Analysis: The Road Rule Is Gone. The Real Housing Problem Is 55 Years Old

Rural Vermont's revolt repealed the Road Rule. Harder to fix: a 55-year-old law and a 2030 housing target missed by 73%.

This is Part 2 of a Compass Vermont series. Part 1 — “Vermonters Yelled. Then Montpelier Listened on the Road Rule.” documented the 18-day political pivot that moved House leadership from defending Act 181 to repealing two of its core provisions. Part 2 examines what that repeal does not solve.

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A note on where the repeal stands

As this goes to press, the Road Rule and Tier 3 repeal has not yet formally passed. The House Environment Committee has signaled it will vote to amend S.325 to repeal both provisions. The full House must then vote. The bill returns to the Senate, where Natural Resources and Energy chair Anne Watson has said she will take testimony but is, per Seven Days reporting, “unlikely to resist” the House’s changes. Governor Phil Scott, who vetoed Act 181 in 2024, is near-certain to sign a repeal bill if it reaches his desk. What follows assumes the repeal advances broadly as Speaker Jill Krowinski and Representative Amy Sheldon have publicly indicated it will.

What the repeal actually solves

Repealing the Road Rule removes the 800-foot threshold that would have pulled private driveway extensions and roads into state Act 250 review across most of rural Vermont. A farmer wanting to extend a driveway to a new house for a child can now do so without a state-level permit. A working-lands business wanting to build out access across a parcel can plan without Act 250 triggering on road length alone.

Repealing Tier 3 removes enhanced environmental review on areas the state would have designated as ecologically sensitive — headwater streams, habitat connectors, and related features. Rural landowners in areas that would have been swept into Tier 3 regain the regulatory footing they had before Act 181.

Those are real wins for rural Vermont. They are also, narrowly, what the repeal does.

What rural Vermont is now seeing

In a letter to the editor published by VTDigger on April 16, Robert MacLeod wrote that the rural revolt of the past month is “on the cusp of achieving our immediate objective” — but that “there is a much bigger objective that we still need to accomplish.” MacLeod argued that Act 181 was not the beginning of Vermont’s top-down land-use problem, but a recent example of a longer pattern. He pointed to Act 59, Vermont’s 2023 conservation law setting goals of protecting 30 percent of Vermont’s landscape by 2030 and 50 percent by 2050. He called for its repeal as well.

Whether one agrees with MacLeod’s policy conclusion or not, his diagnosis captures something the Road Rule fight surfaced. The grassroots rural push that reshaped the politics of Act 181 is not, in its own telling, finished at Road Rule repeal. Writers in the Rutland Herald, the Bennington Banner, and other outlets have published similar pieces in recent weeks. Sam Lincoln, whose March 26 commentary on Governor Scott’s website was documented in Part 1 of this series, wrote that the issue goes beyond any single law: “No more decisions about rural Vermont without rural Vermonters at the table.”

These are not official legislative positions. They are the public record of a rural constituency that has discovered, in the Road Rule fight, a set of structural questions about how Vermont makes land-use decisions. Those questions do not end when S.325 passes.

The structural barrier: Tier 1A is out of reach for most rural towns

Act 181 was structured around a trade. Rural Vermont would accept new regulatory scrutiny in exchange for urban and village Vermont getting faster, more permissive housing construction. The mechanism for that faster construction is Tier 1A — a full Act 250 exemption for housing projects in towns that qualify.

The problem is which towns can qualify. Under Act 181, Tier 1A status requires a municipality to have public water and sewer systems, permanent zoning, and professional planning staff. Most rural Vermont towns have none of these things. They do not have municipal water. They do not have sewer. Many do not have permanent zoning at all, relying instead on older bylaws or no formal zoning. They do not employ professional planners. The tax base to build these systems and fund these positions does not exist in most of rural Vermont, and there is no funded state pathway that helps rural towns qualify.

This means the part of Act 181 that actually delivers regulatory relief for housing — Tier 1A — is structurally inaccessible to the rural towns that most need more housing. Repealing the Road Rule and Tier 3 does not change this. The benefits stay where they were: in places that already have infrastructure. The burdens come off rural Vermont, which is a fair correction of overreach. But the deregulatory relief valve was never designed to reach rural Vermont in the first place.

The 40 percent problem

The inaccessibility question matters because of the math behind Vermont’s own housing plans. The Vermont Association of Planning and Development Agencies (VAPDA) has estimated that roughly 40 percent of the state’s housing will need to be built outside the small share of Vermont expected to be mapped as Tier 1 growth area. The math is geographic reality: Vermont is a rural state. Concentrating all housing production in downtowns, villages, and growth centers — the Tier 1 footprint — cannot produce enough units to meet statewide need.

Act 181 offered regulatory relief only inside Tier 1. The repeal of Tier 3 and the Road Rule removes new barriers outside Tier 1, but it does not create new pathways. The 40 percent of housing that has to happen outside Tier 1 still faces the full pre-Act-181 regulatory environment, which is where the housing production problem was before Act 181 was ever drafted.

The data vacuum that made Act 181 fail is still there

Compass Vermont has reported — with on-record confirmation from the Vermont League of Cities and Towns, the Vermont Housing Finance Agency, the Department of Housing and Community Development, and Representative Marc Mihaly — that Vermont does not have a unified statewide buildable land analysis. No authoritative document exists to answer the fundamental question: how much land in Vermont is actually available to build housing on, and where?

This was true in 2024 when Act 181 passed. It is true in 2026 as the Legislature moves to repeal part of it. No one at the Statehouse has proposed funding the analysis. No one has named which agency would conduct it. The planning required to hit the 2030 housing targets — where housing can go, which towns can accommodate it, what infrastructure investments would open new capacity — is being attempted without the underlying data.

Regulating growth without knowing what is available to grow into is what produced Act 181’s draft maps and the revolt that followed. Removing the Road Rule and Tier 3 does not change the underlying condition. The next Vermont land-use proposal, whenever it comes, will be built on the same data vacuum unless the Legislature funds the missing work.

Act 250 was written for a different Vermont

Act 250 was enacted in 1970. It was designed to prevent the kind of sprawl and unplanned commercial development that other New England states had accepted. For most of its 55-year history, it has functioned as a development-review framework layered on top of local zoning, triggered by project size, location, or sensitive features.

Whatever one thinks of Act 250’s record on environmental protection, the Vermont it was written for is not the Vermont of 2026. In 1970, Vermont’s population was 444,732 and housing affordability was not the state’s defining problem. In 2026, Vermont’s population is approximately 645,000, the state is projected to need 24,000 to 36,000 additional year-round homes by 2029 according to the Vermont Housing Needs Assessment produced by VHFA for DHCD, and median home prices have outpaced wage growth for more than a decade. Act 181 was an attempt to update the framework. The attempt produced the Road Rule fight. Repealing the Road Rule returns the framework closer to its pre-2024 form — which is the 55-year-old architecture itself.

The structural question rural Vermonters are now raising, in MacLeod’s letter and elsewhere, is whether a development-review system built for 1970 Vermont can produce the housing outcomes 2026 Vermont needs, regardless of what tiers, maps, or exemptions get layered on top of it. That question has not been taken up by the Legislature. It was not the question being asked in the Road Rule debate. It is the question the Road Rule debate has now exposed.

The pace and the target

DHCD Commissioner Alex Farrell said in January 2025, introducing new regional housing targets required by Act 181 itself: “Currently we are only building 27% of the homes we need annually to meet our 2030 targets.” The figure was based on average annual Vermont home construction in 2021 through 2024, measured against the regional targets developed by DHCD, VAPDA, and VHFA under the HOME Act of 2023 and Act 181 of 2024.

That figure predates the Road Rule fight. It also predates the Road Rule’s scheduled July 2026 effective date. Vermont was already building at less than a third of its own target pace before any of Act 181’s deregulatory tools took effect, and before any of its regulatory tools took effect. The Road Rule repeal removes a new obstacle that hadn’t yet started. It does not accelerate the underlying pace.

Three legislative sessions remain before the 2030 deadline. Two of those sessions have already been spent debating Act 181 — first passing it, then moving to repeal two of its three pillars. At the end of that two-session effort, Vermont’s Tier 1A relief valve will still be out of reach for most rural towns. The 40 percent of housing VAPDA projects outside Tier 1 will still face the pre-Act-181 regulatory environment. The state-level buildable land analysis will still be unfilled. The 2030 target will be three years away.

The repeal is fair. The architecture is still unresolved.

Repealing the Road Rule and Tier 3 corrects a recent overreach. Rural Vermont was regulated without meaningful consultation, and the correction is a fair response to bad process. Part 1 of this series documented how and why that correction happened.

What the correction does not do is answer the question of how Vermont builds the housing it has told itself it needs. The 55-year-old review framework remains. The structural barriers to Tier 1A in rural Vermont remain. The 40 percent of needed housing VAPDA projects outside Tier 1 still lacks a regulatory pathway. The state-level buildable land analysis still does not exist. The 2030 target is still a target Vermont, by its own Commissioner of Housing’s January 2025 admission, is building toward at 27 percent of the needed pace.

The rural revolt has already shown it can move legislative leadership when the data and the politics align. What the Road Rule fight has not yet produced is a serious Statehouse reckoning with the architecture underneath it.

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Part 3 of this series will follow once the House and Senate complete the Road Rule and Tier 3 repeal — and will examine what the two-year Act 181 detour cost Vermont in legislative time, agency resources, and opportunity on the housing questions that remain unanswered.