Some of Colorado’s packaging producers and users are challenging the escalating costs and optimistic promises of a state-mandated program that would use a business fee to fund expansion of curbside recycling to all communities.
Colorado health department officials overseeing the budding program recommended Tuesday that the legislature’s Joint Budget Committee approve a mid-level cost scenario studied for the expansion, aimed at boosting recycling and creating a “circular economy” in the state. The JBC tabled a required final approval of the plan until more members could ask questions.
Critics say the cost of the middle of three alternatives studied shot up nearly 20% in just over a month of study revisions, requiring a total of $310 million in business fees a year in 2035. That early March draft assessment was up from a late January estimate of $260 million for the middle program.
Those critics, who say consumers will inevitably pay for the fees through higher prices, also say longtime backers of a recycling expansion for Colorado are exaggerating how much waste will be diverted from landfills. The Colorado Consumer Coalition says so many packaging materials and companies have been exempted from the new “producer responsibility” program that Colorado’s abysmal 16% overall recycling rate will only bump up a few points.
“Their numbers are out of whack, and they know that they’re out of whack,” said Jaime Gardner, executive director of the coalition, which represents businesses, trade groups and others questioning how the 2022 law is being carried out. “And the coalition is very concerned about the fact that they increased those numbers by $50 million last week with no public comment period.”
Packaging producers who would have to pay the new recycling-promotion fees have been raising questions for months about rising costs for the statewide program and lack of transparency in how it will be carried out.
The March updated “draft needs assessment” of the program also increased the estimated cost of the most robust recycling program by more than 17%, or $50 million, only a few weeks after the initial draft assessment was released to the public.
The January initial draft had said such a Cadillac curbside system in most Colorado communities would require $290 million a year in fees by 2035 to operate properly. The updated draft released March 4 showed the cost of that high-end “scenario,” the most extensive of three studied, would cost $340 million a year in 2035.
Colorado has some of the lowest waste diversion rates in the country, sometimes half the rate of greener states. Improving those numbers has been one of the main selling points of the recycling expansion. Advocates of the producer fee also say it will encourage the buildout of a recycling industrial complex in Colorado, collecting harder to recycle items like plastics and creating local businesses that will turn them into new packaging here in the state.
Colorado health department officials told the JBC that “only a quarter of the paper and packaging material that could be recycled is actually being collected for recycling.”
Many packaging-heavy businesses have sought various exemptions from being covered by the fees and collection rules, critics said. The fees and the expanded curbside pickup may indeed bump up recycling rates of the packaging now covered. Supporters say the reuse rates in those particular materials categories could double.
State officials told the JBC that the initial scope of the program, expected to start in 2025, will not include universal recycling of flexible plastic packaging such as bags that online goods are shipped in. Recycling centers don’t yet have equipment to handle that kind of packaging, and there is a very limited market for making new materials from those forms of plastic, state solid waste specialist Wolf Kray said.
Calls for more transparency
It’s not clear what pushed up the program’s cost estimate scenarios, or who has the power to make decisions about the fees or demand changes to the plans for the producer responsibility program, said Gardner, the consumer council director.
The 2022 legislation authorized power over the fees and the expanded recycling programs to an independent nonprofit, and the nonprofit Circular Action Alliance, which operates in five states, was chosen. State officials appointed members of the public and industry representatives to an advisory board, which holds public meetings.
But the deliberations of the Alliance are not public, Gardner said. The alliance is listed as a 501(c)(3) nonprofit, but was founded by some of the most profitable packaging distributors in the world, including Amazon, Clorox, Colgate Palmolive and Coca Cola. No one from the Alliance returned Sun messages asking for comment about the draft assessment.
In written answers to questions from The Colorado Sun, the Colorado Department of Public Health and Environment said costs listed in the draft assessment went up because of changes made after public comments sought more drop-off sites for hard-to-recycle items, more composting access and other needs.
State health officials emphasized to the JBC that none of the fees charged are for consumers or households — only the producers and handlers of the packaging, such as Pepsi or Coors or other consumer goods companies, pay the fees. If looked at per household served, the midcase scenario for 2035 will cost about $140 for each dwelling, the draft assessment says.
Critics of the plans have noted that households will likely see their costs go up, as retailers pass on the cost of the company recycling fees to consumers.
The fees will be distributed in multiple ways: Some will go to fund recycling efforts already underway in larger Front Range communities, while others will help smaller or rural communities expand into curbside systems or hire recycling companies to set up programs.
In asking the JBC to approve one of the scenarios, Wolf said, “this program has the potential to move the needle from Colorado’s currently stagnant recycling. Under the program 500,000 additional households will receive curbside recycling,” and many thousands more in rural areas will also receive new access to recycling.
The consumer coalition says its members also support efforts to greatly improve Colorado’s poor recycling rates, but that the state is rushing to create a complex, universal recycling program over a huge territory in less than two years. They want the health department and the JBC to challenge how the fee projections were reached.
“Our cost estimates from the coalition side are that this is going to affect about 1,500 businesses,” Gardner said. Even the cheaper scenarios studied “could assess a six-figure fee on each of those businesses every year,” she said. “That’s a lot of money.”
The producer responsibility legislation exempts any business with less than $5 million in revenue, Gardner added. “In the grand scheme of things, if your business makes $5 million a year and you have to pay a six-figure assessment, that could be your profit.”