On July 30, the National Association of Wholesaler-Distributors (NAW) filed a federal lawsuit challenging Colorado’s Producer Responsibility Program for Statewide Recycling Act. The complaint seeks to have the law declared unconstitutional.

The federal action is separate from ILMA’s pending state court challenge in Denver. ILMA’s lawsuit challenges Colorado’s implementation of the extended producer responsibility (EPR) program under state law. NAW’s new case adds a broad federal constitutional challenge to the same regulatory structure.

Colorado’s EPR law requires companies deemed “producers” of covered packaging and paper products to register with and pay dues to Circular Action Alliance (CAA), the private producer responsibility organization selected by CDPHE to administer the program. Lubricant packaging is handled by the Lubricants Packaging Management Association (LPMA).

NAW alleges that the EPR law imposes substantial fees, reporting obligations, recordkeeping requirements and supply chain tracking costs on distributors and other businesses operating across state lines. NAW asserts five constitutional claims in its complaint.

1. NAW alleges that Colorado unlawfully delegated regulatory authority to CAA, a private organization governed by representatives of major national corporations that may compete with regulated producers.
2. NAW contends that the EPR law imposes unconstitutional conditions by requiring producers to accept CAA’s nonnegotiable agreement, mandatory arbitration provisions and limits on judicial review as a condition of selling products in Colorado.
3. NAW alleges that the EPR program violates the Constitution’s dormant Commerce Clause by disproportionately burdening out-of-state businesses and interstate supply chains while financing recycling services for Colorado residents and exempt entities.
4. The complaint challenges the law’s prohibition on separately identifying EPR costs as a point-of-sale or invoice fee, arguing that the restriction violates producers’ First Amendment rights.
5. NAW alleges that mandatory membership in and payments to CAA compel producers to associate with and subsidize CAA’s policy advocacy.

The complaint asks the federal court to declare the act unconstitutional and permanently stop its enforcement against NAW members.

The NAW action reinforces concerns ILMA has raised in its complaint regarding the costs, governance, accountability and competitive consequences of Colorado’s EPR program. ILMA will continue pursuing its state court claims while monitoring the federal case and coordinating with NAW where appropriate.