ILMA Files Lawsuit to Protect Independent Lubricant Manufacturers
ILMA filed a lawsuit today in Colorado state court challenging how the state is implementing its packaging recycling law, known as the Producer Responsibility Program for Statewide Recycling Act. This action reflects ILMA’s commitment to standing up for independent lubricant manufacturers in the face of regulatory overreach.
The Association has heard members loud and clear that packaging extended producer responsibility (EPR) laws like Colorado’s are an existential threat to the industry, with fees often exceeding profit margins. In Colorado, EPR fees are 56 cents per gallon for all packaged lubricants sold in the state, whether in plastic bottles or bag-in-a-box. This lawsuit is the first major step in a wholistic strategy to address the flaws in EPR legislation, which is rapidly creating a costly patchwork of state regulations that harms small businesses. ILMA is acting now so members do not have to face this threat alone.
EPR laws shift the cost of recycling packaging materials from local governments to companies that produce and sell those materials. “ILMA and its members support effective recycling programs and environmental stewardship,” emphasized ILMA CEO Holly Alfano. “This lawsuit seeks to ensure that Colorado’s recycling system is implemented in ways that are transparent, lawful, and fair to businesses of all sizes.”
ILMA is asking the court to declare that the way Colorado is currently implementing its recycling act is unlawful and prevent the state from enforcing the program for ILMA members under its current structure. The Association also wants the court to confirm that companies cannot be forced to participate in private recycling programs as they are currently designed.
“Without relief from the court, many companies will be required to pay potentially millions of dollars in fees to private entities without clear accountability or meaningful government oversight,” explained ILMA President Jim Carroll of Schaeffer Manufacturing.
“ILMA has chosen to act through litigation because our members deserve a strong advocate willing to take the steps necessary to protect their interests.”
The lawsuit alleges that Colorado has implemented the law in a way that violates both the law itself and basic constitutional protections. It unlawfully forces many lubricant producers to pay fees to private organizations that are not accountable to the state government or to the companies required to participate.
The state has effectively turned over key regulatory authority to two private organizations — the Lubricant Packaging Management Association (LPMA) and the Circular Action Alliance (CAA) — that are responsible for setting and collecting fees and running the recycling programs. Companies that sell covered products in Colorado must join these programs and pay fees to continue doing business in the state.
The lawsuit raises several concerns, including:
- Risk to smaller businesses: Many independent lubricant producers operate on narrow margins and may be forced to leave the Colorado market if the current system remains in place.
- Competitive concerns: One of the organizations is led by four large, multinational oil companies that compete directly with independent lubricant manufacturers.
- Mandatory contracts with private entities: Companies must sign “take-it-or-leave-it” contracts with private organizations that control the recycling programs.
- Fees that are not tied to actual recycling costs: The fees being charged have no clear connection to the real cost of operating recycling programs in Colorado.
- Lack of transparency and oversight: The private organizations setting the fees operate with limited government oversight and provide little visibility into how costs are calculated.
The lawsuit also challenges a provision of the law that prohibits companies from clearly disclosing the costs of the recycling program to customers.
ILMA is committed to fighting for independent lubricant manufacturers at every stage of this litigation and in legislative forums across the country. ILMA will continue to update members as the lawsuit and its broader advocacy on EPR legislation progresses.
