Beshear vetoes solar decommissioning bill, saying it weakens local control
Renewable energy developers have surged into Kentucky in recent years, seeking to establish large-scale solar installations covering thousands of acres with panels to harvest energy from the sun.
It’s what happens to these large-scale projects at the end of their lives decades from now that Republican lawmakers have tried to address with a bill that passed the legislature earlier this month and that Gov. Andy Beshear vetoed on Friday.
Some conservation advocates also have concerns that the legislation, House Bill 4, doesn’t do enough to protect the rights of landowners or Kentucky’s land and water.
Beshear said the measure removes local input from the regulatory process for enforcing proper cleanup and bonding. His veto could easily be overridden by GOP supermajorities later this month.
HB 4, primarily sponsored by Rep. Josh Branscum, R-Russell Springs, would create a legal framework dictating how solar installations are to be decommissioned, or the way in which solar panels are to be removed including underground wiring and electrical components.
“This ensures that the costs for the decommissioning and the removal of the equipment which would be, like I said 20 or 30 years down the road, does not fall on the back of our farmers or landowners and our fellow Kentuckians,” Branscum said earlier this month in a Senate committee.
Branscum, speaking next to a lobbyist for the Kentucky Farm Bureau who supported the bill, said Kentucky had to be proactive in addressing how to clean up solar installations in the future, pointing to how federal funding is being used to clean up some of the thousands of abandoned oil and gas wells across the state.
Solar energy and environmental conservation advocates support the bill’s intent to put some cleanup and bonding standards into state law for the first time but remain wary of potential unintended consequences the bill’s language could have.
One long-time environmental advocate has opposed the bill throughout its movement in the legislature, saying an existing regulatory board through the Kentucky Public Service Commission (PSC) has already been adequately ensuring solar companies have proper plans to clean up their installations decades in the future.
“Frankly, this bill is not needed to protect landowners. It’s not needed to empower local communities. It does nothing but weaken what is already in place,” said Tom FitzGerald, a lobbyist for the Kentucky Resources Council. “This bill is about weakening the standards of accountability and weakening local control in order to suit the desires of these (solar) companies to the detriment of landowners and counties.”
What vetting process do solar companies go through?
HB 4 as written would require solar companies wanting to operate in the state — along with any other merchant electricity-generating facility — to file a decommissioning plan with the PSC that includes securing a bond to cover the costs of the cleanup at the end of the facility’s life.
It also instructs the Kentucky Energy and Environment Cabinet to make sure solar companies are complying with measures in decommissioning plans, such as removing above-ground equipment and below-ground components.
Yet a regulatory board at the PSC already is requiring solar companies to file decommissioning plans with the bonds to fund the cleanup.
Currently, solar companies wanting to operate an installation in Kentucky have to receive a construction certificate through what’s known as the Electric Generation and Transmission Siting Board housed at the Kentucky Public Service Commission, which is the state regulator of utilities.
The Siting Board was created in 2002 to vet proposed large facilities that would generate electricity on Kentucky’s grid, which around that time included a proposal for a coal-fired power plant. The board handles only proposals from entities not already regulated by the PSC; regulated utilities, such as Louisville Gas and Electric and Kentucky Utilities, go through a similar but separate process before the PSC to propose new electric generation facilities.
The board has seven members total, with three members from the PSC — including the commission’s chairman — and two other members being the secretaries of the Economic Development and Energy and Environment Cabinets. Two members from the county or city where the facility is being proposed are also brought on the board for local input, oftentimes one of them being a county judge-executive.
Up until 2020, the board had handled only 12 cases requesting to build new electric transmission lines or new electric generation facilities. Several years the board has had no cases. But since the beginning of 2020, activity before the board has exploded thanks to solar developers: 39 cases, all related to proposed solar installations, have been filed.
If a county or city government where a solar installation is being established also has a local zoning board that requires a permit, the solar company has to also receive approval from that local authority.
FitzGerald says HB 4 is unnecessary because of the work the Siting Board is already doing to vet solar projects by requiring decommissioning plans and bonds. Fitzgerald states the bill would actually weaken the rights of landowners working with solar companies in some parts of the process.
“Codify the best practices of what has been already required of this industry, because that obviously hasn’t kept them from coming to Kentucky,” Fitzgerald said in a recent interview. “They obviously can live with these rules. Why we want to weaken them is beyond me.”
An erosion of landowner protections?
Two aspects of HB 4 worry Fitzgerald in particular: how much underground wiring and electrical parts of a solar installation are removed and, if a solar development is sold to a new owner, how to ensure the new ownership follows through with proper decommissioning.
Of those 39 Siting Board cases filed since 2020 involving solar companies, the board has required solar developers in a majority of those cases to remove all equipment and components of a solar installation, above and below ground, at the end of the project’s life. Ten cases are still pending before the Siting Board.
HB 4 would require solar developers to remove only underground wiring, conductors and other components up to three feet into the ground, unless another depth is agreed upon by both the developer and landowner. The legislation would give local ordinances regulating solar installations the power to require more than that, but the vast majority of counties and cities currently don’t have solar-specific laws on the books yet.
That “three feet of depth” rule is something that some solar companies say is standard practice in the industry. At least one renewable energy developer with an international footprint, NextEra Energy Resources, has tried to get out of the Siting Board’s requirement of removing all underground components during decommissioning and instead stick with the three-feet rule. The company claims to be the “world’s largest” operator of wind and solar projects and has a registered lobbyist in Frankfort.
In a Siting Board case last year involving a proposed solar installation in Webster and Henderson counties, attorneys for NextEra Energy Resources requested that it be required to remove components only up to a depth of three feet because such removal of electrical conductors, after decades in the ground, would require “disturbance to the soil” that could create “unnecessary” risk, if minimal, to other pipelines or utility wiring in the ground.
The Siting Board didn’t budge in that case and in other cases, requiring the complete removal of everything in the ground and stating in its orders that returning land to its original state would benefit the environment and the economic usefulness of the land.
A Breckinridge County farmer Pat Henderson who served as a local member on a Siting Board case considering another proposed NextEra Energy Resources solar project said he believed the rights of landowners were adequately protected by the board. The board also required NextEra Energy Resources to remove everything in the ground, regardless of depth, during decommissioning.
“If you’re going to restore it to the original condition that it was prior to the solar project going in, then you got to remove everything. That’s common sense, isn’t it?” Henderson said.
The Kentucky Conservation Committee, another environmental conservation advocacy group, was supportive of the bill’s intention to codify a process in Kentucky to address solar installation decommissioning. But the group does share concerns with FitzGerald that the bill could more strongly protect landowners negotiating with solar companies.
“I think part of the problem is that there’s such unfair negotiating positions between solar developers … and a property owner,” said Randy Strobo, an environmental attorney working with KCC. “When there’s provisions in the bill that kind of, even if the landowners negotiate for something like the removal of all equipment — say they want that. This bill doesn’t necessarily require that.”
The other concern by conservationists about HB 4 is that it would require solar developers only to provide a notice to state and local authorities if a solar installation is being sold to or acquired by a new owner.
The Siting Board in several cases has required solar companies, including NextEra Energy Resources, to receive the approval from the board before a transfer of ownership is made to make sure the new owner can follow through with decommissioning plans and has a good environmental track record.
Strobo said solar projects are oftentimes “turnkey projects,” meaning one company will construct the project only to immediately sell it to another company.
“They need to make sure that the new entity is solvent, has a good track record and will assume all of the liabilities and the contractual obligations that the previous developer had,” Strobo said.
Matt Partymiller, the president of the Kentucky Solar Industries Association that represents solar-related businesses, said his group has remained neutral on HB 4, supporting the need for decommissioning rules in Kentucky law. But he wanted to see other changes made in the bill to specifically address solar projects, such as having requirements for setbacks that are appropriate for solar installations.
“We’re really hoping we’d have legislative clarification that, ‘Hey, the statute was designed for fossil fuel, and now we’re in a new era. We need to have a statute that’s applicable.’ That never happened,” Partymiller said.
He said his group does support removing the requirement that solar companies receive Siting Board approval before transferring ownership, saying that such a hurdle could create delays and put at risk investments worth hundreds of millions of dollars.
“Across the development stages of a utility-scale, renewable facility, you’ll see multiple transfers of ownership. There are firms that literally just specialize in early-stage development activity, like land acquisition and siting, and then there are firms that specialize in building,” Partymiller said. “I don’t think our members are trying to shirk any responsibility.”
“The Siting Boards have done a great job. The Public Service Commission’s done a great job. Developers have done a great job, and it’s worked out. But codifying those rules in a lot of ways can help our members.”
An attorney representing a NextEra Energy Resources solar project sued the Siting Board in January over the requirement that it seek approval from the board before transferring ownership, saying the board acted arbitrarily and outside of its authority under state law.
“I want to make sure that farmer or that farmer's kid, or whoever ends up with that property doesn't end up getting screwed by the fine text of some lease agreement.”
The attorney stated that prohibiting transfers of ownership without approval “including passive, non-controlling interest transfers for purposes of financing the Project or transfers to an affiliate” allows the Siting Board to hinder or ban transactions necessary to keep the solar project viable.
A spokesperson for NextEra Energy Resources, which is not a part of the Kentucky Solar Industries Association, did not respond to a request for comment.
Potential revisions in the future
As HB 4 was moving through the legislature, Republican lawmakers repeatedly stated the bill was just the starting point and could be revised in the future.
“Something else that’s important to realize is that we’re just starting this,” said sponsor Branscum. “I’m not aware of any projects, solar projects that have decommissioned in Kentucky yet, so over the next 20 or 30 years — I probably won’t be here for it — but I’m sure this is going to continue to be tweaked as we learn more.”
Branscum said it was important to have at least some sort of statutory framework in place for decommissioning solar projects, sharing sentiments that Partymiller also had. Branscum also said a landowner in leasing land to a solar developer could require stricter conditions on the use of their land beyond the minimum standard set in HB 4.
HB 4 requires solar companies to communicate with landowners at the end of a project’s life to accommodate additional decommissioning requests but gives the companies the discretion whether to abide by those requests.
Beshear vetoed the measure Friday, saying he supports putting in place statues that require solar companies to have decommissioning plans and bonds to pay for those plans.
But he said the legislation takes away the authority of the Siting Board to enforce decommissioning and bonding requirements after it issues a construction certificate to a solar developer.
“Because the board’s membership is comprised of members from the counties in which a facility will be located, House Bill 4 removes local input on enforcement of the construction certificate, including the bonding and decommissioning requirements,” he said.
HB 4 states once a solar project begins to generate electricity, the Siting Board’s authority shall end, with the Energy and Environment Cabinet in charge of monitoring the decommissioning and bonding requirements. HB 4 creates a fund, financed by fees on these projects, to pay for those monitoring activities.
The GOP’s supermajority can easily override the veto, with only a majority of votes needed in each legislative chamber.
FitzGerald, the long-time environmental advocate, said he plans to work with local county and city governments to adopt local ordinances that strengthen landowner rights with solar projects, rights that he believes HB 4 is watering down.
HB 4 allows local ordinances regulating solar projects to overrule the power of the Siting Board on decommissioning if the local rules conflict with an order from the board.
Until local land protections are strengthened, he advises landowners to “just say no” to solar developers wanting to lease land.
“We’re putting in place rules where we won’t know, in some cases, whether we were insufficiently protective until 25 years down the road,” Fitzgerald said. “I want to make sure that farmer or that farmer’s kid, or whoever ends up with that property doesn’t end up getting screwed by the fine text of some lease agreement.”