Vermont's Compost Clash: How Depackaging Divided the Waste World
A comprehensive look at how state policy changes created conflict in Vermont’s composting industry
Vermont has been a national leader in diverting food waste from landfills. Since 2012, state law has required the separation of food scraps for composting or other beneficial uses. But a 2020 policy decision by state environmental regulators sparked an ongoing conflict that has pitted small-scale composters against large waste management companies—and forced Vermont to reconsider its approach to handling packaged food waste.
At the center of this dispute is a technology called “depackaging,” which uses industrial machines to separate food from its packaging. While supporters say it captures more food waste, critics argue it contaminates Vermont’s compost with plastics and harmful chemicals.
What Is Depackaging?
Depackaging facilities use industrial machinery to process packaged food waste—think expired yogurt containers, packaged sandwiches, or canned goods—by mechanically separating the food from its packaging. These machines can process up to 20 tons of material per hour, creating a slurry that is typically sent to anaerobic digestion facilities, which break down organic matter to produce biogas and fertilizer.
Companies like Agri-Cycle and Casella Waste Systems operate these facilities in Vermont. Casella’s Williston facility, which opened in 2021, processes approximately 10,000 tons of material annually.
The Timeline: How We Got Here
2012: The Universal Recycling Law
In 2012, Vermont passed Act 148, the Universal Recycling Law, which mandated a phased ban on disposing of food scraps in landfills. The law defined acceptable “food residuals” as materials that are “source separated and uncontaminated”—meaning food waste separated from packaging and other materials at the point it’s thrown away.
This definition was intentional. It created a clean stream of organic material suitable for composting and aligned with Vermont’s Food Recovery Hierarchy, which prioritizes high-value uses for food waste.
2020: The Policy Shift
As the law’s full implementation approached in July 2020, state environmental officials issued new guidance that allowed businesses to mix clean food waste with packaged food waste and send it all through depackaging machines together. This marked a significant departure from the 2012 law’s emphasis on source separation.
According to the state, this change would help capture more of the food waste “trapped in packaging” that was still being sent to landfills.
2022: The Legislative Correction
The 2020 policy proved immediately unpopular with composters, who argued it violated the spirit of Act 148 and risked contaminating agricultural soils with microplastics and PFAS (harmful “forever chemicals” used in food packaging).
In response, the Vermont Legislature passed Act 170 in June 2022, which:
Placed a moratorium on certifying new depackaging facilities
Required state officials to convene stakeholders to develop new recommendations
Mandated a scientific study on microplastics and PFAS in food waste and packaging, with results due in January 2024
2025: New Draft Rules
In July 2025, Vermont environmental officials released new draft regulations that would prohibit the mixing of source-separated clean food waste with packaged food waste. The rules explicitly state that depackaging facilities “shall not accept source separated food residuals that are commingled with packaged food”.
State officials said the new rules take into account both the stakeholder group recommendations and the mandated scientific report on contamination risks.
The Impact on Vermont’s Composters
The 2020 policy change had immediate market consequences for Vermont’s composting businesses, which rely on clean, source-separated food waste.
Tom Gilbert of Black Dirt Farm in Hinesburg told Waste Dive he lost $100,000 in annual revenue when grocery stores—previously his most important customers—switched to depackaging services. “It’s breaking me,” Gilbert said.
Natasha Duarte of the Composting Association of Vermont confirmed that many composters lost key contracts and some delayed or cancelled expansion plans.
The conflict intensified when Agri-Cycle, an out-of-state company, entered Vermont in 2018 and began taking contracts from local composters. Casella Waste Systems, a Vermont-based company with over $1 billion in annual revenue, further expanded the depackaging market when it opened its Williston facility.
The Contamination Question
One key incident illustrates the complexity of this issue: In January 2022, the Chittenden Solid Waste District, which operates the Green Mountain Compost facility, banned all compostable foodware and packaging from its composting stream.
The facility explained that even “certified, legitimately ‘compostable’ products do not always break down adequately” in their operation. Additionally, these products invite “look-alike” plastics that contaminate the final compost, and some contain PFAS chemicals used for moisture and grease resistance.
This ban forced the University of Vermont to redesign waste sorting spaces on campus and exchange existing compostable packaging.
What Stakeholders Say
A stakeholder group convened under Act 170 included representatives from composters, depackagers, grocery stores, and state agencies. Their positions reveal the fundamental tensions in this debate:
Supporting the Ban on Mixing:
Local composters and the Composting Association of Vermont argued that mixing streams violates the 2012 law and contaminates agricultural soils with microplastics and PFAS
Ben & Jerry’s and the Vermont Agency of Agriculture argued that mixing “contaminates the entire stream and prevents maximum benefit”
A majority of the stakeholder group ultimately supported language prohibiting the mixing of clean and packaged organics
Opposing the Ban:
Casella and Vanguard Renewables (which operates anaerobic digesters) argued that a “full-blown system” is needed to “manage organics at scale”
They noted that “source separation does not guarantee that the organics stream is free of contaminants”—a point validated by the Chittenden facility’s contamination problems
The Vermont Retail & Grocers Association argued that source separation creates significant logistical and labor burdens for businesses
Michael Casella of Casella Waste Systems told Waste Dive, “It’s great to have little niche players, but it’s sometimes difficult to keep up with the material.”
The Business Context
The conflict in Vermont reflects broader national trends in waste management. Agri-Cycle was acquired in August 2025 by Closed Loop Partners, a private equity firm, as part of a “buy-and-build investment strategy” to scale organics collection infrastructure nationally.
The acquisition reflects what one industry publication called “strong regulatory tailwinds”—many states are following Vermont’s lead in banning food waste from landfills, creating significant market opportunities for companies that can handle large volumes.
Depackaging companies argue they need consistent, high-volume feedstock to support capital-intensive anaerobic digestion facilities. These operations, unlike small-scale composting, require massive throughput to be economically viable.
The Core Tension
At its heart, this debate involves two competing environmental priorities:
Stream Purity: Maintaining clean, uncontaminated food waste that can be turned into high-quality compost for agricultural use. This approach prioritizes long-term soil health and aligns with the 2012 law’s original intent.
Diversion Volume: Capturing the maximum amount of organic material, including packaged food, to keep it out of landfills where it generates methane, a potent greenhouse gas. This approach prioritizes immediate waste diversion.
The 2025 draft rules represent Vermont’s decision, informed by the mandated scientific study, to prioritize stream purity over maximum volume—concluding that the long-term risks of contaminating agricultural soils outweigh the short-term benefits of diverting more tonnage from landfills.
Ben Gauthier, a state environmental analyst, acknowledged the complexity to Waste Dive, saying the state had “egg on our face” and that “reversing a course like that” is difficult.
Tom Gilbert of Black Dirt Farm described the 2020 policy as opening a “Pandora’s Box”: “Suddenly, these grocery stores get used to not having to separate the packaging, and it’s very hard to get them back.”
What Happens Next
The draft rules released in July 2025 are not yet final. They will go through a public comment and revision process before being formally adopted.
If implemented as drafted, the new rules would:
Prohibit depackaging facilities from accepting mixed streams of clean and packaged food waste
Require businesses to return to source separation practices, separating clean food waste from packaged items
Potentially secure a dedicated, clean stream of food waste for Vermont’s composting industry
Likely face operational and economic challenges as businesses readjust to the stricter separation requirements
State officials have indicated they plan a “soft rollout” of the new requirements, acknowledging the difficulty of re-establishing separation practices after businesses had moved away from them.
The ultimate resolution will depend on whether Vermont can successfully close what officials called a “weird door” that was opened in 2020—returning the state’s food waste management system to its original emphasis on source separation and stream purity, while managing the economic and logistical disruption this will cause for businesses that adapted to the 2020 policy.
The outcome will likely influence how other states navigate similar tensions as food waste bans become more common across the country.