Vermont Legislature SmartTranscripts:

[Amy Sheldon (Chair)]: Welcome back to the House Environment Committee. We're gonna be talking about h seven two seven, an act relating to sustainable data center deployment. Michael O'Grady.

[Michael O’Grady (Legislative Counsel)]: Good afternoon. This is Michael O'Grady with Legislative Council. I'm gonna walk you through specifically the the water use and quality requirements of the strap. But before I do, I wanna take you all the way to the end of the bill or almost to the end of the bill. On page 14, line 17 through 19, you will see that 10 VSA 6,001 is being amended, and that is adding the construction of improvements on a tractor tracks of land for a data center to the list of development that's subject to act two fifty. So this bill adds data centers to the definition of Act two fifty. And what is a data center? Well, that's on page two of the bill. It's a facility that uses or is able to use 20 megawatts or more of power and is engaged in providing data processing, posting, and related services as defined by the North American Industry Classification System. So Act two fifty. As you all know, act two fifty has multiple criteria that are reviewed as part of the comprehensive cumulative. Review of development under act two fifty and that includes criteria that are related to water water quality, water use. In addition, the permits that ANR issues for water quality and other water use are most of them provided with the rebuttable presumption. That they are that they are meeting the criteria in Act two fifty. But a district commission isn't bound by those. It provides a rebuttable presumption. So rebuttable presumption can be rebutted. So the permit is not always the definitive answer for water quality or the other criteria that are entitled to the rebuttable presumption. And that is why on page nine of the bill, there are specific requirements related to water and water use, water permitting that are being added for data centers. You don't put the question of whether certain water uses or permitting is subject to the rebuttable resumption or is subject to whatever the district commission believes is necessary, that you are requiring certain things for the the permitting and citing of data centers. And so moving on to I I'm gonna skip over the definitions, and I'm just gonna come back to them when we hit the relevant provisions because I think it just provides context for what you're looking. And so you can go to page 10, line 12. This is the provision that a person that's applying to operate a data center shall identify through the Public Utility Commission and to the District Commission that's reviewing its Act two fifty permit how the data center will cool the facility. If water is going to be used to cool a data center, the data center shall use a closed loop cooling system to minimize impacts of the quality and quantity of surface water and groundwater unless the district commission determines that that closed loop system is not feasible. Now what's a closed loop system? Let's just go back to the definitions on page nine. So I drew this definition from South Carolina, and I drew it from South Carolina because I looked around the country at at states with significant data center facilities and regulation of them. This is a definition drawn from a South Carolina bill on data centers there. It's a sealed cooling process in which the same water or coolant circulates simultaneously within a data center's cooling system without withdrawal of water from municipal public water supplies, groundwater, or surface water, and without discharge of wastewater to municipal wastewater systems, groundwater, or surface waters, except for de minimis discharges authorized under an ANR discharge permit. So let's think about this. Can't in a closed loop system, take your water from your traditional water sources, your public water supply, your groundwater or your surface water. You're gonna have to identify later on where you're gonna get that water. One of the representatives in the House Energy was like, what if I build a cistern? And I'm like, well, yeah, That that's a potential because cisterns are generally your property, the water in them. And so that's potentially a source, but you could also truck it in. You could bring coolant in, mix it with the water that was struck there. So that is you're not drawing on the traditional resources. So you shouldn't be impacting those because you're not supposed to use. Now you will have some discharge because these systems do have leakage. They do have drainage. They do need maintenance. You're gonna have to have a discharge. It has to be approved by ANR under a discharge permit. And so that's what a closed loop system is.

[Amy Sheldon (Chair)]: Who regulates the creation of a cistern? Because it'd be pretty easy for a cistern to be groundwater fed.

[Michael O’Grady (Legislative Counsel)]: Well, if it's groundwater fed, that's technically taking from a spring. And that spring would be subject to groundwater withdrawal. But,

[Amy Sheldon (Chair)]: I mean, how's that gonna come to light? It's just a question. I I'm it seems like a pretty on the loophole there.

[Christopher “Chris” Pritchard (Member)]: So that's what a closed loop system is. And that's what you're if you're using water to cool, you use that closed loop system unless it's not feasible. So page 11, as I stated earlier, if you're using water to cool through a closed loop system or any other type of cooling system, then you have to identify, how you're gonna obtain

[Michael O’Grady (Legislative Counsel)]: the water and where the cooling water will be discharged. Then if a person is remember, they can't use the closed loop system. It's not feasible. They're gonna use groundwater to cool their data center. They have to obtain a groundwater withdrawal permit. Now, typically, a groundwater withdrawal permit is only required if you are withdrawing 57,600 gallons a day. It sounds like a weird number, but that's 40 gallons a minute. But this is saying notwithstanding that fifty seven six. So regardless, if you're a data center using groundwater, you have to get a groundwater withdrawal permit in order to pull your system. Similarly, if you're going to use surface water, that's on page 11, line 13, you have to apply for a surface water withdrawal permit. Now those permits are not available yet. They're supposed to start issuing them July 2026, but ANR has to adopt the rules for those permits first. And they have indicated they won't go to rulemaking until late fall, early winter. So those permits are not gonna be available until next year at the earliest. So if you're out of a data center, you can't use a closed loop because it's not feasible. If you wanna use surface water, you're gonna have to wait probably a year or more to get that surface water withdrawal permit.

[Kate Logan (Member)]: Why would they have to wait?

[Amy Sheldon (Chair)]: Why couldn't is there a is it in the statute that they have to wait now? Because we created that? They could just start doing it and not

[Michael O’Grady (Legislative Counsel)]: Oh, well, it requires you would need that permit in order to do the withdrawal. Okay. But you can obtain the permit.

[Amy Sheldon (Chair)]: As of this, you

[Christopher “Chris” Pritchard (Member)]: would need it. I get it.

[Amy Sheldon (Chair)]: But anyone right now could do it because there's no permit.

[Michael O’Grady (Legislative Counsel)]: Well, right now, yes. All that's required right now is that you report your withdrawal. That's the current statute.

[Christopher “Chris” Pritchard (Member)]: Presenter Pritchard? Don't these use a tremendous amount of water?

[Michael O’Grady (Legislative Counsel)]: You know, that that is that's a good question. I've heard varying numbers. At one point, I heard that it was only 30,000 gallons a day, but then I heard that it can be, like, million gallons a day. That's a big

[Amy Sheldon (Chair)]: It depends. It hurts. A lot either way.

[Kate Logan (Member)]: Yeah. Yeah.

[Michael O’Grady (Legislative Counsel)]: It it is. It is. And but if you're using a closed loop system, remember, it's supposed to circulate within itself. Then you have to manage that. You're probably gonna you need to use a coolant to manage that chemical coolant. And then you're gonna have to manage the disposition and the disposal of that coolant that's mixed with water.

[Christopher “Chris” Pritchard (Member)]: Plus, there's gonna be evaporation,

[Amy Sheldon (Chair)]: I would

[Michael O’Grady (Legislative Counsel)]: think. That's that's that was just discussed. Apparently, in some of these systems, up to 80% evaporates. But you still have a significant amount that's remaining depending on how much you're using in the first place.

[Amy Sheldon (Chair)]: Representative Austin and then Tagliavia.

[Kate Logan (Member)]: So are we looking at all the companies that use water in the state, ski areas, agriculture, and then seeing how much water we have to look at and then figure out who gets what?

[Michael O’Grady (Legislative Counsel)]: Well, you have the surface water reporting program right now at ANR that's requiring people to withdraw over a certain amount to report their usage. And ANR has been doing that. They're then supposed to come up with rules for when a surface water withdrawal permit is necessary. That's what they need to do. And then people will apply and depending on what those rules say, I can't tell you what they're gonna say. There will be determinations of whether or not the withdrawals authorized or not.

[Sarah “Sarita” Austin (Member)]: But how is it prioritized? I mean, won't people be kind of bidding for water rights?

[Michael O’Grady (Legislative Counsel)]: No. I mean, it's not gonna be like out west where you buy the water right and nobody else can use it. The surface water of the state is a public trust. It's supposed to be managed for use by all at all times. So you're not creating the Western method.

[Amy Sheldon (Chair)]: Present, Tagliavia.

[Michael “Mike” Tagliavia (Member)]: You mentioned some of these systems, up to 80% of the water evaporates. But how many different types of cooling systems do these data centers use? I just did about an hour and a

[Michael O’Grady (Legislative Counsel)]: half worth of research on the cooling systems over the past couple of days, and I saw maybe three different ones, but that makes me not an expert.

[Michael “Mike” Tagliavia (Member)]: I I just when I hear 80% loss, we're thinking closed loop. That's not a very efficient

[Amy Sheldon (Chair)]: Not much of a loop, is it? It's so we I want to remain focused on the part of the bill that you're representing, but I just noticed, I mean, I knew you. Anyway, representative Sebeliya is here, and it's, you my understanding is you're one of the lead sponsors or the lead sponsor on this. Do you want to take a minute and just orient the committee? Like, why are we having this conversation?

[Steve Collier (Agency of Agriculture)]: Thanks.

[Rep. Laura Sibilia (Lead sponsor, H.727)]: Sure. Laura Osibeli, for the record, I've become increasingly aware over the last year and a half about these, particularly on the energy and the energy costs that was what caught my attention. They've created pretty significant chaos in terms of rates and reliability in the area that is south of us. So we're in the ISO New England region, this is in the PJM region. As we have learned more and more, it has become increasingly, I've started to understand they are also pretty dramatic in terms of their water usage. And there's a lot of concern around that, a lot of effort. So these are being developed rapidly. It's a bit of a Wild West. Vermont would not seem to be a very attractive place because of the electric rates in New England. While ours are the lowest in New England, because of our regulatory structure, New England in general has the highest rates in the country. And so that should be dissuading. However, if you can get power and you can get water, we may see that. And we are also seeing a lot of interest in decommissioned energy sites, both coal and nuclear. We do have a decommissioned nuclear site in Vermont. And so it seems that it would be prudent for us to What we've done is consider if a data center we're trying to site in Vermont, what would our existing laws do? And do we see gaps in that, in terms of energy usage, reliability, protecting the environment, and water usage? So that's how we have approached this. We've worked with a number of stakeholders. As you're hearing from Councilor O'Grady, this is a rapidly evolving policy area nationally. And the one thing I would just check-in on, I think that 80% was for a non closed loop system. So that is the reason to follow this system. Is that enough for what I'm sharing? Was that enough, or would you like more?

[Amy Sheldon (Chair)]: That was great. Do members have questions for Representative Sebeliya?

[Rep. Laura Sibilia (Lead sponsor, H.727)]: Would just add one more. There is a proposal for a moratorium from the Senate. There is an executive order, federal executive order, about states inhibiting the AI, citing national defense, etcetera. It does acknowledge states' rights around citing and environmental protections. But it also talks about the potential to claw back funding, BID non deployment funding. Those are funds for internet, etcetera. It's a pretty significant amount of funding in the state of Vermont. I don't know that a moratorium is the best path forward for us. If we can look around us and see, as I said, what our existing laws, how they would handle this, and if there are obvious gaps that we want to tackle, that to me seems to be more proactive. The end, thank you.

[Amy Sheldon (Chair)]: Thanks for joining us and sharing that. Representative Logan.

[Kate Logan (Member)]: Thank you. Representative Sebeliya, do you know if the president's EO has been challenged?

[Rep. Laura Sibilia (Lead sponsor, H.727)]: I do not. Do

[Kate Logan (Member)]: you know? I do. No. Thank you. Alright.

[Michael O’Grady (Legislative Counsel)]: So moving on, you are on page 11. You are in subsection the lines 13 through 17. This is that surface water withdrawal permit. I think we've adopt addressed what we need to address there. Page 11, line 18. In addition to the groundwater withdrawal permit, the surface water withdrawal permit, and the Act two fifty permit, they're going to need to get all other applicable water quality permits from ANR, and that includes state operating permit for stormwater, state industrial classification. The stormwater, if it's located in a shoreland, so that we need a shoreland permit. It's located in a river corridor that will need a river corridor permit, although the river corridor permits, as you know, aren't going to be available until 2028. And and we'll need a direct discharge permit if it is discharging to a surface water.

[Amy Sheldon (Chair)]: So how why is this different from another business? Wouldn't any business needing trying to locate any kind of facility need to get all these permits? Yes.

[Michael O’Grady (Legislative Counsel)]: Page 12, line one through four. This is novel. This is new in the state. So I think you've all discussed the Clean Water Act four zero one certification. That is when an entity needs a federal permit to discharge into state waters. When they are proposing that, they have to go to the state Environmental agency and get a certification that the discharge complies with the state water quality standards that's four zero one certification. Probably remember from Morrisville Dam. This would require that same level of analysis for a state permit, for the state permit for a data center. So a person applying to operate a data center shall obtain from ANR a water quality certificate and meets the same criteria that ANR requires to be met under the federal Clean Water Act four zero one water quality certification. Why would you do that? Well, the four zero one certification process is more comprehensive. It does look at more than just the individual components of an individual permit. It looks at how the entire activity cumulatively will affect the water, how it might affect the wet, how it's gonna affect aquatic biota, types of of activity that that when this activity is proposed is is active could create that that cumulative effect. So that that's why it's being proposed. It is new. It is novel. This is the first time a four zero one certification analysis would be overlaid on a state permit. So I don't, I don't know how to tell you how it will be done. There is an entire process for how to get a four zero one search from ANR right now. If they have an application, they have a pre application, They rely on EPA's four zero one rules. Is currently a way to get one for that federal permit. I don't know what they would do for a state permit. Also be aware that a four zero one can take up to a year to obtain, if not longer, if the state agency is diligently pursuing completion of the four zero one. So when you look at ANR's four zero one listing and you see when the permit applicant applied and when the four zero one was issued, it's usually twelve to thirteen months later. So that's gonna be something to consider as well. And that's what will be required. So I'm gonna move on to the next section. So the next section requires a person applying to operate a data center who intends to discharge water into surface water. They have to submit to ANR a plan for monitoring the discharge for the presence of PFAS. You all know what PFAS is, forever chemical chlorinated chlorinated compound. But I believe this committee has discussed how to define PFAS in the past. And you will see on page 10 how it's being defined in this section. It is being defined in this section underneath the US EPA COSCA definition from 40 CFR seven zero five-three. And that's just if the chemical compound meets one of three specific types of chemical compounds. Now in Vermont and in other jurisdictions, PFAS can be, depending on the program, be defined differently to mean any fluorinated compound. And that means 15,000 14 to 15,000 different types of chemicals. Whereas EPA's universe is much smaller And EPA has a method for monitoring PFAS, but it only monitors for 40 PFAS. Now, advocates will tell you that if you define it as the 14 to 15,000 universe, that you will be able to monitor for the presence of fluorination or fluoride in the water. And technically, that's true, but you're not gonna be able to determine what the specific PFAS is. You're just gonna know that there's fluorinated compounds in the water. And the chair of House Energy pointed out recently, well, that would just mean that you go and you do more testing. Maybe you do a reverse engineering process and try to determine what the source of the PFAS is so you can do a more specific targeted test. That's a valid point. It's a valid point. But I think it's a policy discussion for you all how to define the universe of PFAS that would be subject to monitoring. And I believe I'm not speaking out of terms, but the committee said that they would like to hear your input on that.

[Kate Logan (Member)]: And

[Michael O’Grady (Legislative Counsel)]: that's the water provisions.

[Amy Sheldon (Chair)]: Everybody clear on that? Representative Pritchard?

[Christopher “Chris” Pritchard (Member)]: Yeah. I just want to ask, Representative Spiele, so you said don't think moratorium is legal. Is that because you feel that it's inevitable that they're going to show up here? And so you're trying to I'm trying to understand why a moratorium would be.

[Rep. Laura Sibilia (Lead sponsor, H.727)]: I don't know that it's inevitable. I do think that it is possible. And we're seeing such radical swings in both federal and other policies. It seems prudent, given how impactful these are, both to our energy, to our environment, and water noise.

[Christopher “Chris” Pritchard (Member)]: Prudent and more effective, probably.

[Rep. Laura Sibilia (Lead sponsor, H.727)]: Yeah, for us to really walk around and see how would this land, and do we have the right A moratorium, I worry about us leaving open things that we don't want to.

[Amy Sheldon (Chair)]: Moratorium also might just be a lightning rod for a fight. Yes. Rather than being like, these are our boundaries. If you can meet these criteria, we're open to this conversation. Seems more Yeah. Great. Thank you. More to come on this topic, and members. So we're, gonna be looking at this bill further. And also, next up, we have the agency of agriculture coming in on the

[Michael O’Grady (Legislative Counsel)]: Chair, do you you need me tomorrow for testimony?

[Steve Collier (Agency of Agriculture)]: I

[Amy Sheldon (Chair)]: don't think so, but double check. Alright. Thank you. Bills and other committees that we that gonna have overlapping jurisdiction is one of the themes of this week. And so with that, we're gonna invite Steve Collier from the Agency of Agriculture to join us on the an act relating to municipal regulation of agriculture. Thanks for joining us, Steve, on particularly on short notice. Oh, thank you. I know you've been following the bill, it's just great to get the agency's perspective on where we are, why we are, and your thoughts on the current draft.

[Steve Collier (Agency of Agriculture)]: Yeah. Thank you so much. It's good to see you all. Steve Collier from the, Agency of Agriculture. So if I can, I'll start with the end and then explain how we got there. So the bottom line is the language and I'm talking about draft 5.1, which is something that was I think circulated earlier today. And it's not the language that we and I have a copy if anybody wants one, but it's not the language that we proposed or that we ultimately want, but we do respectfully urge the committee to support it because it is crossover week and it's a good faith compromise proposal that's taking in all of the stakeholders interest, including ours and the farmers and the Vermont League of Cities and Towns. We think it's trying to get where the parties are very close to getting. So we'd really like the opportunity to continue the conversation to reach consensus, and we think this is a good faith effort to do that. And so given where we are in crossover week, it doesn't seem prudent to us to splice the details, and we'd rather just continue the conversation. And I'll and I can explain how we got there because the reality and the reason that we feel that way is that the stakeholders and I'm talking about the farm organizations, many of them and the Vermont League of Cities and Towns have worked a lot ever since May to try to build a consensus proposal that everybody could agree on.

[Amy Sheldon (Chair)]: And we

[Steve Collier (Agency of Agriculture)]: we did not get all the way to consensus, but we got very close. And so all of the effort and time has been spent on where we disagree naturally because that's where the only real issues are from our perspective, but the reality is all of those groups agree that as a general rule, municipalities should not be zoning farming. And so then the question is how do you draw those lines? And this this effort in 5.1 is very much a good faith effort to do that. We we think it can be done a little bit better in the senate. Both the senate and the house agriculture committee have been working on this this year because it is an issue that all the stakeholders believe is really important. So we expect them to pass a version, of language as well. So you'll have another opportunity to see their language and we hope to keep we've been talking constantly. We hope that we'll get to a point where everybody can support the end result. But either way, this is a good faith effort we believe. So if I can, I don't know how much you're familiar with the issue? So I'll give you a little bit of history if that's okay.

[Amy Sheldon (Chair)]: I did take a little testimony last week, but I think a refresher will be great.

[Steve Collier (Agency of Agriculture)]: Sure. As we understand it, municipalities have never applied zoning bylaws to farms in the state of Vermont. Without going to a law library, can't go back and look at every statute easily, but I have gone back to 1987, which is as far as I can find online. There's an explicit exemption for farming from town zoning bylaws starting at least in 1987. And the reason I'm pretty confident it's never existed is is that the first statewide zoning act, as you all know, is Act two fifty in 1970, and that also excluded farming from its jurisdiction. So I think, I think there's been a constant, it seems to every law that I've seen suggests that if there's been a constant desire to not extend either Act two fifty or municipal zoning bylaws to farming. So the 1980, but from 1987 on, I'm confident that farming was not supposed to be zoned. That's what the legislature decided that farming was not subject to zoning by laws. The way the what gets a little tricky about it was that instead of calling it farming back in 1987, it was called accepted agricultural practices. And the reason for that, as I understand it, is that at the same time, water quality requirements were becoming more prevalent. And so the agency of agriculture was being asked to define accepted agricultural practices so that those could be regulated. And so instead of calling that particular bucket of activities farming, it was called accepted agricultural practices. So for the zoning bylaws, the language and statute did not say farming was exempt. It said accepted agricultural practices were exempt. And it also included later language that included farm structures and then also it defined accepted agricultural practices as those defined by the agency of agriculture. So there was when I started working at the agency in 2000, I've talked to Michael Grady about this, so I believe was involved in some of the legislative language back in 2004. There was accepted understanding among all the stakeholders that municipalities did not zone farming or accepted agricultural practices. In 2015 though, when act 64, you're all familiar with that act 64, which really ratcheted up the water quality requirements for farming in Vermont, that part of that initiative was to change the accepted agricultural practices to what's called the required agricultural practices. So as part of a conforming all of the legislative language, the word required was a substituted for the word accepted. So it became the statutory exemption became required agricultural practices as including farm structures as defined by the agency of agricultural exempt. What I what I believe happened from reading the supreme court's opinion and just from reading the language myself is that the supreme court understood required to mean things that you have to do, which is this common definition. Know, farming had always been described as accepted agricultural practices and in our rule, in the required agricultural practices rule, there was a list of farming activities, they were also the same as they'd always been accepted agricultural practices. And I think the Supreme Court understandably got confused about what the word required meant in that context, because it used to be accepted, it was changed to required in normal parlance required means you have to do something. Well, you never have to farm, it's just that the way the rule was set up, you were doing these practices, you're exempt from farming, from zoning. So is my, I think everyone agrees that it was just a misunderstanding by the Supreme Court. So that happened back in May. I think after the legislature had initially adjourned, but before the first veto session or the only veto session. So there was a little window in there when the Supreme Court decision came up when we were hoping to just quickly restore the exemption because it was in our opinion and I think everyone's opinion never intended. The legislature never intended towns to zone farming. So we we tried to do that, but the league of cities and towns, which represents all the municipalities in the state had some concerns about the parameters that existed at the time. So there wasn't really an opportunity to do something quickly, but what we did start doing was talking to the League of Cities and Towns who's been terrific throughout, talking openly with us, collaborating with us, working with us to get some to a place where they were comfortable. And I just to let me explain the framework that existed at the time and why they were uncomfortable. So farming of every kind was never exempt. It was farming of a certain level. It was not if you had one chicken, you were farming and you were exempt from zoning. You had to be farming in a way that was subject to our rules. Therefore, you're regulated by the agency of agriculture. The idea being you don't need duplicative extra regulation from another from municipal entity. So the way that farming was defined was essentially you needed to have four contiguous acres of land. If you had four contiguous acres of land and you had a specified number of livestock, So it could be four horses, five cows, there's a litany of other things, 30 rabbits. But if you had four acres and a specified number of livestock or you were growing crops on those four acres, you were farming. So if you had that land base and you were farming, you were exempt from municipal regulation. The other way though, there was a way that there was no acreage requirement where you could also be farming and that was if you had $2,000 on average in crops on agricultural product sales every year, or if you file the schedule f and with your income taxes, which is just a federal income tax form you file when you're farming to deduct your expenses and claim your profits. So what that meant was if you were, you had to be commercially farming because you were selling, were either selling products or filing a schedule F, so it did not apply to a homesteader who's got a couple of pigs, you had to be commercially farming. However, there was no minimum land based requirement in that category. So you could have ducks in Essex on a half an acre, and if you were selling $2,000 of duck eggs, you were farming and you were exempt from a municipal regulation. That's the case that went to the Supreme Court. We personally had no problem with the ducks in Essex in terms of it being farming and fitting within that threshold. But we also recognize that to properly manage livestock, certain types of livestock in particular, you do need some land. The agency of agriculture cannot effectively regulate four cows in a garage. We don't have the authority to sort of regulate that in a meaningful way. So there was a potential loophole there. Had one case that I remember where somebody had goats in their basement on a tenth of an acre in the middle of town, and they were milking the goats and making soap and selling the soap. And they wanted to be the town didn't, they wanted to regulate it and they came to us to say that they were farming and it was a hard decision because there is no land based requirement, but we didn't think that they had enough land to meaningfully comply with

[Amy Sheldon (Chair)]: the

[Steve Collier (Agency of Agriculture)]: RAPs. So there was that we understood that there was that potential deficit. We didn't see it being abused. It was a rare instance that it came up, but if somebody put 50 pigs on a quarter of acre and they were selling bacon, know, arguably they could be they would be subject to the RAPs and we probably couldn't on that quarter of an acre address the real issues. Could enforce the water quality requirements, but if someone was exporting all of their manure and weren't so they weren't discharging across property boundaries and they happened to meet the setbacks, then arguably they would be okay. So we we knew that was it was not a common concern, but we knew it was a weakness in the system. But one of the reasons we were, we were reluctant to address it because without farming protection, there's no protection. So if you raise the standards, then anybody who wants to grow food or anyone who wants to have livestock could arguably either be subject to zoning bylaws or even precluded from doing that activity because of zoning. So we were kind of at this threshold where we didn't wanna box people out because it's so critically important, we think for people to be able to farm, to be able to grow food and economic viability is such a challenge to farmers that we didn't want to make it harder for people and especially new and beginning farmers often have to start small. You can do some wonderful things on two acres with, especially with produce and vegetables. So we didn't wanna make it so that it was too difficult for anyone, but we also recognize that livestock, particularly on a really small parcel can be problematic. So when the league came to us, their their kind of concern was we we think the $2,000 is too permissive. We think there's not enough. Well, there's there's a place for towns in here where this is too easy for people to get zoning exemptions and maybe they're not really farming and maybe the standard should be different. We've had, so our first thought was, well, if we can, can make the, if the eligibility requirements are not so vitally important, then it will be easier to give on the other end, meaning let's talk about what really matters and not focus on everything. So we talked to the league and said, well, you really, our town's worried about growing plants, growing food because we really want everyone to be able to grow food, even if it's for their own consumption. You know, even if they're selling a small amount, we don't want to do anything to curb that because one neighbor perhaps doesn't like it, or just, you know, we'd like to keep that as clean as we can. And the league was fine with that. You know, we talked to them and said, yeah, we're not worried about people growing food. So like we can, we don't, we can agree that that should be exempt irrespective of whether somebody's technically farming. So we we thought that was great. Okay, that's good. Another thing that that people really like to do more more on homesteads, but also to raise their own food is to have, some poultry. And a lot of people can, you can have 10 chickens in a lot of places that you can't have 10 pigs. And so again, if you're selling the eggs, then you met the farming requirement, but if you're just raising your own chickens, then you don't meet the farming requirement and you could be subject to being zoned or even told you can't do it. So we talked to the league about that. This was important to a lot of the farm groups as well to make sure that people can raise their own food. So the league again was very amenable to saying, we're not worried about small backyard flocks of poultry. Like if you want it, whether it's farming or not, we don't think the towns need to zone that. As as I, if I've heard the league correctly, there isn't any town currently that precludes that. So they were comfortable saying, yeah, that's fine. So by taking growing food and raising a small backyard of poultry out of the equation, then it became easier to, from our perspective, to adjust the other requirements to essentially to ensure that if you have livestock, you have enough land to reasonably manage the livestock. So when we talked about that and said, well, there's no currently there's no land based requirement for you to be farming, but four acres also seems like a bit much. You can easily raise livestock on less than four acres. The question is how many should you have for the four acres? We had specific requirements. If it's four acres and 5,000, you're subject to the farming requirements. That's really to protect water quality because there's a certain amount of manure and nutrients and other things are being generated. So let's make sure that they're being captured. So we talked about, well, you don't need four acres to have livestock, but you do need enough land to be able to manage your waste and manage your nutrients. We, but we also understand that the smaller the parcel size gets, you know, if you're farming on a quarter of an acre, you're more likely to be in densely populated areas. You're more likely to have neighbors. There's more likely to be bigger concerns. So we talked about, well, what about having an acre, a minimum one acre requirement to be farming under the RAPs. And if it's one acre to four acre, which would be a change from what it was, we'll have the authority, the agency of agriculture to determine on those farms, whether or not you have enough for the number of animals you want, whether you have enough land to be able to responsibly farm those. And the league was also amenable to that. So this meant that you didn't have to have, so when sort of balancing the requirements, you didn't have to be commercially farming necessarily, you didn't necessarily have to have four acres, but you had to have enough land to manage your livestock if you're going to be farming. So that made us comfortable with saying, okay, well, can get behind these changes. Protecting people who want to grow food, but it's also making sure that municipalities have a role when you're putting livestock on a less than an acre. So essentially we said if you've got less than an acre that we're comfortable with that being up to the towns and they may permit it, hopefully they will permit it at least reasonably, but that's something that they can manage. If it gets above that, then we'll manage that. And the league was comfortable with that. So all of that, we were at consensus with the league, which was great. The leagues and you'll hear more from the league directly, just quickly, the leagues concern was less about the one acre and much more about tier 1A and tier 1B. And I won't try to explain it for them, but just so you have the context, they are worried about town development, future town development. They would like in tier 1A and tier 1B areas to be able to have authority to zone farms similarly to how they zone others. They don't want to prohibit farming in those areas, but they would like more expansive zoning authority. So we never, we couldn't get on the same page with that issue. Everything else we were both on the same page with that one we tried, but we ultimately agreed. We've come a long, long way. We mostly agree about everything, but we're going to bring these separate proposals to the legislature, but we also agreed we wouldn't change our position without consensus. So we really appreciated what they did and I think they appreciated what we did. So we said, unless we can move together, we're going to stick to our respective positions, which is why we've still been working for consensus. The farm groups are a little, some of the farm groups are in a little different side and they want kind of more than what we've compromised to. They want more ability for homesteaders to have livestock without regulation, totally valid legitimate points, but we sort of wanted to find something that would work for municipalities and for us and the farm groups. So essentially we were very close to agreement, but not all the way there and the language that you have in section 5.1 is the House Agriculture's Committee. I think it's that their effort to sort of bring all interest as close together as possible and they they have put in the tier one A and one B language which would allow municipalities to regulate farming, but not in a wholesale manner. So essentially they've, we can go through it if you'd like, but they, because that was when we were talking to the league.

[Amy Sheldon (Chair)]: Oh, was that really? Yeah. Sweet. Yeah. Did we have another rest of it?

[Steve Collier (Agency of Agriculture)]: Sorry. No. No. That's okay. So for a little more backdrop, when we were talking to the league about tier one a and tier one b and trying to come to consensus, we we said we're not necessarily opposed to any regulation of farms in tier 1A and tier 1B, but we'd like to know that it's needed and not just kind of an extra layer. So we said, well, there some public safety issues that you think livestock or farms pose and more densely populated areas that you need ability to regulate. So we kind of asked them to narrow down because the league's proposal was to kind of treat farms like churches and hospitals where they couldn't functionally prohibit them from existing, but they could zone a lot of things like landscaping and lighting and a lot of issues that we're very reluctant to have farms be subject to because it's just another layer and we don't think it's necessary. They've never been zoned in that capacity. We So said, but if there are some things that you're really worried about, if you're worried about traffic, if you're worried about livestock in densely populated areas, we're happy to talk about those. And we could probably agree that towns could have some authority in densely populated areas. That's what we were trying to do with the one acre. Under one acre was give towns authority in densely populated areas, but we're willing to think about it more broadly in the tier 1A, tier 1B area, but there are a lot of farms in tier 1B because they're planned growth areas. So that also means current farms. And you don't need me to talk about farm viability probably, but it's a disaster at times. I mean, it's flood in '23, flood in '24, drought last year, milk prices tanked. Mean, we just, we keep losing farms and farmland and it's really hard to do and to do well. So anyone who is successful where they are, we don't want to put up roadblocks. And so we want them to be responsible, everyone does. We think they are being, we're not aware of any consistent problems that need to be zoned. And also with farms, like a lot of farms are in multiple towns. So if you start changing the requirements for them and they suddenly have to know what to do in four or five different towns, it just become really cumbersome. We don't see the need for it. We regulate farm structures. They have to meet municipal setbacks unless they can't, and then they can come to us for a variance, but we talk to the towns about that. So we feel like the structure has been working and this is really just the Supreme Court understandably didn't understand. So, you know, we really want to get to a full agreement with the league and I still think we can, but if we're going to permit this new level of zoning, which hasn't existed before, we'd like it to be as targeted as possible. So I think the House Agriculture Committee was trying to do that in this version in 5.1 is they do, they put the language in the same section where accessory on farm businesses are currently in, where in towns currently can't prohibit an accessory on farm business, but they can't regulate them through either site plan review or performance standards. And so this is language where what the house ag committee tried to do was say, can't generally regulate farming in tier 1A and 1B, but you can regulate some things like trafficking, ingress and egress, some other public safety like concerns, signage, pavement markings so that they would have authority. I want to continue conversations with the league about what exactly would be effective for them and reasonable for farms. And I'm hoping we can figure out exactly what that would be. But I do think this is a good faith attempt to get where it's taking everyone's considerations into account and the farm groups as well. There's the right to grow food that's built in. There's the right to have a small backyard poultry flock that's built in. So it's really at the margins that I think need to be tightened, and we just need more time to to do that.

[Amy Sheldon (Chair)]: Thank you. We did walk through it last week, but we haven't walked through this most recent version of it. I guess, kind of bringing us back to the the problems we were trying to solve, the Supreme Court one seems fairly straightforward. That needed clarification. It's been that language probably didn't change. It's clarified from version four I assume. Does this the direction you're headed, will it actually address the issue that brought this to the Supreme Court, which was it's affectionately called duckweed in the building, about, like, is it gonna address that? It doesn't I'm not seeing if it will.

[Steve Collier (Agency of Agriculture)]: So the language that's proposed is you could have a small backyard poultry flock. I actually left out one part of our compromise, sorry, was the league didn't like the $2,000 threshold and they wanted it to be $10,000 and we, so we talked to them about that. We proposed $5,000 shockingly, a majority of farmers in Vermont do not make $10,000 because these are very small farms, a lot of them. But so we talked to the league about that and they were okay with $5,000 So our compromise position is $5,000 So that particular farmer in Essex did not have $5,000 in duck egg sales. So he wouldn't have been farming if under the revised definition. However, everyone is allowed to have a small backyard poultry flock under this definition. So this would allow everyone to have small and small is not defined. We expected that is something that would get discussion in the legislature and so far, it hasn't people have been pretty comfortable with small, but it's a it's a reasonable question. What is small? And we know that. We just didn't wanna propose a number because no one really agreed upon a number. And I don't know how many ducks there were in Essex. I also think

[Amy Sheldon (Chair)]: It was, like, 50 comes to mind, but I don't I mean, I might but I but that was because of the definition of regulated by the wraps.

[Steve Collier (Agency of Agriculture)]: It was because of the $2,000 in sales. It wasn't the number of animals.

[Amy Sheldon (Chair)]: It wasn't at all.

[Steve Collier (Agency of Agriculture)]: No. Okay. It was because he he didn't have four contiguous acres. So to be to to fit within the four to to fit within the livestock

[Christopher “Chris” Pritchard (Member)]: I see. They go

[Steve Collier (Agency of Agriculture)]: to Yeah. Yeah. So so he had about a half an acre, I believe, and he had $2,000 in sales. So that's how he was fitting underneath the under the definition. As I I under as I understand it, the the there was a dispute between neighbors. I I think the I've been told that the cannabis was the bigger issue between the neighbors. Not not that I'm judging that.

[Amy Sheldon (Chair)]: Well, that's why I'm asking is is this results is this resolving the cannabis?

[Steve Collier (Agency of Agriculture)]: This doesn't this doesn't cover cannabis. The when our cannabis is regulated by the cannabis control board. It's not considered farming in the state because of the federal law essentially, really. And so this would not this this is not an effort to address cannabis in any way.

[Amy Sheldon (Chair)]: Small amounts of outdoor growing of marijuana or farming?

[Steve Collier (Agency of Agriculture)]: No farming. Are subject to some parts of the RAPs. The cannabis control board basically, as I remember what happened is that because the RAPs are, I mean, would be farming if it wasn't for federal law. It's just that federal law prohibits it. And this agency of agriculture gets a lot of federal dollars. So to have the agency of agriculture do it, we would be violating the drug free workplace act and all of our federal money would be subject to seizure if we were had marijuana in the workplace. And so it doesn't make good sense for the agency of agriculture to regulate cannabis, whether it's hemp, we can, if it's just hemp, but but but it's but now we don't anymore because it's it's cannabis. Yeah. So the cannabis control, this is not meant to address cannabis in any way. It's really was so and I think it was Michael Grady when we first talked about growing plants in the in the in the protection for anyone regardless of whether you're farming suggested writing excluding cannabis. I mean, that makes that makes sense. I don't know that it's necessary because we don't regulate cannabis, but it clarity is fine in that regard. It's not it's not meant to address cannabis because that's not us.

[Amy Sheldon (Chair)]: Members have questions?

[Christopher “Chris” Pritchard (Member)]: Representative Pritchard? And you also don't control hemp anymore. Right? Agriculture doesn't control. That's what the cannabis for.

[Steve Collier (Agency of Agriculture)]: The there's so when the when hemp about in 2022, hemp was essentially when the cannabis control board was sort of expanding their jurisdiction, the the What happened legally was hemp regular growing hemp went to USDA instead of us. Our hemp positions got transferred to the Cannabis Control Board. So one way to address that was USDA has an identical program that we had at the time that we had to have, because under federal law, have to be the same. So hemp growing became regulated by the USDA, same rules, but federal regulation. And the cannabis control board took over hemp processors. There's since been a little, there's been some dispute about that and there's actually language in the Senate Agriculture Committee to try to

[Christopher “Chris” Pritchard (Member)]: because you're trying to close them down.

[Steve Collier (Agency of Agriculture)]: Well, yeah, there's some issues with it. Yeah. Yeah. And so we're we're trying to fix that in Senate agriculture, but it would not, we don't think many cannabis growers want to do both hemp and cannabis and they can legally, they can get the, and the big benefit to hemp is you can export it. So instead of talking about a tiny little Vermont market, you've got at least a U. S, maybe a global market. Cannabis is an in state market only. So they're very, the potential is very different. And so we want a path for everyone to be able to, whether they're growing hemp or cannabis, be able to do it legally. With hemp, it has to meet federal thresholds to be exported. With cannabis, it's got to meet state thresholds. So there's been a little bit of, it's been some challenges navigating that change,

[Christopher “Chris” Pritchard (Member)]: but we're working on it. I hope you saw that. I have a constituent of the close hand, or the process for CBD, And he's been told that he has six months to sell what he has in inventory, or a cannabis court is gonna have it confiscated. That's what he's been told.

[Steve Collier (Agency of Agriculture)]: Well, we've been talking to the CCB, and they're trying. It's not an easy world to navigate with the federal state disconnect just because everything they do is illegal under federal law. So it's not easy. I have some sympathy, but we also, we had a lot of farmers were quite successful in growing hemp and building a market, and we don't want them to be precluded from continuing it because one of the trickier issues is importing hemp. Like, you grow it here, you ought to be able to if you're if you're importing the I don't know how much you want me to get

[Amy Sheldon (Chair)]: into it. I'm curious, though, about I need to revisit the statement that your positions were switched to the cannabis control board. Why? If the hemp is legal and it's a USDA thing and the federal is why did that happen?

[Steve Collier (Agency of Agriculture)]: Well, they needed people cause they were a new program and they were growing and we had some people for hemp. And so it just was a way of not creating new positions, but still regulating cannabis. And the USDA program is by law identical to our program. It had to be, it's free. As I remember at the time, at least it was free. Think it still is all the same requirements apply and the requirements became a lot more onerous when the Congress first passed the pilot project in 2014 to grow hemp, it was a pretty permissive standard. And then in 2018, they tightened up the standard and it became much more difficult to grow legally compliant hemp. The testing parameters greatly expanded, the way that you calculate the amount of THC greatly expanded. So it became much more difficult for growers to grow legal hemp. And so a lot, our understanding at that time was that most Vermont growers was our primary concern is the folks who are actually growing it here, producing it here, that they wanted to be able to grow cannabis, you know, marijuana. So it made more sense for them to be able to do both under that umbrella rather than trying to meet the hemp requirements, and some people still do meet the hemp requirements through the USDA program, but it's, you have to be much stricter. The way that they were, they calculated the level of THC was changed dramatically. So initially it was, it was point three THC by Delta nine THC by, by weight and point three in the plant is easy, but USDA by rule said you have to first burn, basically burn the plant and count the THC A that's in there, which ratchets up the amount. So it went from pretty easy to meet the threshold to pretty hard. And we thought, and we do believe most processors wanted to be able to do both. So it made sense to go to the CCB and it was just a way not to expand government positions at that time. It's just been, there's been some wrinkles in getting there with the processors, not with the growing, but with the processors. And there's a lot of people who are growing marijuana can't get tax deductions, they can't claim their expenses, it's hard for them to get loans. There's just a lot of extras for businesses who are involved in cannabis that's not strictly hemp. So they, they have a challenging path, but there's been some who've been done terrific job and we, and who who have had a really developed a big market. You can make a lot of money with the products that are perfectly legal, and we don't wanna stop those folks.

[Amy Sheldon (Chair)]: Questions for Steve Collier on

[Steve Collier (Agency of Agriculture)]: act? Thank you so much. If you have, I'm happy to

[Kate Logan (Member)]: I just just I'm not clear where what's happening with the Supreme Court. The ruling has come down. As a member of the whole Testament Planning Commission, it was shocking to me, this ruling. And I'm just wondering, is it just you negotiating now with the league to figure this out? You can't appeal the ruling on this.

[Steve Collier (Agency of Agriculture)]: No. Right. The the law right now in Vermont is that municipalities can apply zoning bylaws to farms, except for water quality practices and farm structures. But in every other way, now, towns can apply zoning to farms. So the only way to change that is right here. We're doing. Yeah. Right. Right. Right.

[Amy Sheldon (Chair)]: And there is version 5.1 up on the web page now for folks to look at.

[Steve Collier (Agency of Agriculture)]: If you have any further questions this week, I know, I mean, this is an important week. Happy to come back and answer whatever questions I may be able to.

[Amy Sheldon (Chair)]: Great. Thank you so much.

[Steve Collier (Agency of Agriculture)]: Yeah. Thank you very much. Thanks. Thanks.

[Amy Sheldon (Chair)]: We'll be taking more testimony on this tomorrow, and that'd our