Two years after enacting a major but little understood alteration to Vermont’s land use regulations, lawmakers agreed to roll back restrictions that stood to hinder private land use and rural development.

In Senate Bill 325, the Vermont Legislature repealed not-yet-implemented regulations known as the “Road Rule” and “Tier 3,” and added an exemption from Act 250 permitting for accessory on-farm businesses like farm stays, concert venues, and other educational, recreational, or social ventures.

For more information about the Road Rule, Tier 3, and Act 181 (2024), check out our article from March: Is This Land Your Land? Maybe Not Under Act 181 – NFIB VT.

Background: In Act 181 of 2024, lawmakers attempted to accelerate growth in already-developed areas while imposing significant new limits on development in other parts of the state.

The changes became law after Democratic supermajorities in the Legislature overrode Governor Phil Scott’s veto. Scott specifically cited a slowdown in housing construction and economic harm to rural Vermont as likely consequences and reasons for his veto.

As the Act 181 implementation process unfolded, it became clear that Governor Scott’s view of the law was correct. The accelerated permitting process for development in cities and villages is difficult to access for most municipalities.

Other changes imposed steep limits and permitting requirements on large swaths of the state.

This not only hindered residential and commercial development, Act 181 made it much harder for rural families to split up property so new generations could build a home near their family. Something as simple as adding a shed to an existing property could be subject to the arduous Act 250 permitting process in some areas.

What does it mean for Vermont? The Road Rule and Tier 3 restrictions that would have hindered a range of development, from small scale changes on existing properties to mid-scale development, are gone.

However, the high bar to accessing Act 250 permitting exemptions for more developed cities, towns and villages remains in place. Municipalities that lack comprehensive zoning, wastewater, and sewer will struggle to take advantage of the Act 181 reforms (Tier 1A, Tier 1B) that were intended to speed up housing development.

And the interim exemptions for small- to mid-scale residential development created in Act 181 were only extended through 2027. Those exemptions apply to clearly defined areas where development is exempt from Act 250 review until the larger reforms are fully implemented.

The interim exemptions have helped expedite and expand housing projects in the state. The Senate version of Senate Bill 325 would have extended the exemptions until 2030.

Senate Bill 325 also establishes a new Joint Legislative Environmental Oversight Committee to oversee implementation of what remains from Act 181 and orders a public engagement process to produce a report on what should come next.

What comes next? That largely depends on how the elections go in November. While a full return of the Road Rule and Tier 3 seems unlikely, a segment of progressive lawmakers was unhappy with their repeal.

They want a replacement focused on preventing “forest fragmentation” and other environmental disruption, which will naturally cause friction with how landowners use their property in large portions of Vermont.

A return to Democratic supermajorities could see some version of the repealed land use restrictions reimposed on rural Vermont.

On the other hand, Governor Scott has urged lawmakers to go further in expanding the Act 250 exemptions (both interim and permanent Tier 1A/1B) to more municipalities.