EPR Litigation Expands to Colorado as Industry Targets Program Design

Colorado has become the newest battleground state in the growing battle over Extended Producer Responsibility (EPR) laws. 

A national trade association, the Independent Lubricant Manufacturers Association (ILMA), recently sued the Colorado Department of Public Health and Environment (CDPHE), challenging the state’s implementation of the Producer Responsibility Program for Statewide Recycling Act (the “Act”) on constitutional and state statutory grounds. The complaint, filed on March 12 in Denver District Court,^[1] alleges that CDPHE’s implementation hands private entities broad authority to impose fees and contract terms on producers of lubricant and other packaging sold into Colorado, without meaningful oversight, inadequate due process, and inadequate recourse for the companies who are paying the fees to bring legal challenges. For companies navigating EPR compliance obligations, the case is notable because it raises a new constitutional challenge and a direct statutory attack on the implementation of those laws that could have implications for similar laws in other states. 

Who Is Suing, and Why It Matters

The plaintiff, ILMA, is a trade group founded in 1948 that represents 355 companies, including manufacturers and distributors of lubricants and related products. The complaint states that ILMA members buy base oils and additives at commodity-linked prices, blend them into finished products, and sell into a market. ILMA alleges that this leaves smaller and mid-sized producers more exposed to new compliance costs than larger integrated competitors.

ILMA’s charge of anti-competitive harm runs through the complaint. Under the Act, producers of covered materials generally may not sell or distribute those materials in Colorado unless they participate in the EPR program. ILMA alleges that, as implemented, the Act forces its members into contracts with two private entities for recycling services and facilities that have not yet been developed, while charging fees that ILMA says are not tied to actual Colorado recycling costs.

The Constitutional Claims: Due Process and the Non-Delegation Doctrine

The ILMA lawsuit raises constitutional objections under both federal and Colorado law, contending that CDPHE handed too much power to private groups without adequate guardrails. These arguments largely track the similar arguments made in a constitutional challenge to Oregon’s EPR statute.

ILMA says its members are forced into “take it or leave it” contracts with fees set without their input. The suit claims that members had no opportunity to weigh in on pricing, no procedure to challenge the fees, and must resolve disputes through confidential arbitration with no court appeal.

The trade group also argues Colorado violated its own constitution by delegating lawmaking authority without clear boundaries, which claims to be especially problematic when the entity setting fees is run by competitors.

The First Amendment Claim

The complaint also includes a facial First Amendment challenge, a challenge that was not raised in the Oregon case. The Act provides that, “[a] person shall not charge any kind of point-of-sale or point-of-collection fee to consumers to recoup its costs in meeting the obligations of or complying with” the Act. ILMA argues that this provision violates the First Amendment by prohibiting producers from accurately communicating the cause and cost of the price increase to their consumers. That communications limitation, according to ILMA, has no relationship to the EPR law’s intended purpose.

The practical implications extend beyond Colorado’s borders. ILMA says producers may spread those costs across their broader pricing structure rather than disclose them directly in Colorado. According to the complaint, that means consumers outside Colorado may end up bearing some of the cost of Colorado’s program without any transparent explanation at the point of sale.

The State Statutory Claims

Beyond the constitutional claims, the lawsuit takes direct aim at how the program has been implemented. ILMA challenges the Act as contrary to statutory requirements. The Act caps administrative expenses at five percent of producer fees and requires that fees be tied to actual recycling costs within Colorado. ILMA alleges that, because neither LPMA nor CAA has yet implemented a recycling program in Colorado, the fees collected to date necessarily have gone to planning, start-up, and administrative expenses, contrary to that cap. ILMA also alleges that the fee schedules used by both entities are not based on Colorado-specific costs in violation of the statute because the fee schedule offered in Colorado is “calculated pursuant to ‘CAA’s harmonized national dues-setting methodology.’”

What This Means for Industry 

For producers already grappling with EPR compliance, the Colorado case underscores that implementation—not statutory text—is where the real pressure points are emerging. Even if ILMA does not prevail on its constitutional claims, the complaint highlights structural features of Colorado’s program that companies across sectors are now confronting in real time.

First, Colorado amplifies the cost‑certainty problem that has defined EPR rollout nationwide. The complaint focuses less on whether producers must pay fees at all—now largely a given—and more on how those fees are calculated, by whom, and on what basis. Many companies have accepted EPR as a cost of doing business, but Colorado illustrates the growing disconnect between statutory promises of “cost‑based” recycling systems and early‑stage programs that are still collecting planning and start‑up fees before any recycling services are delivered. For producers operating on thin margins, the lack of transparency in those fee methodologies complicates pricing, contract negotiations, and internal budgeting.

Second, governance risk is becoming a key business consideration. The challenge to CAA’s role is notable not just because it raises delegation concerns, but because it places competitors in positions of operational control. Regardless of how the court resolves the legal claims, the case highlights an uncomfortable reality for independent producers: EPR programs may be administered, at least in part, by entities whose leadership overlaps with dominant market players. That dynamic will likely influence how companies evaluate participation agreements, dispute‑resolution provisions, and audit rights going forward.

Third, restrictions on cost disclosure remain a live—and practical—issue. Colorado’s prohibition on point‑of‑sale EPR disclosures mirrors provisions in other states, but ILMA’s First Amendment claim puts renewed attention to how producers communicate price changes to customers. Even absent judicial relief, companies should expect continued tension between EPR cost pass-through strategies and statutory limits on consumer‑facing disclosures, particularly for national brands trying to maintain consistent pricing narratives across states.

Finally, the case reinforces that EPR compliance strategies cannot be static. As seen previously in Oregon and now in Colorado, early assumptions about program design, fee stability, and administrative structure can change as implementation unfolds. Companies with multistate footprints may need to revisit participation agreements, reassess whether industry stewardship groups align with their commercial interests, and monitor litigation closely—not because it will eliminate EPR obligations, but because it may reshape how those obligations are administered.

In short, the Colorado complaint reflects a broader shift in the EPR landscape: from debates over whether these laws are valid to disputes over who controls them, how costs are imposed, and how much visibility producers have into systems they are required to fund.

Please reach out to Betsy Stone or Nick Johnson with questions you may have about EPR laws and how they apply to your business.