Colorado Packaging EPR Program Faces Legal Challenge from Lubricant Trade Association

In particular, the lawsuit challenges the aspect of the EPR law that requires CDPHE to designate third-party organizations to implement and manage the statewide EPR program. As with other states, Colorado’s EPR program requires the designation of a third-party nonprofit organization to act as a “Producer Responsibility Organization” (PRO) to implement and manage the statewide EPR program, including, among other things, by setting and collecting fees for different types of covered materials and notifying CDPHE of non-compliance. In Colorado, as in other states, the PRO is the Circular Action Alliance (CAA), a nonprofit corporation organized in Washington, DC. However, the Colorado law also allows producers to submit an individual program plan as an alternative to joining the statewide PRO.

In September of 2025, CDPHE also approved an individual program plan submitted by the Lubricants Packaging Management Association (LPMA), also known as Interchange 360.

LPMA’s plan focuses specifically on lubricant packaging for oil-based lubricants, grease, antifreeze, engine additives and other fluids used in transportation and mechanical applications. The plan aims to create a separate, statewide collection and recycling system for these lubricants by establishing dedicated drop-off depots, commercial pickup services and collection events (instead of curbside recycling). Aiming to achieve a 44% collection rate and 35% recycling rate by 2030, the plan funds operations through producer-paid fees with incentives tied to recyclability and recycled content. CDPHE had set implementation of LPMA’s plan to begin on March 13, 2026. ILMA filed its lawsuit in Colorado state court on March 12, 2026.

Overview of ILMA’s Claims
ILMA makes the following allegations in salient part:

• That CDPHE unlawfully approved LPMA’s individual program plan (IPP) because LPMA is not itself a “producer” under the statute. Under Colorado’s EPR law, only “a producer may submit … an individual program plan proposal” for approval. However, the LPMA is a nonprofit entity founded by five major petroleum companies (Castrol, Chevron U.S.A., ExxonMobil Oil, Shell and Valvoline) that compete directly with many ILMA members. The complaint accordingly argues that CDPHE’s approval of LPMA’s IPP effectively makes LPMA effectively a second full-fledged PRO (in addition to the CAA), even though the statute contemplated a single PRO in the early years of the statewide program.
• That the $0.56 per-gallon flat fee charged to producers under LPMA’s plan is unlawful because it does not bear any rational relationship to actual recycling costs of covered lubricant packaging. ILMA’s complaint notes that per Colorado’s EPR law, the PRO’s funding mechanism must not “exceed the direct and indirect costs of implementing the program.” ILMA notes that LPMA’s plan levies a $0.14 per-gallon “planning fee” towards implementation fees in the future as Colorado’s EPR program matures, arguing that the producers are “required to blindly pay this planning fee without any guarantee of ever receiving any kind of credit or other service in exchange.”
• That the statewide CAA program plan, which covers non-lubricant packaging such as paper, corrugated cardboard and paperboard boxes, violates the Act by failing to account for Colorado-specific conditions. ILMA notes that CAA’s Colorado dues are based on a national or “harmonized” methodology rather than on Colorado-specific recycling costs, pointing to the fact that some fees for common material categories in Colorado are allegedly the same as the fees charged in Oregon. ILMA alleges that CAA’s reliance on a national methodology similarly violates the Colorado EPR law’s requirement that funding mechanisms must not exceed the direct and indirect costs necessary to establish a Colorado recycling program.
• That CDPHE’s approval of LPMA and CAA’s plans violates the constitutional principles of due process and non-delegation. These allegations are similar to those made by the National Association of Wholesalers-Distributors (NAW) (and other intervenors) in the federal suit challenging Oregon’s EPR program. The due process violations are alleged to occur by requiring businesses to sign “take-it-or-leave-it” contracts with LPMA or CAA, pay fees determined by these private entities, and accept limited visibility into how those fees are set, all without meaningful recourse to challenge the terms. ILMA also alleges that CAA’s plan violates producers’ due process rights by depriving producers of the ability to seek judicial review because the plan requires that disputes be resolved through binding confidential arbitration. Meanwhile, the very vesting of such authorities in a private entity is alleged to constitute a violation of the non-delegation principle.
• That the CDPHE, through approval of the LPMA and CAA plans, violated the First Amendment right to free speech because of plan provisions prohibiting producers from disclosing the costs of the state EPR program to consumers. ILMA only asks the Court to invalidate the prohibition on cost disclosure as unconstitutional.

Aside from seeking a judicial declaration that the Colorado EPR program is unlawful based on the above grounds, the ILMA complaint seeks a preliminary injunction against the application and enforcement of the Act against itself and its members, as well as the return of fees paid to the CAA and LPMA (in addition to awards of attorneys’ fees and other relief).

Looking Ahead
ILMA’s lawsuit fits into an emerging pattern of industry groups challenging state EPR laws. At a practical level, ILMA’s lawsuit tests whether the State can require producers to participate in programs administered by private organizations while giving those organizations substantial control over fees, participation agreements and program design. Notably, the constitutional allegations regarding due process and the non-delegation doctrine survived a motion for dismissal in the NAW’s federal lawsuit against the state of Oregon and formed the basis of successful plea for a preliminary injunction in that case. It will be interesting to see whether NAW’s preliminary successes in that litigation influence the outcome of the ILMA’s challenge. What is more, as is true of the NAW litigation, successful constitutional arguments in this litigation could set the precedent for successful challenges to other state EPR programs and, what is more, influence the shape of any federal EPR bill, such as the one being drafted by Rep. Paul Tonko of New York.

For these reasons, regulated companies may wish to monitor the ILMA lawsuit. Pillsbury’s chemical regulation practice has been deeply involved in all aspects of EPR law, including regulatory and legislative monitoring, litigation counseling, enforcement defense, and public policy and advocacy. For more information, please contact the authors.