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Whiskey distiller's proposal watched for its impact on farms and Act 250

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Posted on January 17, 2013 |
By John Flowers



whistlepig9103.jpg
SIVAN COTEL, HEAD of operations and finance for WhistlePig, guides a site visit of the Shoreham company’s farm and bottling operation Tuesday morning as part of a District 9 Environmental Commission review. The commission’s decision could have a bearing on whether agricultural operations need Act 250 permits. Independent photo/Trent Campbell

MIDDLEBURY — WhistlePig owner and founder Raj Bhatka had hoped this year to begin harvesting rye grown on his 500-acre farm off Shoreham’s Quiet Valley Road, a crop he wants to distill and store in oak barrels to age for up to 10 years to mature into high-end whiskey.

But now Bhatka is concerned that he himself will age considerably before getting the Act 250 permit he needs to proceed with his proposed on-site whiskey distillery. Some of his neighbors have served notice they will contest the project based on their concerns about the proposed enterprise that include the potential spread of a black mold that they believe will be a byproduct of the whiskey making process — a mold they fear could envelop and damage adjacent forestland, a berry and fruit farm and a sugarbush.

It is a case that will feature testimony from a black mold expert witness from Canada and will be keenly monitored by farmers and planners throughout the state for the impact the outcome could have on state review of future agricultural projects.

In a related, parallel matter, District 9 Environmental Commission Coordinator Geoffrey Green has been asked to issue a jurisdictional opinion on what components of the WhistlePig project should be subject to Act 250 review. Vermont agricultural operations have historically enjoyed substantial permitting exemptions. But officials in this case will have to sort out exactly what components of the WhistlePig operation should justifiably fall under Act 250 review. That will mean separating out functions that are non-agricultural in nature (such as marketing office space and a parking area for employees) and the processing of any products that are not “principally produced” on the farm.

“The redevelopment of agricultural properties and value-added agricultural manufacturing is an important issue for Addison County,” said Addison County Regional Planning Commission (ACRPC) Executive Director Adam Lougee, one of more than 25 people who attended a District 9 Environmental Commission preliminary hearing on the WhistlePig application at the Shoreham Firehouse on Tuesday. Parties also toured the WhistlePig property.

“How this jurisdictional issue works out will be very important to people, beyond this farm.”

It was in 2007 that Bhatka, a onetime contestant on the NBC television show “The Apprentice” and erstwhile Congressional candidate from Pennsylvania, purchased and moved to the former Norris dairy farm on Palmer Road.

“I moved here with no particular idea of what I was going to do with the 500-acre farm that I had bought,” Bhatka told the commission on Tuesday. “In time, after a couple of years of really thinking … and staring at the landscape, I, by necessity, had to make the farm work.”

Bhatka determined that resurrecting a dairy operation on site did not seem viable, so he decided to grow a substantial rye crop for the production of whiskey. As a first step, he hired master distiller Dave Pickerell, who formerly spent 14 years in that position at Maker’s Mark in Loretto, Ky. Pickerell assisted Bhatka in planning his own distillery, while at the same time sourcing a Canadian rye whiskey stock to bottle under the WhistlePig label until the fledgling company could produce its own product.

The small company successfully applied for assistance from the Vermont Agricultural Credit Corporation to get going. WhistlePig currently has 20 full- and part-time employees and has generated $439,000 in federal tax revenues, produced more than $300,000 in state sales taxes and generated more than $840,000 in income for the Vermont Department of Liquor Control, according to Bhatka.

He added that based on recent reviews, WhistlePig has garnered the highest rating of any whiskey in the U.S.

Bhatka is now seeking to take his business to the next level. Specifically, he is asking for permission to convert an existing dairy barn to a rye whiskey distillery and office space, along with construction of a 50-foot-by-90-foot storage barn.

IMPACT ON NEIGHBORS

He believed his project would sail through what he assumed would be minimal permitting requirements. But Bhatka is learning that his path to producing a potent potable will face substantial scrutiny, triggered by several neighbors who are concerned the proposed distillery could have impacts on their property and quality of life.

Among them are George Gross and Barbara Wilson, who own and operate the nearby Solar Haven Farm LLC at 977 Bates Road. The couple, through their attorney Gerald Tarrant, are contending among other things that WhistlePig has been operating in violation of Act 250 for the past two years and that the proposed distillery’s fermentation and whiskey aging process will produce ethanol emissions. Those emissions, the couple alleges, could trigger the formation of Baudoinia Compniacensis black mold — also known as “whiskey fungus” — on structures in the vicinity of the whiskey aging warehouse.

“Depending on local climate conditions, any exterior structures or crops within a several-mile radius of the warehouse are at risk of mold infestation,” Gross wrote in an affidavit that is part of a growing file of evidence the environmental commission has received in the case. “This mold is tenacious and once it colonizes a structure it will chronically return even after power washing. Mold infestation will have a long-term damaging impact on property values or residences in the neighborhood of the warehouse.”

Solar Haven Farm, founded in 2011, is a small, organic berry and fruit tree farm located on 25 acres. Its crops include blackberries, raspberries, blueberries and peaches.

“For the Solar Haven Farm … a Baudoinia Compniacensis mold infestation would destroy the market value of our crops and force our business to close,” Gross added in his affidavit.

Tarrant on Tuesday confirmed his clients’ plan to have University of Toronto professor James A. Scott testify as an expert witness during the commission’s evaluation of the WhistlePig application.

WhistlePig officials have yet to specify exactly how much whiskey they plan to produce at the proposed distillery. There are currently 500 barrels on site to receive product brought in from Canada, which is then bottled on site. Bhatka on Tuesday acknowledged the whiskey aging process at his farm would produce some ethanol emissions, but he added not nearly enough to have an impact on any surrounding properties. He said his company is dealing with a Canadian distillery possessing 1.6 million barrels that generates an ethanol emissions influence of around a quarter-mile.

“This is nothing more than paranoid delusion,” he said of the black mold allegation.

“There is no threat (from the whiskey), except in overconsumption.”

Will Porter lives just south of the WhistlePig headquarters. He, too, told commissioners that he had concerns about black mold and its potential threat to the productivity and aesthetics of his forested property. Those concerns were echoed by another neighboring couple, Maizie Hescock and Rustan Swenson, who operate a goat farm and sugarbush.

“We are very concerned about the sugaring (operation), as well as the physical beauty of the landscape,” Swenson said. “One of the primary purposes of Act 250 is to preserve the landscape … While I applaud Raj’s attempt to produce rye whiskey, I think some aspects of the operation are not conducive to being located in that valley in Shoreham.”

Along with the potential for black mold, Swenson said he was concerned about increased trucking traffic that could come with the whiskey production.

“The scale of the operation goes beyond agriculture to a commercial scale,” Swenson said.

The commission granted party status — meaning an opportunity to testify on the record — to the aforementioned neighbors, as well as the ACRPC and the town of Shoreham and the state Agencies of Natural Resources and Agriculture.

PERMIT NEEDED

In addition to their concerns about black mold, Gross and Wilson have alleged that WhistlePig has been operating without an Act 250 permit for the past two years. They argue WhistlePig’s current bottling, whiskey aging and parking/office functions are operating in violation of Act 250. Green said he notified Bhatka two years ago that a permit was required and an investigation of the alleged violation is currently being conducted out of the commission’s Montpelier office.

“We will openly admit that we misconstrued a communication from permit officials in 2010, and as soon as we realized our error, we submitted the appropriate permits,” Bhatka said.

WhistlePig and its neighbors will spend the next several weeks gathering their experts and evidence in anticipation of an Act 250 permit hearing in Shoreham tentatively set for March 22. Green has set Jan. 25 as the deadline for receiving evidence he will weigh in making a critical determination on what aspects of the WhistlePig plan will be subject to Act 250 review and what elements can legitimately skirt the process as agricultural exemptions.

Bhatka stressed a lot is riding on the decision. A prolonged permitting and appeals process would place the distillery in jeopardy, he said.

“We find ourselves now, having done the right thing and applied for our Act 250 permit, harassed by a man with time, loopholes, and a good lawyer,” Bhatka said through a written statement. “We find ourselves responding to inane accusations such as posing ‘an existential threat’ to berries.

“It is abundantly clear, no matter what definition of farming one chooses to use, that growing grain, processing it, and selling it, is agriculture,” he concluded.

Reporter John Flowers is at johnf@addisonindependent.com.

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