By P.J. Heller

The mulch and soil industry could be facing huge fees – totaling in the millions of dollars – as states ramp up efforts to implement Extended Producer Responsibility laws which shift recycling costs away from local governments and taxpayers to the actual producers.
Seven states – Oregon, Colorado, California, Maine, Minnesota, Maryland and Washington – have enacted comprehensive packaging EPR laws. More than a dozen other states are reported to be considering similar legislation.
Product packaging is the latest area to come under EPR.
“It will definitely affect the [mulch and soil] industry,” says Robert C. LaGasse, executive director of the Mulch & Soil Council. “We estimate it will probably be an 8- or 9-figure penalty to the industry.”
EPR packaging laws are designed to improve the collection, sorting and recycling infrastructure for packaging waste.
“Each year, Americans trash more than 80 million tons of packaging – primarily made from plastic, paper, glass, and metal, and less than 50 percent of it is recycled,” the Product Stewardship Institute says. “When it comes to plastic, the rate is less than 9 percent.”
Other products previously addressed by EPR laws include electronics, mercury thermostats, batteries, pharmaceuticals, paint, fluorescent lighting and mattresses, according to the National Council of State Legislators.
California officials say EPR programs can “transition the state towards a circular economy by placing the responsibility for reducing waste, maximizing reuse and recycling, or other end-of-life management of products on producers.”
Mulch and soil producers who sell bagged products, typically in linear low-density polyethylene bags, could fall under new EPR packaging laws.
While those bags are tough and can resist punctures and heat and support the weight of the soil or mulch, they are difficult to reprocess.
“In many cases, recyclers won't recycle them because of the contamination of the soil or mulch that’s still in the package that clogs up their reprocessing systems,” LaGasse notes. “A lot of recyclers won't collect our bags.”
Mulch and soil producers have little choice but to use the polyethylene bags.
“There’s no other practical solution,” LaGasse says. “We can't use paper. No technology is currently available that would allow us to package it in a more recyclable manner.”
Mulch and soil producers face a patchwork of state laws under EPR.
“With no federal EPR legislation on the horizon, states will likely continue to take matters into their own hands, resulting in a patchwork of laws regulating different products and imposing a disjointed regulatory scheme,” says the Godfrey & Kahn law firm in Wisconsin.
“EPR law is still in its early stages, and state programs differ significantly,” notes the Holland and Knight law firm. “Even small differences among state programs, including the way in which each state defines a ‘producer,’ can create meaningful practical consequences for regulated businesses.”
Under EPR, producers must join a Producer Responsibility Organization (PRO), such as the Circular Action Alliance, report packaging data, and pay fees to fund recycling infrastructure. Depending on the state, penalties up to $100,000 can be levied on companies that fail to sign up and participate; companies may also face restrictions or be banned from selling products in a state.
The Circular Action Alliance says it is the only organization approved to implement EPR laws for paper and packaging in the U.S., and is operating as the single PRO in California, Colorado, Maryland, Minnesota, Oregon and Washington. Oregon’s law allows for multiple PROs.
Fees collected are often calculated based on the weight and recyclability of materials, providing a financial incentive to reduce, reuse, or use sustainable packaging.
Meantime, a federal district court judge in Oregon issued a preliminary injunction in February pausing enforcement of the law there after a national trade association filed suit claiming that the program was unconstitutional. The injunction applied only to the National Association of Wholesaler-Distributors and its members. A trial was set for this summer.
It was not immediately clear what impact the ruling would have on other states.
“If the court’s decision stands, it could set a roadmap for future challenges of other EPR programs nationwide,” according to the law firm ArentFox Schiff.
“This decision does not directly impact producer obligations under any of these other statewide EPR programs, but the constitutional challenges implicating the Dormant Commerce and Due Process clauses could carry negative implications for these other programs if they are eventually successful,” it says.
“In addition to paying close attention to this case, as the trial is set to begin later this summer, it will be crucial to keep a close eye on whether similar challenges crop up in these other states seeking to acquire similar short-term relief at a minimum. Likewise, states currently developing EPR laws may choose to make changes to their schemes to protect themselves from similar challenges,” it adds.
If soil and mulch producers have to pay EPR fees, costs at the retail level would likely increase.
“Absolutely,” LaGasse says about a retail price hike.
“What choice would we have?” he asks. “Just the administrative burden of doing different things in different states . . . and tracking all of those things including how much plastic and of what type you're sending to each state. You’re going to have to hire staff people just to keep track of it.”
Some states exempt small businesses such as those who have under $1 million in revenue or generate less than a ton of packaging. Exemptions are also granted for specialized packaging for such things as drugs and medical devices and for items covered by existing state container deposit laws.
LaGasse argues that members of his organization who sell bagged products should be exempt from any fees since they are already keeping large quantities of material out of landfills. Mulch and soil producers who sell in bulk are not subject to EPR fees, he adds.
“They're penalizing us for doing exactly what they’re trying to do,” he says. “If the object is to keep things out of the landfill or recycle them, we’re keeping a huge quantity out of the landfill. All the tree trimming, all of the wood cuttings, all these wood shavings, all these manures that would normally go into the landfill, they're coming to us, and we’re processing them and putting them back into useful consumer products.”
Fighting the EPR packaging laws on a state-by-state basis could be a tough slog, LaGasse admits. He says his preference would be for federal legislation “that would set some ground rules for all these states and pre-empt some of the legislation they’re pushing out there.”
He adds that it would be a simple matter to include in such federal legislation an exemption for packagers of materials who are already diverting materials from landfills.