Committee reviews S.323 amendment to Act 250 exemptions for accessory on‑farm businesses

Ellen Chaykowski of the Office of Legislative Council briefed the committee on Section 4 of S.323, explaining that the Senate added an alternative eligibility test to the Act 250 exemption for accessory on‑farm businesses. Under the amendment, an accessory on‑farm business that prepares or processes qualifying products would remain exempt from Act 250 permitting if either more than 50% of its total annual sales of prepared or processed qualifying products come from products produced on the farm, or "not more than $250,000, adjusted for inflation, in total annual sales or the equivalent value of donated farm crops" come from products not produced on the farm, Chaykowski said.

The amendment is intended to give farms a second path to the exemption in addition to the longstanding 50% sales test. Committee members pressed on how the 50% test is calculated — by sales value rather than weight — and pointed out practical examples that complicate the metric, such as baked goods that mix on‑farm ingredients with purchased flour or sugar. A committee member illustrated the difficulty: if a farmer uses their berries in jam and in muffins (which require purchased flour), calculating whether more than half of total annual sales derive from on‑farm products may be hard to apply consistently.

Several members focused on the new $250,000 alternative metric. Chaykowski read the draft language aloud and noted that the Senate added the dollar cap option ("$250,000 adjusted for inflation") and a definition of "donated farm crops" that references 26 U.S.C. §170(c) (charitable contributions) and requires donations be to organizations unrelated to the landowner. Members asked whether, as written, a business could operate largely with off‑farm inputs and still qualify under the $250,000 cap; Chaykowski confirmed that the language, as drafted, would permit that outcome.

The committee also discussed scope: the draft amendment targets construction of improvements for processing/preparation/value‑added activities and is not changing the statutory list of "qualifying products." Chaykowski emphasized that event spaces or farm‑stay units remain outside the Act 250 exemption in the bill and that municipal zoning rules on farm events and stays continue to apply; whether an event or farm stay triggers Act 250 remains highly fact dependent.

Members raised drafting and interpretation concerns. They noted inconsistent terminology in the draft (the Senate substituted the phrase "donated farm crops" in places where the statute uses "qualifying products") and asked the committee to consider retaining the existing statutory term for consistency. The Land Use Review Board, which interprets the statute for district commissions, is preparing a report that had been due in February but will arrive only after the session; members said that report might inform any language changes.

Fiscal‑office staff told the committee that inflation‑adjustment language referencing the Consumer Price Index for All Urban Consumers (CPI‑U) is common in statute and that agencies sometimes publish conversion tables to help stakeholders apply the cap year‑to‑year. Committee members requested the drafters (Kirby and Bradley were cited) return to explain the legislative intent behind the dollar cap and the donated‑product phrasing.

The committee did not take a vote on Section 4. Members agreed to flag the qualifying‑product versus donated‑farm‑crop wording during bill mark‑up, to invite staff drafters back for clarification, and to consider whether additional statutory definitions or administrative guidance are needed before finalizing language.