The American Chemistry Council this year voluntarily withdrew a lawsuit in Colorado regarding mass balance allocation methods in the state’s extended producer responsibility for packaging program plan. But the wider debate about what counts as recycled content is far from at rest.
The Colorado Department of Public Health and Environment, the defendant in the lawsuit, “will have further discussions this summer” about the excluded methodologies, according to an emailed statement, and in the interim the plan will continue being implemented.
Behind the legal challenge
Andrea Albersheim, ACC’s director of plastics sustainability policy, said first and foremost, “we never want to have to litigate an issue.” The lawsuit was more of a “just in case” action, she said, because ultimately ACC wanted to see CDPHE find a solution with the state’s producer responsibility organization, Circular Action Alliance.
The case started in November 2025, when ACC filed a complaint against CDPHE after the agency recommended that mass balance free allocation and fuel-excluded credit methods not be used when measuring postconsumer recycled content rates in the state’s packaging EPR program plan.
The complaint challenged “the removal of sensible allocation methodologies from industry recycling plans” and said it was an overreach of CDPHE’s regulatory authority.
“This plan has run headlong into the CDPHE’s inexplicable hostility to tertiary recycling (also known as advanced or chemical recycling), a recycling technique that expands what goods can be recycled compared to traditional recycling,” the complaint added.
In an Oct. 20 letter preceding the lawsuit, CDPHE wrote: “the Department believes that it is not appropriate to use mass balance credit methods when calculating PCR content for consumer-facing covered materials.” It asked for that language to be removed from CAA’s EPR program plan. The decision came after months of debate within Colorado’s producer responsibility advisory board.
ACC asked for the decision to be reversed, noting that the law doesn’t “indicate any preference for one type of recycling over another, and it is contrary to law for the Department to read such a requirement into the statute.”
Ultimately, the program plan allows for a proportional mass balance credit method, and CAA added a process to review alternative mass balance credit methods.
CDPHE said CAA will review third-party certification for alternative mass balance credit methods “to ensure that only those that have adequate methods to guarantee that the allocation method excludes use as fuel” are accepted. To add a method, CAA would have to submit a program plan amendment for the department to approve.
On Feb. 9, ACC filed to voluntarily dismiss the suit without prejudice, meaning that it can re-file on the same topic later if it so chooses.
ACC spoke with CDPHE about this lawsuit dismissal and potential to re-file, Albersheim said, noting the solution in the program plan is “fine with us.”
“It’s not ideal,” she said. “It’s not written the way we would write it, but we do believe there is a pathway.”
ACC indicated it planned to monitor the advisory board’s work while deciding about any further legal actions, said Colorado Assistant Attorney General Rebecca Fischer during a Feb. 11 advisory board meeting.
CDPHE said it plans “to begin providing additional information to the Advisory Board on this process over the summer so they are more prepared to address the matter if or when the alliance seeks a plan amendment.”
The balance of the debate
Mass balance is one methodology to track recycled content. With plastics, this particularly applies to chemical recycling processes.
Supporters point to the ability for mass balance to cover the varied outputs of chemical recycling, which include oils and fuels. Conversely, critics argue that the methodology is highly susceptible to greenwashing, especially under the free allocation accounting method. That method allows companies to “assign” recycled credit to different products based on the amount of recycled material present overall, as opposed to what’s physically put in a specific product.
The U.S. Plastics Pact published a 2025 position paper on chemical recycling that noted mass balance calculations should use only one of four methods.
Types of allocation methods
Proportional: Based on the assumption that recycled units flow the same way as non-recycled units and have the same distribution among outputs. Does not allow for flexibility in the credit allocation process.
Non-proportional (free allocation): Allows for credits to be freely assigned to any product. Offers the highest degree of freedom and flexibility, but there are concerns about consumer understanding and trust.
Non-proportional – fuel-exempt: Units directed to fuel cannot be counted to other products; recycled units are lost from the system.
Non-proportional - polymers only: Only outputs directly linked to the production of polymers can be freely allocated.
Anja Brandon, director of plastics policy at the Ocean Conservancy, said it’s important to look at the big picture and ask what the purpose of the accounting method is.
“Why do we need this in the first place? Something we often forget is recycling is also a business,” and right now it’s a business in trouble, she said.
Selling a product at a premium because it contains recycled content is an “economic counter to the direct subsidization of virgin fossil fuel-based plastic,” and can help recycling succeed, she added.
While the Ocean Conservancy is still deciding its position on specific types of mass balance accounting, Brandon said she could imagine a world where polymer-to-polymer systems use mass balance allocation, but “that only works if we’re doing all the other pieces that are necessary.”
“That’s not solving this problem if we can’t even sell mechanically recycled PET bales,” she said, referencing current market crashes. “So how do we put this all together to get to a whole system that delivers on reducing virgin plastic and ending plastic pollution? Thinking about it through that lens of free allocation, that just doesn't cut it.”
Albersheim said that Colorado’s EPR bill as written is “pretty clear – it's open to all technology.”
ACC’s membership includes companies involved in chemical recycling projects, including Dow, Eastman and LyondellBasell.
“We would never put a lawsuit as the first option, or even the 10th option, but we do need to defend our members’ priorities and the billions of dollars invested in these technologies,” Albersheim said. “We support EPR. We want these EPR programs to be successful. We want to make it feasible and workable so we all come to better solutions.”
A question that’s bigger than plastic
Colorado’s debate over mass balance allocation is a microcosm of a larger discussion playing out in multiple other states and at the federal level.
Brandon said she doesn’t anticipate that the exact same lawsuit will be filed in other states due to differences in EPR programs: “The ability for it to translate across state boundaries is going to be a little bit limited.”
Oftentimes, groups opposed to mass balance are focused mainly on plastics, Albersheim said. But the concept has been used for years for glass, paper and many agricultural processes as well.
Albersheim pointed to a bill in California, AB 2253, that would expand recycled content claim requirements from just plastic food containers to all plastic products, and would also redefine postconsumer material to exclude “credit-based mass balance accounting, including free allocation, ‘book-and-claim’ accounting, or similar approaches that are not based on the actual physical recycled content in the product.”
Changing the definition of postconsumer material would not just affect plastics, Albersheim emphasized, but also paper, textiles and glass. That could cause serious complications with SB 707, California’s textile EPR law, she added, because a textile EPR law “needs to be technology-neutral or you will never be able to recycle a polyester shirt.”
While other packaging materials, such as glass, do use free allocation methods, Brandon said the key is that only glass is coming out of the furnace as an end product.
At the federal level, the industry-backed Recycled Materials Attribution Act was introduced this year in the U.S. House of Representatives. It would set federal standards for recycling and recycled content marketing claims. However, environmental advocacy groups such as the Ocean Conservancy warned that the bill could advance mass balance accounting in chemical recycling.
Brandon said her concern is that legislation defines “third-party certified” broadly, and there is very little federal agency oversight. “So it’s basically handing the keys to the castle to industry to self-regulate these types of claims through these third-party bodies, and I don’t think that does a service to our existing recycling system who cannot benefit from this special accounting,” she said.
The U.S. isn’t alone in its challenges here. A similar debate is playing out in Europe, where the European Commission recently shared how it plans to approach mass balance under the Single-Use Plastics Directive. It plans to use a fuel-use excluded mass balance approach, with free allocation allowed for the rest of the material, with some additional conditions.
While those rules only technically apply to recycled PET under SUPD, the Commission has said previously that it intends to use the same framework across European Union recycling legislation.
Brandon said the United States is not at the same point as the EU, and that individual U.S. states “are quite simply defining recycling quite differently, even from each other.”
The EU is starting with the bare minimum, Brandon added, and she thinks the U.S. will set a higher threshold.
