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WhistlePig Act 250 opinion could affect Vermont agriculture

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Posted on February 18, 2013 |
By John Flowers



SHOREHAM — Raj Peter Bhatka’s argument that his proposed whiskey distillery should be considered a farm operation does not hold water and therefore should be subject to Act 250 review as a commercial enterprise, according to a recent opinion issued by District 9 Environmental Commission Coordinator Jeffrey Green.

And the reason Green believes Bhatka’s argument doesn’t hold water is because the whiskey he would make will hold a lot of water.

He said water is a resource that cannot be considered an agricultural commodity, thereby preventing the aspiring whiskey manufacturer from meeting the requirement that more than 50 percent of the ingredients that go into the making of the finished product be grown on the farm in order to trigger an exemption from Act 250 review.

Bhatka was candid in his criticism of Green’s jurisdictional opinion, dated Feb. 8. Barring a successful appeal, the verdict means he will have to successfully secure Act 250 permission in order to convert his existing dairy barn to a rye whiskey distillery and office space, and build a 50-foot-by-90-foot storage barn. Several neighbors have already been granted party status and have vowed to challenge the project, which some fear would bring traffic, noise and potentially a black mold that they believe would be a byproduct of the whiskey making process.

“The commission has asserted that, though our product would be entirely made from our own grain, the fact that 50 percent of the final product is water, it is not an agricultural product,” Bhatka said in an e-mail response to questions from the Addison Independent. “By that very same logic, milk and cider, to name just a few things, are not agricultural products, which is preposterous. Apparently no one is exempt from Act 250 regulations. No one. This leaves us with no choice but to appeal, both for the future of our farm and for the future of all other farms in the state. If Act 250 thinks that milk is not an agricultural product, which it has implied in that ruling, then Vermont is in a very sorry state of affairs and farms will be strangled with red tape.”

Bhatka bought the former dairy farm off Quiet Valley Road back in 2007 and decided to make it the home base for production of his WhistlePig brand rye whiskey. He has spent the past few years putting together financing to build a distillery and storage facility for a whiskey that would be made from a foundation of rye grown on the farm. In the meantime, he has been sourcing whiskey from Canada and bottling it on site.

Stating he was unaware of the Act 250 requirement, Bhatka began making distillery-related improvements to his property several years ago, which drew concerns from some neighbors. On Nov. 16, 2012, he filed his formal Act 250 application for the proposed improvements, including those he had already made. That application stated, among other things, that the farm would produce more than 50 percent of the rye crop used in making the whiskey — a formula that Bhatka and his attorney said should classify WhistlePig as a farm and therefore exempt from Act 250.

Green, in his jurisdictional order, said WhistlePig declined to specifically reveal the ingredients of their whiskey. So Green said that he did his own research into the manufacture of rye whiskey, and took issue with the company’s central argument.

“The most recent proposal assumes that WhistlePig, LLC will only create a whiskey that will be at least 101 proof (50.5 percent by alcohol by volume) when it is bottled,” Green said in his opinion. “WhistlePig, LLC argues that the principal ingredient in whiskey after it is processed is alcohol, not water, and therefore since all the alcohol is produced from grain grown on the farm it satisfies the ‘principally produced’ test defined in Act 250 Rule 2(C)(19). Although this argument is creative, it is my opinion that an analysis that accounts only for the end product and which fails to account for all of the ingredients used to manufacture the product fails to meet the requirements of the statute and rule.”

Green argued that WhistlePig’s end product is alcohol, which is not an ingredient in the whiskey recipe. He also argued that the rye grown on-site and used in the making of the whiskey does not exceed the weight or volume of what Green considers to be the product’s main ingredient: Water.

While WhistlePig’s water is drawn from an on-site well, Green pointed to a past Environmental Commission decision indicating that water cannot be considered an agricultural product. That Aug. 19, 2008, decision related to a farmstead brewery that had also argued for an agricultural exemption under Act 250. But the District 7 Environmental Commission coordinator in that case determined that water was not an agricultural product that was grown on the farm; water comprised more than 50 percent by weight or volume of the raw ingredients that went into its product; and less than 50 percent of the ingredients were agricultural products that were grown on the farm. As a result, the farmstead brewery did not qualify for the farming exemption because less than 50 percent of the agricultural products that actually went into the finished product actually came from the farm.

“In examining the only evidence presented on this issue and assuming that water and grain are by far the principal ingredients (by weight and volume) used in the production of rye whiskey, then the preponderance of the evidence is that water makes up 60 percent of the volume and 73 percent by weight of the ingredients used in the production of whiskey,” Green wrote in his opinion. “Water is not among the agricultural products or activities enumerated in the statutory exemption for farming, nor cited in the rule.”

Green said Bhatka has two avenues through which to appeal the jurisdictional opinion, each within 30 days. He can submit new facts and ask Green to reconsider his opinion; or he can appeal it directly to Vermont Superior Court, Environmental Court division.

George Gross and Barbara Wilson own and operate the nearby Solar Haven Farm LLC at 977 Bates Road. The couple has been very vocal in their concerns about WhistlePig’s plans and potential impacts on their small, organic berry and fruit tree farm. Their concerns include the distillery’s fermentation and whiskey aging process that will produce ethanol emissions they believe could trigger the formation of Baudoinia compniacensis black mold — also known as “whiskey fungus” — on structures in the vicinity of the whiskey aging warehouse.

“We consider the Jurisdictional Opinion decision to be an essential first step towards bringing the WhistlePig distillery and whiskey warehousing project into the public review process,” the couple said in response to an e-mail request for comment. “This decision compels the proposed WhistlePig project to have a level of transparency, disclosure, and accountability that otherwise would not have occurred. The Shoreham community will now have the opportunity to protect their economic, agricultural, and environmental interests from the threat of whiskey mold, along with the other negative impacts of the proposed WhistlePig project. At the forthcoming March 22 Act 250 public hearing, Solar Haven Farm will present the scientific facts describing how the ethanol emissions from the WhistlePig whiskey aging warehouse will permeate the Lemon Fair River valley area, fostering the growth of whiskey mold. This mold could potentially impact all neighbors and agricultural enterprises surrounding the WhistlePig warehouse site.”

Reporter John Flowers is at johnf@addisonindependent.com.

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