The greatest accomplishment of the proposed extended producer responsibility program, HB22-1355, being considered in the Colorado Senate this week will be the flurry of complicated lawsuits sure to follow its passage. Even if the state can defend the law successfully, Colorado will be saddled with a convoluted program riddled with exemptions, an unclear structure and no coherent direction for its implementation.

Dubbed the “Producer Responsibility Program for Recycling,” HB 1355 is a purposely complicated scheme designed to try to weave its way around several constitutional hurdles. The result is a mess: the state, through the Colorado Department of Public Health and Environment (CDPHE), would force specific businesses which sell packaged goods direct to consumers to form an independent third-party nonprofit organization – the Producer Responsibility Organization (“PRO”). The targeted businesses would be required to pay a tax/fee/dues to the PRO to develop and implement a statewide recycling program that may or may not work with our locally-controlled waste management system. The same model has already been rejected in New York and Maryland this year, and it is obviously bad policy for Colorado as well.

When introduced, the legal issues presented by this bill were so glaring and obvious that a flurry of amendments had to be offered just to attempt to bring it within viewing distance of constitutionality. Unfortunately, the amendments offered have done very little to make the legislation legally defensible.

Among other lingering legal deficiencies, the bill still violates Colorado’s non-delegation doctrine. The state’s legislative branch, the General Assembly, is not allowed to delegate its legislative functions, authority or oversight to a third party. Nor is the state permitted to delegate its taxing authority. Yet that is exactly what this bill does, by anointing a non-governmental organization – the PRO – with an extraordinary discretion to establish and collect taxes (disguised as “dues”) for the purpose of running a statewide program.

Through this bill, the Legislature is essentially telling an outside party to develop and run a program for the state. The state retains fining authority, of course, along with other punitive abilities – including the imposition of restrictions on business licenses if the state deems a business as non-compliant.

Were this structured as a voluntary effort, there would be no issue of the state delegating its authority. However, with a program and structure that mandates participation, enforced by the power of state law with associated penalties, that violation is clear.

Proponents have tried to paper over the bill’s obvious, attempted end-run around both TABOR and Proposition 117 by labeling the money extracted from businesses as “dues” rather than “taxes” or even “fees.” The fact is, they are monies being exacted under the force of law to pay for a program with a public benefit under threat of fines and penalties for noncompliance, making it difficult to argue with a straight face that it is not a tax. And the cost will certainly be passed along to us – the consumers.

While an argument could be made that the required payment is a fee, in that it is paying for a specified service, doing so would make the PRO an enterprise – subject, under the direction of Proposition 117 passed last year, to a vote of the people, since the program is expected to far exceed the $100 million threshold set by that law. None of the proffered amendments even pretend to address that issue.

The proposed amendments also do next to nothing to deal with issues concerning violations of freedom of association (forced membership in the PRO) and anti-trust law. Competing businesses will be forced to collude with one another to set “dues” for a public program, which they will jointly run under the distant but threatening eye of the CDPHE, to which they will be expected to report on one another.

It is not especially surprising that HB1355 is planted with so many legal mines. It is structured so broadly that it is impossible to even know how it is going to work, let alone if it is all legal.

Among the many unanswered logistical questions are: Who will be responsible for letting businesses know they are not included among the many exemptions and, therefore, need to participate? How many Colorado breweries or other businesses will only discover they fall under the shadow of the new program after they are slapped with a fine? Who will be communicating that fine?

HB 1355 exposes the state to a very real risk of expensive lawsuits, which will require especially circumlocutive legal maneuvering to overcome. The Senate ought to reject the bill and spare the state the ordeal of gambling millions of taxpayer dollars to fight the inevitable legal challenges, a successful defense against which will only result in an expensive and unworkable new third-party bureaucracy that doesn’t actually fix anything.

John Zakhem is a partner in the Denver office of Jackson Kelly PLLC, practicing in commercial and constitutional litigation.