PepsiCo has been sued by New York state for plastic pollution along the Buffalo River that is allegedly contaminating the water and harming wildlife.
According to the lawsuit, PepsiCo is the single largest identifiable contributor to the problem.
PepsiCo's spokesperson has told the BBC that it has been "transparent in its journey to reduce use of plastic".
Last week Coca-Cola, Danone and Nestle were accused of making misleading claims about their plastic bottles.
PepsiCo, maker of Pepsi, Doritos and other snacks, is the world's second biggest food company after industry leader Nestle.
The American giant is the latest major corporation to face a lawsuit by local authorities about its impact on the environment.
The New York complaint says Pepsi broke state laws by failing to warn the public about the risks from plastic packaging and promoting misleading statements about its effort to combat the pollution.
"No company is too big to ensure that their products do not damage our environment and public health," said Attorney General Letitia James.
According to the lawsuit, PepsiCo manufactures, produces, and packages at least 85 different beverage brands and 25 snack food brands that predominantly come in single-use plastic containers.
When Ms James's office conducted a survey of all types of waste collected at 13 sites along the Buffalo River last year, it found that PepsiCo's single-use plastic packaging was the most significant.
"Of the 1,916 pieces of plastic trash collected with an identifiable brand, over 17% were produced by PepsiCo," it said.
Other identifiable brands included McDonald's and candy maker Hershey's.
The lawsuit said microplastics had been detected in the city of Buffalo's drinking water supply which "can cause a wide range of adverse health effects, from reproductive dysfunction to inflammation of the intestine and neurotoxic effects".Pepsi said in a statement that it was "serious about plastic reduction and effective recycling".
It added that this was a "complex issue" which required involvement from "businesses, municipalities, waste-reduction providers, community leaders and consumers".
New York state senator Andrew Gounardes told the BBC Pepsi should be designing its packages and products in a way that was not harmful to human health.
"Based on the allegations that were filed yesterday in the Attorney General's lawsuit, PepsiCo has been advertising itself as a very environmentally conscious company.... And yet, the reality is, according to the Attorney General, they've actually not been decreasing, but increasing their use of plastics," he said.
"But the company has a responsibility if they're going to be an actor in this marketplace. They have to make sure that they products are not going to cause harm to people."