Environmental court says Shoreham whiskey maker must follow Act 250 rules

SHOREHAM — A Vermont Environmental Court judge has rejected WhistlePig LLC’s longstanding assertion that it should be considered an agricultural enterprise and thereby entitled to an exemption from Act 250 regulations governing the production and storage of its rye whiskey at its farm off Quiet Valley Road in Shoreham.
The decision should be of great interest to farmers and entrepreneurs who had been intrigued about a potential precedent in the Environmental Court’s interpretation of Act 250 — a permitting process that can be costly and time consuming for developers.
At issue is a Nov. 19 decision by Environmental Court Judge Thomas S. Durkin, to whom WhistlePig appealed District 9 Environmental Commission Coordinator Geoff Green’s determination back in February of 2013 that the farm-based distillery should be subject to Act 250 review.
Durkin’s decision — which is appealable to the Vermont Supreme Court — means that WhistlePig will need to apply for local and state permission to make further, substantial changes to its already approved whiskey making operation in Shoreham.
It was on Nov. 16, 2012, that WhistlePig founder Raj Peter Bhakta filed an Act 250 application for construction of a whiskey distillery and other related improvements on the former dairy farm he owns. WhistlePig in early October feted the opening of its distillery, making the farm “the country’s first, true farm-to-bottle whiskey,” according to Bhakta. The operation is expected to produce around 15,000 to 20,000 cases of whiskey in its first year, increasing to 25,000 cases annually within the next four or five years, he said.
In the meantime, WhistlePig has been sourcing whiskey from Canada.
Farm-related construction is excluded from the definition of development in state statutes and therefore from Act 250 jurisdiction. Farming is defined as including “the on-site storage, preparation and sale of agricultural products principally produced on the farm,” according to state statutes. Neither the term “agricultural product” nor “principally produced” are defined within the statute, Durkin noted.
WhistlePig had sought a determination that the production and storage of the whiskey should be exempt from Act 250 jurisdiction because it qualified as an “agricultural product principally produced on the farm,” according to Durkin. But neighboring property owners George Gross and Barbara Wilson argued that the production and storage of whiskey should not be considered exempt from Act 250 jurisdiction because the majority of ingredients that went into the production of the whiskey were not produced on the farm, and therefore the farming exemption did not apply.
In making his decision, Durkin got some guidance from Rule 2 C (19) of Act 250 which states that “An agricultural product is ‘principally produced’ on the farm if ‘more than 50 percent’ (either by volume or weight) of the ingredients or materials contributing to (the) final agricultural product” are grown or produced on the farm.
The parties in the dispute disagreed on whether ingredients used in the production of an agricultural product — but not present in the final product — must be considered in determining whether the product is principally produced on the farm. They were also at odds on whether water should count as an ingredient contributing to the final agricultural product, and if so, whether the source of the water is relevant in determining whether it counts as an ingredient or material produced on the farm.
Durkin ruled that “all ingredients used in the production of an agricultural product must be considered in determining whether the product is principally produced on the farm and not only the ingredients remaining after the production process. Water must be counted toward the total sum of ingredients when used as an ingredient to make the product, and the water that contributes to the creation of WhistlePig’s rye whiskey may not be considered to be an ingredient grown or produced on the farm, regardless of its source.”
So Durkin affirmed Green’s decision, leaving Bhakta unsure about a further appeal at this time.
“We are still deciding whether an appeal is the best way to advance our deeply held conviction that distilling spirits from grain grown on the farm constitutes agricultural activity under both the letter and spirit of Act 250,” Bhakta said through an emailed statement. “Regardless of whether we pursue the appeal, we will not be giving up the struggle to make Vermont the friendliest state in the union to pursue sustainable, value-added agriculture, and we are working to mobilize farmers statewide to achieve this goal in Montpelier, where agricultural interests are too often ignored.
“Bottom line, we believe that making whiskey 100 percent from grain grown on our farm is a quintessential example of the type of the value-added agriculture upon which the future of this state rests,” he added.
Meanwhile, Gross and Wilson — who operate the neighboring Solar Haven Farm — were pleased with Durkin’s decision.
“We hope this decision puts to rest the issue of Act 250 jurisdiction so that both sides can move on and get back to their respective business,” Wilson said through a written statement. “Now that Solar Haven Farm has secured the regulatory jurisdiction we need to protect our long-term investments in our berry and fruit plants, we can reconsider expanding our crops to support the production of our new berry sorbet product line.”
Reporter John Flowers is at [email protected].

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