As Colorado initiates the rollout of a statewide recycling program, business advocates are warning lawmakers that companies are facing hefty fees they may not be aware of and implementing the initiative may not be realistic heading into 2026, not to mention its price tag amounting to hundreds of millions of dollars.  

House Bill 22-1355, signed into law in June 2022, tasked the Colorado Department of Public Health and Environment with selecting a nonprofit organization to oversee the recycling initiative, funded through annual dues from producers of packaging materials and paper products.

Producers are not required to pay those dues until 2026, and their advocates are uncertain about the program’s funding sources until that time.

The goal of the program is to increase the state’s recycling rate, which, at an estimated 22% to 28%, falls below the national average of 34%. Similar initiatives in various countries and states encompass a wide range of materials, spanning from electronic waste to mattresses.

As a provision of the bill, a needs assessment was conducted and presented to the Joint Budget Committee in January. The assessment outlined three scenarios with varying recycling rates: high, medium, and low.

The JBC opted for the “medium” scenario, which is projected to increase recycling rates to roughly 40% by 2030 and over 50% by 2035. The scenario is projected to cost over $310 million. However, a recent state revision increased projected costs by another $50 million.

The Colorado Consumer Coalition estimates that around 1,500 businesses will be financially responsible for the program, with exemptions granted to companies with yearly revenues under $5 million. If the needs assessment’s calculations are correct, each business could be facing a yearly cost of roughly $200,000 to support the program.

However, some of these businesses aren’t even aware of their impending financial obligations despite being expected to register with the state by July 1, the coalition’s Jaime Gardner told Colorado Politics.

Gardner said the state’s timeline for the needs assessment was “rushed,” asserting that Circular Action Alliance (CAA), the organization responsible for the assessment and appointed to manage the recycling program, only consulted with about half of Colorado’s 336 municipal waste districts.

“The timeline of the needs assessment release was short because it was mandated by the bill,” she said. “Because it was short, it probably isn’t as thorough as it could have been.”

Gardner also said the recycling rates projected in the assessment’s three scenarios are incorrect because they’re only accounting for the recycling of packaging and paper products.

When the needs assessment was published on Jan. 30, the bill stipulated a 30-day public comment period. However, Gardner said that period was shortened and CAA’s director was unable to join the meeting due to technical issues.

Gardner voiced frustration over what she described as the lack of transparency by CAA, saying its board meetings are not open to the public. She said producers are confused as to who is covering the costs of setting up and financing the program for the next two years.

“There are all of these costs happening currently, and it is very unclear who is paying for all of that right now,” she said, adding that there is no line item in the state budget that explains who is covering program costs for this year and the next.

Gardner maintained that, while costs are a significant concern, perhaps an even more pressing issue is the uncertainty surrounding whether the program will actually significantly increase recycling rates.

Gardner pointed to British Columbia, Canada, which implemented a similar paper recycling program in 2014. According to Gardner, this program only increased recycling rates in the province by 1%.

Gardner said all producers recognize the importance of recycling, and many of them already have their own sustainability initiatives in place. She argued these initiatives could be negatively affected by having to adhere to a specific program in just one state.

She said while producer responsibility programs make sense for products like mattresses and paint, the latter of which has been in effect in Colorado since 2014, it gets more complicated with products that consumers purchase on a frequent basis, such as paper and packaging.

“You’re talking about a hefty tax on businesses,” she said. “Logically, those businesses will pass along that increased cost to their consumers, and this is at a time when inflation is rising on everything. The logical common sense thing would be to send it back to the legislature for a refresh and, quite frankly, a more thorough needs assessment that really takes all of these things into consideration.”

In response to inquiries from Colorado Politics, the health department said CAA has secured agreements with several organizations, known as Founding Members, to cover the initial expenses related to launching the program, such as the needs assessment, project planning, communications, and legal affairs, until 2026.

Regarding Colorado Consumer Coalition’s estimate that 1,500 businesses would be shouldering over $300 million in costs, the department said it would not have a count of participating producers in the program until the July registration deadline in July.

“It is important to note that small businesses, defined as businesses that generate under $5.32 million in annual revenue adjusted annually by the Consumer Price Index, are exempt from the requirements of the Producer Responsibility Program For Recycling Act (HB22-1355),” the department said. “Additionally, the formula for producer dues, which will be established in the program plan, will be based on the quantity and types of materials produced.”

The agency also said that producers may lower their dues by reducing the amount of materials they use in packaging, and by manufacturing packaging that is “more collectible, sortable, and recyclable.”

The agency added that producers have the option of developing an individual program plan to provide recycling services of their covered materials, as an alternative to paying dues and participating under the appointed “Producer Responsibility Organization.”

The agency said individual program plans must address specific requirements established under the law and its regulations. Notably, those plans will require a review and recommendation of the producer responsibility advisory board, as well as department approval.

If a business chooses not to participate in the statewide program, the agency clarified that they have the option to develop their own program, which must be approved by the department, but that waste hauling and recycling service providers that opt out would not receive reimbursement from Circular Action Alliance.

Editor’s note: An earlier version of this story had the incorrect named of the organization advocating for companies. The correct name is Colorado Consumer Coalition.