Vermont Legislature SmartTranscripts:

[Sen. Russ Ingalls (Chair)]: Back in action. We're gonna spend some time with legislative counsel on our miscellaneous ag bill. Attorney Schumann, are you gonna lead it?

[Bradley Schumann, Office of Legislative Counsel]: I will.

[Sen. Russ Ingalls (Chair)]: Okay. If I may. Yes, you please,

[Bradley Schumann, Office of Legislative Counsel]: sir. Self situated. Here, welcome to

[Sen. Russ Ingalls (Chair)]: the Center of Agriculture. The floor is yours, sir.

[Bradley Schumann, Office of Legislative Counsel]: Thank you. Bradley Schumann, Office of Legislative Council. And today, I will do a walkthrough of the Senate Agriculture Miscellaneous May Bill. And I am going to share my screen with the PDF so we can walk through it on the screen. Setting that up

[Sen. Russ Ingalls (Chair)]: now.

[Bradley Schumann, Office of Legislative Counsel]: And I have a summary that was posted. I said, I've created out copies of the summary if you'd like to I'll take

[Sen. Russ Ingalls (Chair)]: a copy of what you do, I want to print it out for tonight. Seem to leave my computer near the wrong.

[Bradley Schumann, Office of Legislative Counsel]: Take them at your leisure.

[Sen. Russ Ingalls (Chair)]: I got one now. I've got it

[Bradley Schumann, Office of Legislative Counsel]: on the screen. So summary just goes section by section.

[Sen. Russ Ingalls (Chair)]: Rob, you I don't know. I'll take that back.

[Bradley Schumann, Office of Legislative Counsel]: Thank you. The summary goes section by section of the bill. It's a a longer bill, and Yeah. So let's get right to it.

[Sen. Russ Ingalls (Chair)]: I couldn't keep the senator major from my admin. I just kept going. Wow. And

[Bradley Schumann, Office of Legislative Counsel]: so the first three sections are the municipal agriculture regulation sections. These sections are meant to undo the holding of Tap Street that we discussed last time I was in the committee. Holding of Tap Street permitted more extensive regulation municipal regulation of agriculture by municipal bylaw. So the first section here lays out some findings for the this municipal agriculture regulation section. Since the enactment in 2020 or 2004, it's been both the intent of the general assembly and controlling law that a municipality shall not regulate farming, including the construction of farm structures. And, the Supreme Court's decision misconstrued that history, and to avoid unchecked and unintended consequences of the decision, it's necessary for the general assembly to clarify that municipalities under ordinance or bylaw shall not regulate farming or construction of farm structures as set forth in 24 BSA forty four thirteen b. And for purposes of section two, it is the intent of the general assembly to overturn the holding. I put that section in there because the Supreme Court did want to see or did note that they did not see legislative findings, and in the decision, we won't comment on that, but but we wanted to put that in there to make the legislative findings clear. So this next section, this is language that was posed by the agency of agriculture, and it does two things. One, it restores

[Bradley Schumann, Office of Legislative Counsel]: municipal regulation of farming to the pre tax rate status quo. And then the second thing it does is it actually expands upon what would be prohibited by municipal regulation. I'll go

[Bradley Schumann, Office of Legislative Counsel]: through point by point. It's the important thing to know as we go through this is it is not just a return to the status quo. There is an expansion here. And so by bylaw, a municipality shall not regulate the cultivation or other use for of land for growing plants, including the list there. Grazing, feeding, management of small backyard poultry, excluding roosters. Those are things that would be would be added. And then this language would clarify the language the Supreme Court had a had a hard time with in the task group decision. So this language says that farming that meets the minimum threshold criteria in the required agricultural practices rule and is therefore required to comply with the required agricultural practice rule. This language in isolation is what would return us to the freeze pastry status quo.

[Sen. Russ Ingalls (Chair)]: And I'm not gonna spend a lot of time on each one of these sections. We have a lot to get through. We're not a lot of time. But I think that was important to get that language in there because from what I was hearing and what was being told to me as well was that the reason why the Supreme Court, that the Supreme Court was actually saying, Where's your language? Where is it? If we had that language, probably there would have been a different outcome.

[Bradley Schumann, Office of Legislative Counsel]: I think that's correct. I think that's correct. The decision was based on the plain language of the statute, so we're spelling it out much more plainly. So we won't go through each of these line by line. By moving on to page four. These are changes to clarify definition and to spell it out. Section three is a change to required agricultural practices. Any changes to the required agricultural practices will have the effect of expanding what municipalities may not regulate by bylaw. And the big changes here are that the agency is proposing to increase the gross income of agricultural products from 2,000 to 5,000 before you're subject to the RAP's rule. We're moving on to page six. They are they are proposing language that would permit them to regulate it used to be four acres and more. Now they're proposing language to regulate one to four acres to regulate farm animals and agricultural practices such so long as the activities have sufficient land base for nutrient waste management, as this is another expansion of what the rules would regulate. And the next page on page seven is another similar kind of expansion there. And we're moving on

[Sen. Russ Ingalls (Chair)]: moving on

[Bradley Schumann, Office of Legislative Counsel]: to to page page eight, and I will slow down and talk about anything more fully. I am trying to just get through all of this. You're fine. We'll we'll stop you. So the Vermont Income Capital Gainings and Property Transfer tabs. My colleague, Kirby, I confirmed him on this, and he graciously offered to step in at 11:30 to talk about this piece, and he has some notes that he'll share with you. So we're going to skip past this for now.

[Sen. Russ Ingalls (Chair)]: Okay.

[Bradley Schumann, Office of Legislative Counsel]: And so we are scrolling down to section six on page 12. Accessory on farm structure permit. So this will change the requirements, that will say that no permit or permit amendment is required for construction or improvement of the on farm accessory on farm business for the storage or sale qualifying products. It's changing the threshold provided that the log used to be provided at 50% of the total annual sales of the prepared or processed qualifying products that come from the farm do not exceed Thank you. The threshold used to be at 50% now. They're changing the threshold to where you would not need a permit to $250,000. So instead of a percentage of annual sales, it's just changing to a hard number.

[Sen. Russ Ingalls (Chair)]: Do we know where that number came from?

[Bradley Schumann, Office of Legislative Counsel]: Is language proposed by the agency of agriculture, and so if there are policy rationales for this, I'm not really sure.

[Sen. Russ Ingalls (Chair)]: Okay. We'll bring it back. And

[Bradley Schumann, Office of Legislative Counsel]: section seven, the agricultural land definition, This is meant to amend the definition of agricultural land. Mhmm. It's an added presumption that the land is used for agricultural purposes. If if it has produced an annual income from the sale of crops or the equivalent value of donated crops in one or two of the following categories. So the change here, if a a farm donate crops instead of sells them, it can get the presumption that it is being that land is being used for agricultural purposes if it meets these criteria for donating crops. That section is farm kitchens. My colleague, Katie, will

[Sen. Russ Ingalls (Chair)]: be Can I just go back just on that Yes? One section, Simon. So I presume that the proof of them as far as donated crops would be in some kind of filing that they had with the IRS some sort, or when the state of Vermont, as far as looking for a tax advantage, that they actually donated these crops and not just hearsay it on a slip of paper.

[Bradley Schumann, Office of Legislative Counsel]: That would that would be the assumption. However, this language does not necessarily require that, and so let me check on that and get back to you. Okay. The proof of Yeah.

[Sen. Russ Ingalls (Chair)]: Proof of sale. Proof of sale.

[Bradley Schumann, Office of Legislative Counsel]: Presumably, the farm is taking that as a tax deduction, but that would be the assumption that we don't charge. Okay. Farm kitchens is Katie will come in at 11:45 to discuss and so we are going to skip to page 17, section 10. So this is this is the rep representative Burt's bill regarding, new electric generation siting facility siting. And so this section would, amend the criteria for citing a new electric generating facility to include a ample changes. And the first change is that for a public hearing about the siting of a new energy, electric energy generating facility, the Agency of Agriculture Food and Market shall appear as a party. The siting shall also include, or the application for the citing shall also include the presence of total acreage of primary and then adding in secondary and local importance agricultural soils. So adding some additional information to the applications for the citing. For the certificate of public good that an electric generating facility needs to issue to ensure that their facility is for the public good, Going to add some requirement or this bill will add some requirements to that, including, an audit of payback time on carbon dioxide emissions at the cost of the applicants and an audit that includes a cradle to grave calculation, including resource extraction, mining, procurement, production, manufacturing, transportation, deployment of and disposal of all technology required in solar panels, concrete footings, transformers, batteries, forest ecosystem disruption, and then foregoing twenty five years of agricultural crops. At one point, this was twenty years in a in a version of Brett Burt's bill. The most recent version includes twenty five years, so I hope they did that in here.

[Sen. Russ Ingalls (Chair)]: Is there is there nothing in here for for cleanup as far as after the after it succeeded, it's like, do they have to bond or anything for that to make sure that there's money there for rest of the season to clean it up?

[Bradley Schumann, Office of Legislative Counsel]: I'm I'm not meaning to to if the facility is at the end of its life cycle Yeah. And then the I'm not familiar with with if they have to include that into the calculation. Let me check out the because you got top of that,

[Sen. Russ Ingalls (Chair)]: but I've never, is there anything, like, in the worry world there is that you have to set aside money to be able to reclaim it when you're done, and Well, you do hear from the and, again, I'm with you as far as that. You do hear, Well, we have to restore this back to the original shape or the condition of what the property was, and I don't know that If I file bankruptcy and have no money, it doesn't get Right. Can check on that and get back to the committee. Sure.

[Bradley Schumann, Office of Legislative Counsel]: Next section is milk producers, and we are on page 23, section 11. This corrects an error in the statute. This statute allows a milk producer to request a hearing if they have a dispute with a purchaser. And so this statute of amends section d here, if a request is made by the producer, refusal of the purchaser shall not to participate in the hearing shall not become operative or excuse me, refusal of the purchaser to not purchase the goods shall not become operative until a hearing of decision deferred by the secretary. So it just changes the language there. So producer would be requesting a hearing, not the purchaser. When the purchaser is backing out of a a sale to to purchase milk. The next section is amends the Farm to School program. And currently, it is a grants only program, and they this is another proposition by the Agency of Agriculture. The agency would like to also permits contracts in additions to grants. And so the language in this section would permit the agency of agriculture to execute, administer, and provide local grants or contracts for the purpose of helping Vermont School develop the Farm to School programs. The rest of the language in this section amends that to say grants or contracts for that piece. You're on page 26 on section 13. Section 13 repeals the Interstate Pest Control Compact. This is a compact that existed for quite some time, I believe late sixties, early seventies. It went into the effect and it became defunct in 2013. This compact was an insurance fund. I heard you. This compact was an insurance fund that would help states mitigate pests outside of their borders. And due to a change in the IRS tax category that this compact was in, they became financially untenable, they closed the doors to 2013. And so a number of states have kind of passed laws to to not be in this compact anymore, and this would be ours. Kirby is here, so I suggest that we pause and allow Kirby to talk about sections four through five, and then I can pick us back up on page 26 on section 14.

[Sen. Russ Ingalls (Chair)]: Sounds good. Thank you. You're looking scrolled up. Yeah.

[Kirby Keegan, Office of Legislative Counsel (Tax)]: That would be great. I don't think that that was my backup link.

[Bradley Schumann, Office of Legislative Counsel]: That's okay. You can just use my computer. Page number. We go. Yeah.

[Sen. Russ Ingalls (Chair)]: We got There you are.

[Kirby Keegan, Office of Legislative Counsel (Tax)]: Thank you very much, Brad.

[Sen. Russ Ingalls (Chair)]: Thank you. Appreciate it.

[Kirby Keegan, Office of Legislative Counsel (Tax)]: I'm Kirby Keegan, legislative counsel. I handle the tax

[Sen. Russ Ingalls (Chair)]: portfolio for our office. Welcome. Glad to have you here.

[Kirby Keegan, Office of Legislative Counsel (Tax)]: Yeah. Let's talk about BonTaxo.

[Sen. Russ Ingalls (Chair)]: We bring here a return. He's He's a little side business

[Kirby Keegan, Office of Legislative Counsel (Tax)]: that he does a little bit. So Okay. So we are on section four and then page nine. The place in the law that that we're at here is the definition of taxable income in this robust income tax chapter, and the language you have really starts on page 10, starting at line eight. There's two exclusions from taxable income here. To give you a little bit of the background, there's there's different ways to take something off of your income taxes. One is to exclude it, which would mean it doesn't even go on the return, this income. And that's what this is. Don't even report it. The second way to reduce tax liability would would be through a deduction, which is where you do report the income, but then you take some of it away and it doesn't get taxed. And then a third way would be a tax credit where you pay all of your tax liability, but you get a credit toward the tax liability itself, and that could be refundable or not refundable. So now that we, you know, there's see different ways of approaching it, in this case, it's an excluded. This is being taken or being left out entirely of taxable income. It would need

[Bradley Schumann, Office of Legislative Counsel]: to be reported on a return.

[Kirby Keegan, Office of Legislative Counsel (Tax)]: So the first exclusion here being proposed is the amount of any net farm profit provided the taxpayer's net farm profit during the taxable year did not exceed $10,000. The way that would work is at the federal level, people report on a sched what's called a schedule f, their their net farm profit to be taxed. Net farm profit would be all the income from farming, which under federal law, that's gonna be set out to be certain things, and then you take all the expense, the farm expenses that are allowed at the federal level, and then that flows through to your Vermont return, and that would be your your net farm profit that that could be taxed in Vermont. So the proposal here would be if you don't have more than 10,000, you would not report that, and that income would not be taxed. So I'm

[Sen. Russ Ingalls (Chair)]: not sure how many farmers there are

[Kirby Keegan, Office of Legislative Counsel (Tax)]: whose profit doesn't exceed $10,000. This looks like it's aimed at people who dabble and and have a little bit of farm income, and it's probably not their main source of income.

[Sen. Russ Ingalls (Chair)]: Used to do a roadside stand that we didn't make that kind of money in. Really? Yeah. You do it as a hobby. Okay. A hobby paraness. Very well. Or maybe somebody just getting started. Yeah. Would you like to see that one to go up? I don't know what's a fair limit. If it was my full time job and I was only making $10, I'd probably do something else. Right. Do you know how they came up with the 10,000?

[Kirby Keegan, Office of Legislative Counsel (Tax)]: I don't know much of the backgrounds proposal at all. I'm kind of a mercenary here being called it.

[Sen. Russ Ingalls (Chair)]: Don't know that kind of stuff. Probably. At least your aunts. Yeah.

[Kirby Keegan, Office of Legislative Counsel (Tax)]: Yeah. I mean, we can definitely look into it for you, though, and and I and I think Bradley probably could shed some light on the background. It would be great.

[Bradley Schumann, Office of Legislative Counsel]: Okay. Thanks for being the arbitrary.

[Kirby Keegan, Office of Legislative Counsel (Tax)]: Yeah. Yeah. So the yeah. My read on this is the policy intent is to not provide this to people who are 100% full time customers, but the thoughts would be what it's worth. Okay. So moving on to the next one, which, again, I don't know the background, and I I do know that these proposals came from things that have happened in years past, but there are some issues on the next one. So so the next proposal here, starting at line 10, would be to exclude net capital gain income from the sale of real estate that is part of the farming operation provided the buyer continues using the real estate and is either related to the seller or was an employee of the farming operation for at least ten years. Yep. That that all seems discreet and and understandable, but there's a clawback starting at line on 18 where basically you lose the tax benefit if it's ever developed, and developed in this case is using the term from current use. So

[Sen. Russ Ingalls (Chair)]: without really confusing it, almost like a ten forty one exchange, you're actually pushing off the tax liability till later on in life, if the situation changes.

[Kirby Keegan, Office of Legislative Counsel (Tax)]: Yeah. And in tax law, there there are clawbacks like this where it's something you lose tax benefit if something happens subsequent. I can't think of an example that I'm aware of where that happens with an exclusion, though, where, like, you left it off your taxes Because, you know, when you file your taxes, you're paying tax for that for that tax year for that year. In this case, it would be you owe taxes years later potentially for some for, you know, and you so you left it off your taxes in the year in which you earned it. That is not typically how that goes. That's one issue. The example I can think of in Vermont, though, that we do have, we have a tax credit for five twenty nine plans, the Vermont Higher Education Investment Plans, if you up to $2,500 worth of contributions you make to one of these plans per account, you can take 10% of that as credit. Right? And the way that Vermont potentially asks someone to pay that back later is there's a penalty if you take a distribution years later from one of those accounts and it's not used for the allowable purposes.

[Sen. Russ Ingalls (Chair)]: Can we put a time on that too? Like because the person keeps it for twenty years, you know there is 10 who wasn't to sell.

[Kirby Keegan, Office of Legislative Counsel (Tax)]: That's I'm about to get to those two problems here, and that's one. So with the 05/29 plan approach, least, so so that would be one suggestion I would make. If you wanna pursue something like this, the precedent that we have would be maybe use a credit, maybe do it like the five twenty nine plans where there's instead of saying that you have to pay the tax back or or something like that, you would just create this separate penalty like like, you know, that credit has. But that way, we're not trying to talk about a tax debt that's hanging out there for years and years. In that case, it would just be a penalty that occurs later. Right? So that would be one suggestion. Another kind of maybe bigger problem is with the compliance, the administrative side of this, though. We're taking a current use mechanism, and we're gonna try to apply it to the income tax. With current use, you have a lien on the property, and the compliance issue is kinda taken care of where if you want that lien off your property, you're gonna have to pay land use change tax. We don't have a lien in this case, so the department would be in the position so when it comes to current use, they don't have to track

[Sen. Russ Ingalls (Chair)]: development. That's just if

[Kirby Keegan, Office of Legislative Counsel (Tax)]: you want the lien off, you gotta pay. So the lien kind of serves the purpose of any kind of compliance work that has to be done. We don't have that for this, so it would it would put the department in a position where they would have to learn about the development happening if someone doesn't voluntarily come forward and pay a penalty for development. Just and that's the same problem that happens with the five twenty nine thing I was talking about, where if someone uses a distribution five twenty nine plan inappropriately, there's questions of how does the department go about finding out about that. That's that's tricky as far as the compliance side of it. That same problem exists here too. So so it could be done through the tax credit with the penalty, but you're gonna have that compliance issue no matter what, because we don't have the benefit of the current use lien in this case.

[Sen. Russ Ingalls (Chair)]: But why couldn't you create a lien? Why couldn't you create a lien so that it would it would I don't know how you would do that, but so that it would kick in something. I mean, you're, you know, as you're gonna use an attorney to change the use or change whatever or change ownership or whatever, it's gonna show that there's a lien on the property. Well, what the heck is this? Well, this is what it's for. So I mean, could you attach a lien to that?

[Kirby Keegan, Office of Legislative Counsel (Tax)]: We could we could look into that. I mean, the things that come to my mind are is is the income tax benefit here gonna be worth it for someone to put a lien on their property? Under current use, you get pretty significant benefit as people go through that process. So that would be one question is what is the benefit? In this case, I mean, the capital gain from the sale of the entire farm, I guess that could be, that's pretty significant. It is. So maybe people would be willing to do that.

[Sen. Russ Ingalls (Chair)]: Well, it's, so again, just for the other people, real estate world, ten thirty one exchange, I sold a business, here's my tax on it, but as long as I went and bought another business like that, the tax would defer And then at some point in time, if I sold that second property and I didn't roll that into another like property, then I pay the tax at that point in time. And so there is a mechanism there. I didn't know the mechanism that we attach here.

[Kirby Keegan, Office of Legislative Counsel (Tax)]: Yeah. And but it's it's tying it to development, you know, makes the compliance side trickier. But, yeah, there's there's different things to explore. I think I think the issue of of putting a time limit on it, if you're that's I would you know, you'll wanna talk to the farmer tax if they Yeah. Sure. Go through the administrative issues that they see, I imagine that's one too where it's like thirty, forty years down the road. They're like, what?

[Sen. Russ Ingalls (Chair)]: You know?

[Kirby Keegan, Office of Legislative Counsel (Tax)]: It's like how development occurred. And like, what do we do now?

[Sen. Russ Ingalls (Chair)]: I think they're gonna have some questions about that. Well, trick is not to discover it that late. It's to discover it as it happens, and there needs to be something in there that gets discovered in a title search, so there'd have to be an attachment of something that said, There's a lien on this property. Okay, what's it for? I mean, see that all the time in real estate. We see, Oh, oh no. Sometimes it's as simple as that you didn't get a lender to sign off on a note that was paid or something triggered that. We'll talk to the Department of Tax.

[Kirby Keegan, Office of Legislative Counsel (Tax)]: I think they'll give you their view on it. My take right now is maybe think about tax credit, maybe think about a penalty that applies. The lien would help with the compliance issue, and, you know, I think going from there. Okay. So moving on to the next section. Section five is a an exemption for the property transfer tax. It's similar to what we were just talking about, and that the exemption would apply for transfers of property that are part of a farming operation, providing provided the transfer will continue using real estate's farm farming operation and is either related to the seller or was an employee, and it has the same clawback approach that's tied to the current use definition of development. Same issues apply as far as the compliance side and how will the department know when development occurred in order to go back and impose the penalty here, so to speak, or the transfer tax.

[Sen. Russ Ingalls (Chair)]: So

[Kirby Keegan, Office of Legislative Counsel (Tax)]: you

[Sen. Russ Ingalls (Chair)]: could put a lien on illness on the property when it transfers hands. So it's always there. Right. You have to have something to trigger something for somebody to look for. That's what you have to have. It could be as simple as that. There's a lien. Okay? What's the lien for? Oh, the lien's for this. Okay, well, we gotta notify the tax department. We gotta notify whatever. So there's a way to do it. Whether it's the right way, I don't know. We'll turn people in. We'll find out. Maybe it's all amazing. Sorry. I'm used to a.

[Kirby Keegan, Office of Legislative Counsel (Tax)]: So that's it for the tax then.

[Sen. Russ Ingalls (Chair)]: Thank you. Appreciate it very, very much. And we continue to generate some thought and discussion already. So Yeah.

[Kirby Keegan, Office of Legislative Counsel (Tax)]: And just let me know if you need me to work the tax to,

[Sen. Russ Ingalls (Chair)]: you know, make adjustments. Yep. Thank you. I appreciate it. Yeah. Yes. Very much. Bye, everybody. Yep. Have a good day.

[Bradley Schumann, Office of Legislative Counsel]: And, Linda, can you let me know when Katie hop hops on online?

[Sen. Russ Ingalls (Chair)]: Katie has not yet.

[Bradley Schumann, Office of Legislative Counsel]: Okay. Great. Oh, and I'm scrolling down to page 26. We are continuing on section 14.

[Sen. Russ Ingalls (Chair)]: Get all the way to the bottom here. Uh-huh.

[Bradley Schumann, Office of Legislative Counsel]: Bit A more than a half. Okay. Section 14, licensing pesticides applicator the pesticide applicator licensing. This would amend the statute here to prevent individuals to take the exam as many times as they'd like. The next subject is it currently limited? It is currently limited to

[Sen. Russ Ingalls (Chair)]: Four. Four? Yeah. I think it's I'm sorry. I shouldn't have said it. No. No. I think it's four.

[Bradley Schumann, Office of Legislative Counsel]: I was gonna say three or four. Yeah. And so and so it is currently limited. This would remove pollination. We're not sure how many people are taking it more than or would like to take it more than four times, but this would remove that barrier if that is becomes an issue. Section 15, the CBOG conforming to universal standards. Okay. So these are sections 15 through 20, and I'll go through this, but I will not go through it line by line. And this these sections make small changes to seed law to conform to universal standards. And so let's start going through this. We are on page 28. Just clarifies the definition of labeling and to include information that describes the labeled seed. We're moving on to page 29. The definitions, it's adding in definitions of distribute and distributor and treated. In particular, treated means seed that received an application of a substance process designed to reduce control or repel certain disease organisms and so forth, and this language will be installed in pieces in the section, in the remainder of the sections that are being amended in order to increase clarity and to focus on what is being addressed. On section 16, changes the language, distributed distributed and distributes just using that uniform language. Section 17, again, using the uniform language that was created in the definition section. We are moving on to page 31. Caution statements of the label, again, changing the language to make it clear. Section 18, more changes to the distribution language. We're scrolling on to page 32. More changes to that language. I will point out number three is added here. Failure for administrative penalties, adding a penalty failure to report the quantity of genetically engineered treated and untreated seeds sold in the state during the previous calendar year. Section 20, registration and reporting changes a fee, and we're moving to 34. And just some changes to the language here

[Sen. Russ Ingalls (Chair)]: to conform. There are lots. A language lot in here. What would you say, attorney Shalman, what's the, is this just something that hasn't been paid attention to? Is this in preparation because of

[Bradley Schumann, Office of Legislative Counsel]: the treatment seeds and non treatment seeds? What's this section really trying to do in your opinion? The vast majority of this section is trying to update the language to conform to universal standards in the

[Sen. Russ Ingalls (Chair)]: the name of the

[Bradley Schumann, Office of Legislative Counsel]: there's a a compact that cited earlier. Recommended Uniform Sale of Seed Law. Okay. And so the vast majority of this section is updating the language to do that. There are the piece that I pointed out with respect to the genetically modified seeds and that reporting. So some there is increasing reporting requirements. There's a changing in the bee structure. Sounds like more than anything, we're

[Sen. Russ Ingalls (Chair)]: trying to find out what's getting put in

[Bradley Schumann, Office of Legislative Counsel]: our soils as far as for seeds and such like that. That is exactly right. And so it's more information about what seeds, what kind of seeds, genetically engineered, especially with respect to genetically engineered material in pages thirty four and thirty five. You'll see that disclosures of genetically engineered material, treated seed and untreated seed, and more information regarding disclosure of use of pesticide treated article seeds, and again, we're genetically engineered material. I think this would be the policy rationale if there's something brewing, would be a good thing to have Steve Collier Yeah. Testify on if there is some there's a a a more of a policy impetus behind this over and over.

[Sen. Russ Ingalls (Chair)]: Okay. Sounds good.

[Bradley Schumann, Office of Legislative Counsel]: And we are moving on to sections 24 on Okay. This is actually a good stopping place because this one gets complicated. So, Katie, I'm going to, first of all, mark where I am on page 36, section 24, and I'm going to scroll up to the farm kitchen section. Okay, Katie. And I can continue to share my screen and scroll as as we go through this.

[Katie McLennan, Office of Legislative Counsel]: Okay. Perfect. Good morning. Katie McLennan, Office of Legislative Counsel. I Good can't be

[Sen. Russ Ingalls (Chair)]: Thank you for coming.

[Katie McLennan, Office of Legislative Counsel]: Good morning. Sorry I can't be there in person with you today. So there are two sections in this bill that define farm kitchen operations and set a fee for it. As I know, this committee is familiar because you worked on the cottage food products last year. There is a chapter in Title 18, which is the health chapter, that establishes a set of definitions for food and lodging establishments and food manufacturing operations, and creates a licensure structure through the Department of Health and licensure fees. So what you're looking at in Section eight is actually the same section that you looked at last year when you were looking at adding the cottage food products. We're looking at the exact same definition section, and here the proposal is to create a new type of food manufacturing establishment, and that would be the farm kitchen operation, which means an accessory on farm business as defined in Title 24 that utilizes a dedicated kitchen facility located on the premises of a working farm for the purposes of preparing, preserving, packaging, labeling, or storing food products derived from crops, livestock, or other agricultural goods grown or raised on the farm for farm direct sales, donation, or distribution. So that is the definition. And from there, we have some renumbering happening. And so we have an established definition of food manufacturing establishment, and it lists all different types of facilities that fall under the broader term of food manufacturing establishment. And if you look on line six, farm kitchen operations would be added to this list, along with cottage food operations, food processors, bakeries, distributors, etc. So that's being added there, and otherwise, I think we just have renumbering for the rest of this section. And then section nine, this is also a section that you worked with last year when you were looking at the Cottage Food Products. This is the licensure requirements and the fees associated with each of those licenses. And as you may remember, each license type has its own set of fee requirements. So if you scroll down a bit, there's on line sixteen and seventeen, there's the addition of food manufacturing establishments, farm kitchen operations specifically. The fee there would be $75 as proposed in this draft. And that's all I have for you today.

[Sen. Russ Ingalls (Chair)]: I should note that. Katie, Okay. Thank you very much. Appreciate you.

[Katie McLennan, Office of Legislative Counsel]: Yeah, you're welcome. If you have any questions, feel free to be in touch.

[Sen. Russ Ingalls (Chair)]: We will.

[Bradley Schumann, Office of Legislative Counsel]: Thank you so much, Okay.

[Katie McLennan, Office of Legislative Counsel]: Bye bye.

[Bradley Schumann, Office of Legislative Counsel]: We are back at page 36. And this is a little bit of a complicated section. And so the agency of agriculture is proposing to move the Vermont Agriculture Credit Program from its own chaps its own chapter in its own with its own board to being a subset of the Vermont Economic Development Agency or VDAP. And so what this bill does is that it effectively repeals and redesignates the Vermont Agricultural Program from 16 a to a subchapter of chapter 12, which is where VITA is located, chapter 12, subchapter 16. So it's moving that program and nesting it underneath Vita in the statute. And then so you'll see that everything here is underlined. That doesn't mean it's all new. In fact, most of this language is copied from the existing statute. It's just underlined because it's moving to a different place. But I will note that there are some items here that's were just some small changes, and then I will note that some statutes, some sub excuse me, some subsections did not make the move, and I'll explain what those subsections are. So right now we have the definition section that has moved over, and the definition section is largely the same. Just gonna pull up my notes about what's changed. Definition section is largely unchanged, And just some just a couple of wording and language changes. I I also changed the order of this to make it alphabetical. And so we're scrolling down, and we are on page 39. This section is also copied from the existing statute, moved on over. The statute is amended to highlight that ag both agriculture and forestry projects are eligible to participate in the Vermont agricultural credit program. That does appear to have been the case already, but the language here is is changed just to clarify that. And then we are looking at section b, and this is where we start to get into where, ordinarily, this section would say that the corporation that currently administers the VACP program, we're changing that language from the corporation that administers a program to VITA or the authority. So currently, VACP has its own board. It is nested underneath to be that, but it has its own board. They administer the program as their as on their own. The proposal here is just to move it for efficiency purposes. We have those folks in. Yeah. Okay. Yeah. We Okay. Okay. And the loan eligibility standards is not is unchanged. What has what you will not see here so I'm scrolling down. Okay. And so what you'll not see are things that did not make it over. So corporation of the board of directors that won't make it over because there will not be a a board of directors specifically for this program. What the board of what that board of directors does, that did not make it over because VITA is already authorized to do what the board of directors already does. And so this statute just says VITA administer program in accordance with authority that already has. And then the last bit that did not make it over was information about recordkeeping and confidentiality with loans. Those are aspects that data already does and did were were necessary to bring over. And then the last piece is the removal of the agriculture credit development fund. We've received instruction that that program is defunct anyway, and so they said that they did not want to break that over in the move and delete that program from the statute. Any questions on that piece? Nope. Okay. Great. And we're almost at the end. And so these are two recent additions here permitting regarding large and medium farm operations to remove the fee for large farm operation. There was an annual fee of 2,500 doll or there is an annual fee of $2,500. This statute would remove that fee from medium farm operation. There is a statute that requires a $1,500 fee. This would remove that fee. It's Steve has mentioned that there might be an appropriate hopefully will be an appropriation to cover the cost here. The cost that would be lost of these fees is in the neighborhood, according to Steve, of $230,000. The last piece is a study asking about floor drain permitting. So I've been researching an issue related to how to permit floor drains for purposes of disposing of processed wastewater for washing off bedrooms. And this issue is thorny at at best and requires a lot of different different moving pieces in terms of manufacturing the floor drain, coming off of a plan, what kind of wastewater, the uses of the facilities, and the jurisdiction the Agency of Agriculture and the Agency of Natural Resources, and in addition to issues relating to potential wastewater and sewage sewage issues. So there's a lot that actually goes into if a farmer has a facility that is just used for washing vegetables, they might have a floor drain that goes into an injection well, and, you know, and that that floor that water might go into the sediment trap, and then gets dispersed in an injection well into the soil, and goes about goes about it that way. If a farmer were to install a floor drain in an adjacent room, but that adjacent room is not just used for washing produce, they might run into an issue with siding and obtaining a permit for that forage drain. And, unfortunately, the solution or the fix to make that easier for a farmer is is not clear in our current regulatory framework because of different moving pieces, sanitation issues, usage issues, drainage issues, and manufacturing. And so what this section does is propose to ask the agency of natural resources in coordination with the agency of agriculture food markets to convene a stakeholder group to report on how to address the permitting process for installing floor drains for purposes of disposing processed wastewater into underground injection wells to better support farmers and the role in agricultural economy. Since the idea here would be similar to the wood products manufacturers report for Act two fifty compliance and how the Legacy Review Board convened stakeholders to try and find ways to make that process more efficient for Wood Products Manufacturers. This would be similar. It doesn't involve Act two fifty at all, but the idea would be to examine this very discreet issue and propose some ways to make it easier for farmers if they want well forged drains in their farms. And then the effective date is currently 07/01/2026. There as it stands right now, there are not any different effective dates in the bill, so this is the only one.

[Sen. Russ Ingalls (Chair)]: Thank you. So, committee, the way to look at this, so we just got 15 bills posted to our law, or 14 bills posted to our law. That's really what it is. So I would say to Emma, I would say to anybody else that has competing interests in this bill, get your people in here. It's time to talk about all this stuff. Depending on how that all goes and depending on what we can get done and passed, It's a very ambitious miscellaneous bill. There's a lot of people obviously who want some stuff. So, you know, we'll work diligently. Senator Major and I will, along with Linda and all the rest of you will work diligently to to get testimony in, but we've got a lot of work to do. So anybody who's listening and has something in this bill, It starts today. It's time to get ahold of us, so we'll do the same. Committee, any other thoughts, comments on what's going on? Excuse me? We'll vote on tomorrow. We're gonna at least give us some thought about it as well as make sure that the committee's good. So everybody's aware of that, right? We gotta vote on this because these bills have to get introduced and then we'll ask for it to be remanded back to us. Everybody good with that, but I do think it's the right thing to do is at least to sit on this overnight in case there's something in here that really doesn't sit well with one of you. So I'll I'll do that. The floor drains issue, how big an issue is that? What and why'd that pop up? Who knows? Did they That popped up a constituent request,

[Bradley Schumann, Office of Legislative Counsel]: and and I, you know, I did speak with an individual from, Bruce Douglas with the agency of, the Department of Environmental Conservation of the Agency of Natural Resources. And it is not an issue that comes up with great frequency. However, it is an issue that is is frustrating when it does come up, and and it is one that requires a very skillful engineer to design a floor drain to make sure that it meets a number of requirements in order to ensure that wastewater water is being processed properly. Yeah,

[Sen. Russ Ingalls (Chair)]: Which I said we're gonna have to hear more. Well, we're gonna have to because it's a lot more complicated issue than what it sounds. I mean, you're actually discharging waters, right? We know how important that is or how serious people take that. And so, yeah, that's just

[Bradley Schumann, Office of Legislative Counsel]: not a simple little thing. And processed washed water from produce is not necessarily subject to wastewater regulations and things, but other wastewater from a facility, perhaps a farm kitchen, might be subject to those wastewater rules, and so designing your facility and structuring your drainage could potentially be a very thorny issue for a farmer who still wants to save some time and energy and resources in disposing of of the water. It's a thorny narrow, but thorny issue.

[Sen. Russ Ingalls (Chair)]: Questions? No. Pretty good? Any comments from anyone else? Linda, we'll go off, please.