that New York’s EPR legislation, if enacted, could saddle businesses with more than $4 billion annually in added costs, with much of that passed along to consumers.
“The adoption of EPR in New York State has the potential to impose substantial new costs on producers,” noted Lakhan, adding that those costs “are likely to be passed down to consumers in the form of higher prices on essential goods and services.” Previous research, Lakhan added, has “shown that the cost increases resulting from EPR-related producer fees can range from 2% to 6% on grocery items alone, disproportionately impacting marginalized communities that rely more heavily on pre-packaged food products.”
“This shift in financial responsibility could significantly constrain household budgets, leading to reduced discretionary spending, decreased business revenues, and potential job losses in sectors reliant on consumer expenditures,” Lakhan added. “Such outcomes have the potential to disproportionately affect low- and middle-income households, which dedicate a larger share of their income to everyday necessities and have less financial flexibility to absorb price increases.”
Heading into the 2026 midterm elections, expect Democrats and Republicans to blame one another for rising consumer costs. Just as it will be hard for Republicans to dodge blame for increasing costs when they are supporting the imposition of tariffs that raise consumer costs, it will be difficult for Democrats to convince voters that it is the GOP to blame for the high cost of living when Democrats are advocating for EPR programs that raise the cost of consumer goods by design.