                                   STATE OF VERMONT
SUPERIOR COURT                                                    ENVIRONMENTAL DIVISION
Environmental Division Unit                                          Docket No. 21-2-13 Vtec

              WhistlePig, LLC Act 250 Jurisdiction Opinion (#9-070)

                             ENTRY REGARDING MOTION

Appeal from Act 250 Jurisdictional Opinion (#9-070) from District 9 Env. Comm. Coordinator.

Title:        Response to Parties' Stipulated Facts (Motion 13)
Filer:        (Joint Stipulation)
Attorney:     (Joint Stipulation)
Filed Date:   October 26, 2015


        This matter concerns an appeal by WhistlePig, LLC and its principal Raj Bhakta (together
“Appellants”) of the February 8, 2013 Act 250 Jurisdictional Opinion #9-070 in which the District
9 Environmental Commission Coordinator (“District Coordinator”) determined that WhistlePig’s
proposed “farm-based” distillery would be subject to Act 250 jurisdiction. The Court has
addressed several pretrial motions, including motions to dismiss, to declare the appeal moot,
and for summary judgment. When the Court’s Decisions on those motions did not fully resolve
all legal issues, the Court set the matter for a final pretrial conference, with the goal of
scheduling a trial.
       By their “Supplemental Stipulation [as to] Undisputed Facts,” filed with the Court on
October 26, 2015, the parties presented to the Court an agreement concerning the ingredients
used by Appellants to produce WhistlePig’s farm-distilled rye whiskey and the percentages,
both by weight and volume, of those ingredients.
        At the last pre-trial conference, held on September 28, 2015, all parties agreed that the
Court could dispense with an evidentiary hearing and, based upon the parties’ stipulated facts,
render a judgment. Appellants affirmed their agreement with this suggestion, while reserving
their right to appeal the Court’s final judgment. The Court noted that all parties would be
entitled to file a timely appeal of a future judgment, if they so wished.
       The Court issued its most recent Decision on competing motions by Appellants and the
Vermont Natural Resources Board (“NRB”), concluding that Appellants were not entitled to a
summary judgment upon their claim of an “agricultural exemption” from Act 250 jurisdiction;
the Court also concluded that it could not render judgment against Appellants, as requested by
the NRB and the neighbors appearing in this appeal, due to a dispute about the material facts
concerning the ingredients used to produce the WhistlePig rye whiskey. In re WhistlePig, LLC
In re WhistlePig, LLC Act 250 JO, No 21-2-13 Vtec (EO on Joint Stip.)(Nov. 19, 2015)            Page 2


Act 250 JO, No 21-2-13 Vtec, slip op. at 7–8 (Vt. Super. Ct. Envtl. Div. Sept. 2, 2015) (Durkin, J.).
The Court reached those conclusions after having revisited its legal analysis from a prior
Decision, which the Court summarized in its September 2, 2015 Decision as follows:
                In response to the cross-motions for summary judgment in this matter,
         the Court was tasked with determining what constitutes an agricultural product
         principally produced on a farm sufficient to exempt the on-site storage,
         preparation, and sale of that product from Act 250 jurisdiction. The construction
         of improvements for “farming” is excluded from the definition of development
         and therefore from Act 250 jurisdiction. 10 V.S.A. § 6001(3)(D). Farming is
         defined as including “the on-site storage, preparation and sale of agricultural
         products principally produced on the farm.” 10 V.S.A. § 6001(22)(E). Neither the
         term “agricultural product” nor “principally produced” are defined within the
         statute.
                 WhistlePig sought a determination that the production and storage of the
         whiskey would be exempt from Act 250 jurisdiction because it qualified as an
         agricultural product principally produced on the farm. Neighboring property
         owners George Gross and Barbara Wilson d/b/a Solar Haven Farm (“Solar Haven
         Farm”) argued that the production and storage of whiskey are not exempt from
         Act 250 jurisdiction because the majority of materials or ingredients that went
         into the production of the whiskey were not produced on the farm and therefore
         the farming exemption did not apply.
In re WhistlePig, LLC Act 250 JO, No 21-2-13 Vtec, slip op. at 1–2 (Vt. Super. Ct. Envtl. Div. Sept.
2, 2015) (Durkin, J.).
       In our Decision on the parties’ first set of competing motions for summary judgment, we
began our analysis by noting that:
                 Act 250 generally requires review of significant development and its
         impact upon neighbors, neighboring properties, and the environment, so as to
         “ensure economic growth without environmental catastrophe.” Southview
         Assocs. Ltd. v. Bongartz, 980 F.2d 84, 87 (2d Cir. 1992) (cert. denied, 507 U.S. 987
         (1993)). As with any general legal provision, there are exceptions to this general
         Act 250 permitting requirement. However, the party seeking an exemption
         bears the burden of proving the exemption and “[t]he farming exemption, like all
         exemptions, is to be read narrowly and only applied when the facts clearly
         support the exemption’s application.” In re Ochs, 2006 VT 122, ¶ 12, 181 Vt. 541
         (citations omitted).
                  ....
                The Act 250 definition of development expressly exempts construction
         and use of land improvements for farming. Therefore, as long as the proposed
         operation fits Act 250’s statutory and caselaw definition of “farming,” an Act 250
         permit is not required. 10 V.S.A. § 6001(3)(D)(i).
In re WhistlePig, LLC Act 250 JO, No 21-2-13 Vtec (EO on Joint Stip.)(Nov. 19, 2015)           Page 3


                 Farming is defined to include “the on-site storage, preparation and sale
         of agricultural products principally produced on the farm . . . .” 10 V.S.A.
         § 6001(22)(E) (emphasis added). Thus, if the rye whiskey WhistlePig proposes to
         produce constitutes an “agricultural product principally produced on the farm,”
         the still and the whiskey storage and aging facility are exempt from Act 250
         jurisdiction.
                 The parties here seem to agree that the question of whether WhistlePig’s
         rye whiskey will be an “agricultural product” is dependent upon the question of
         whether the whiskey is “principally produced” on the farm. An agricultural
         product is “principally produced” on the farm if “more than 50% (either by
         volume or weight) of the ingredients or materials contributing to [the] final
         agricultural product which results from the activities stated in 10 V.S.A.
         § 6001(22)(A) - (D), and which is stored, prepared or sold at the farm, is grown or
         produced on the farm.” Natural Resources Board Act 250 Rules, Rule 2(C)(19),
         Code of Vt. Rules 12 004 060, available at http://www.lexisnexis.com/
         hottopics/codeofvtrules (“Rule 2(C)(19)” or “the Rule”).
                 The parties dispute how this standard should be interpreted, specifically
         relating to three issues. First, the parties dispute 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. Second, the parties dispute whether water counts as an ingredient
         or material contributing to the final agricultural product. Finally, if water is an
         ingredient, the parties also dispute whether the source of the water is relevant
         in determining whether it counts as an ingredient or material produced on the
         farm.
In re WhistlePig, LLC Act 250 JO, No 21-2-13 Vtec, slip op. at 5–7 (Vt. Super. Ct. Envtl. Div. Apr.
11, 2014) (Durkin, J.).
         After analysis, we resolved those three disputed legal issues as follows:
    1. 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;
    2. water must be counted toward the total sum of ingredients when used as an ingredient
       to make the product; and
    3. 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.
Id. at 7–10.
        Thus, we concluded that the rye grown on Appellants’ farm needed to be compared
with all other ingredients (including water) that are used to produce the WhistlePig whiskey,
and that water, even if it came from the farm, could not be used to reach the 50 percent target.
Since the parties could not agree on the amounts of these ingredients, either by weight or
In re WhistlePig, LLC Act 250 JO, No 21-2-13 Vtec (EO on Joint Stip.)(Nov. 19, 2015)        Page 4


volume, we concluded that a trial was necessary to resolve those disputed facts, and to resolve
the remaining legal question of whether the WhistlePig whiskey could be considered an
agricultural product. The resolution of that last legal issue would determine whether this
WhistlePig operation would be exempt from Act 250 jurisdiction. Id. at 15.
        The parties have now presented a resolution of the disputed facts with the filing of their
Supplemental Stipulation as to Undisputed Facts. Their representations evidence that the
milled rye grain grown on Appellants’ agricultural fields represents less than 50 percent, either
by weight or volume, of all the ingredients used to produce the WhistlePig whiskey. Thus,
pursuant to Act 250 Rule 2(C)(19), the WhistlePig whiskey cannot be regarded as an agricultural
product that is “principally produced” on the farm. See id.
        For all these reasons, we conclude that the construction and production proposed by
Appellants is not entitled to an agricultural exemption from the definition of development and
is therefore subject to Act 250 jurisdiction. In this regard, we AFFIRM the Jurisdictional Opinion
(#9-070) issued by the District Coordinator on February 8, 2013.
       Given that we have not been presented with facts or legal arguments that cause us to
reconsider and alter our prior legal determinations, we adopt them as final by the above
references.
      This completes the current proceedings before this Court concerning this appeal.
Pursuant to V.R.C.P. 58(a), we issue this Entry Order as a final Judgment Order in this appeal.
So ordered.

Electronically signed on November 19, 2015 at Newfane, Vermont, pursuant to V.R.E.F. 7(d).



________________________________
Thomas S. Durkin, Judge
Environmental Division

Notifications:
Jon T. Anderson (ERN 1856), Attorney for Appellants WhistlePig LLC and Raj Bhakta
Ritchie E. Berger (ERN 2871), Co-counsel for Appellants WhistlePig LLC and Raj Bhakta
Gerald R. Tarrant (ERN 4743), Attorney for Interested Persons George Gross, Barbara Wilson,
   and Solar Haven Farm, LLC
Peter J. Gill (ERN 4158), Attorney for the Vermont Natural Resources Board
Elizabeth Lord (ERN 4256), Attorney for the Vermont Agency of Natural Resources
Town of Shoreham (FYI purposes only)
John Kiernan (FYI purposes only)
dchamber
