Environmental, Natural Resources, & Energy Law Blog

Fall 2023

GROWING SOLAR

Jason Asbell, LLM Candidate

Introduction

Two outdated Pennsylvania regulations are limiting revenue for farm owners and impeding the development of renewable energy: Pennsylvania Clean and Green and the Pennsylvania Agricultural Conservation Easement Program (also called the Farmland Preservation Trust). Pennsylvania should change these regulations to allow farmers to reap the financial benefits of selling solar power.

Farms provide the baseline needs of our existence. Only two percent of Americans are farmers, but 100% of us are fed by food produced by farmers.[1] Agricultural production accounts for 52% of the American land base.[2] A significant percentage of Pennsylvania’s land base is agricultural, although less than the national average.[3] Pennsylvania farms cover 7,278,668 acres or 25% of the state.[4] In Lancaster County farms exceed 60% of the land base.[5]

Feeding the country requires significant resources. As we endeavor to shift to renewable energy, farmland can be used to produce renewable energy as well as food. One way this can be done is with dual use solar, also known as agrivoltaics. Agrivoltaics is designed specifically to provide utility scale solar installations on farms. The general population and climate benefit through increased solar energy production. Farmers benefit because they gain another revenue source.

What stands in the way of this win-win situation? As occurs far too often, the law and government policy have not kept up with these technological advancements. Two particular Pennsylvania laws stand in the way of agrivoltaics on farmland: (1) Clean and Green, a preferential tax program;[6] and (2) the Pennsylvania Farmland Preservation Trust, a farm conservation program.[7] Pennsylvania should act swiftly to amend these regulations so that utility scale solar can be installed on farms.

Agrivoltaics

Agrivoltaics are grid-scale solar installations on farms that allow farming practices to co-exist with the solar panels. The solar panels are usually raised so that under the panels crops can be grown and livestock can graze under the panels. Farms are attractive locations for grid-scale solar because they are flat, treeless, and sunny.[8]

Agrivoltaics can be compatible, and even helpful, for crop growth and yields in certain farms. In dry conditions solar panels can decrease evaporation by providing partial shade, allowing the soil to retain more moisture.[9] Agrivoltaics can also protect crops from dangerous weather conditions, with the panels providing shade to crops and livestock during extreme heat and protection from heavy rain and hail.[10] Of course, agrivoltaics might not be suitable for crops that are incompatible with some shade. For livestock the shade from the solar panels can provide a refuge from extreme heat. Most importantly, the lease or other financial relationship with the solar company provides additional revenue for the farm.

Pennsylvania’s Clean and Green

Clean and Green is a preferential tax assessment program that applies to both farmland and forestland.[11] An owner of farmland or forestland enrolls in the program by submitting an application through their county tax assessor’s office.[12] Once a property is enrolled in Clean and Green, it is assessed on use value rather than fair market value for tax purposes.[13] This presents a substantial tax savings to farm owners whose farms are enrolled in Clean and Green.

The Pennsylvania Department of Agriculture explains that the purpose of Clean and Green is to “encourage protection of the Commonwealth’s valuable farmland, forestland and open spaces.”[14] For a farm to qualify it must:

• Be at least 10 acres in size or be capable of generating $2,000 annually in farm income; and
• Be in ‘agricultural use’ or ‘agricultural reserve.’[15]

A landowner can remove their farm from Clean and Green, but there are significant disincentives to doing so. Any landowner that exits Clean and Green must immediately pay “rollback taxes” for the last seven years at 6% interest per year. The “rollback” is calculated as the difference between what the landowner paid in taxes under Clean and Green versus what the landowner would have paid in taxes without Clean and Green.[16]

The property can be used for activities other than farming and still qualify provided that the additional use is “incidental,” meaning “a commercial enterprise or venture that is conducted on two acres or less of enrolled land, and when conducted does not permanently impede or otherwise interfere with the production of an agricultural commodity on that portion of enrolled land not subject to roll-back taxes.”[17] Rollback taxes must be paid on the 2 acres.[18]

The Clean and Green statute allows energy production to qualify as an incidental use but only certain types of energy production. Commercial wind production is permitted with rollback taxes applying only to the areas devoted to wind production, including “the foundation of the wind turbine and the area of the surface covered by the appurtenant structures including new roads and bridges, transmission lines, substations and other buildings or structures related to the wind power generation system.”[19]

Oil and gas got an even better deal – oil and gas production is possible with the rollback taxes only due with respect to those areas of the property used for oil and gas production.[20] Subsurface transmission lines receive a complete exemption.[21]

Unfortunately, the Clean and Green program treats solar energy differently. Solar production is possible without any rollback penalty, but the majority of the energy must be used on the enrolled tract as opposed to being allowed to sell it to the grid for others to use.[22] The fact that grid scale production is allowed for oil and gas or wind but not for solar is a large failing of Clean and Green and fails to provide the proper incentives to farmers to add solar to their land.

Pennsylvania Agricultural Conservation Easement Program

The Pennsylvania Agricultural Conservation Easement Purchase Program, also known as the Farmland Preservation Trust, is a program that allows state and county governments to purchase easements on farms.[23] The easement generally prohibits the property owner from converting the easement area to a use besides farms.[24] Farmers are paid the difference between the “fair market value” and the “agricultural value” of their farmland, in exchange for a permanent deed restriction which prevents uses of the property that will have a negative impact on its agricultural viability.[25] To date over 6,200 Pennsylvania farms, covering 630,000 acres, have been “conserved” through this program.[26] Unlike Clean and Green, the Farmland Preservation Trust’s easement is permanent. There is no opting-out later.

The Farmland Preservation Trust, perhaps surprisingly, allows oil and gas activity on the preserved farm. The Pennsylvania Department of Agriculture has taken the position that “[f]or our preserved farms, leasing for natural gas is permitted under the terms of the agricultural conservation easement.”[27] The Pennsylvania Department of Agriculture even provides step-by-step instructions on its website for farmers on how to obtain a gas lease for preserved farms.[28]

Clean and Green and the Farmland Preservation Trust should allow Agrivoltaics

Clean and Green and the Farmland Preservation Trust should be amended to incorporate farm-compatible solar. Agrivoltaics would further the purposes of both programs. Clean and Green’s stated purpose is “to encourage the keeping of land” to agricultural use or agricultural reserve use.[29] The Farmland Preservation Trust’s purpose is “to strengthen Pennsylvania’s agricultural economy and protect prime farmland.”[30] Most Pennsylvania farms are small, family-owned enterprises that operate with small financial margins.[31] Agrivoltaics furthers both of these programs’ purposes by adding a revenue stream for farmers, assisting crop growth and yields, and providing shade for livestock.

Notably, Pennsylvania’s approach in discouraging agrivoltaics is the opposite of the approach taken in some other states which actively encourage agrivoltaics. As the United States Department of Energy reports:

Massachusetts has enacted a feed-in tariff adder of $0.06/kWh for agrivoltaic projects through its Solar Massachusetts Renewable Target (SMART) program. New Jersey authorized an agrivoltaics pilot program of up to 200 MW on unpreserved farmland and funded an R&D system at the Rutgers New Jersey Agricultural Experiment Station. Colorado has also funded agrivoltaics research.[32]

Indeed, even the Pennsylvania Department of Agriculture claims to support solar development on farms. In its December 22, 2015 report, “Farmland Considerations for Siting Grid-Scale Solar Panels,” it stated:

The Pennsylvania Department of Agriculture (PDA) supports the advancement of technologies that create jobs and generate long-term revenue opportunities for Pennsylvania farmers and landowners, without compromising food and fiber production. Solar energy production is a climate-smart practice that has the potential to meet those goals while reducing emissions and helping to address the negative impacts of climate change.[33]

However, the report then goes on to outline what is set forth above – that grid-scale solar is not permitted under the Farmland Preservation Trust and would remove the farm from the Clean and Green program.[34] The report makes no reference to the potentially changing the programs to permit agrivoltaics.

Pennsylvania is behind the curve on this issue. Its farmers are missing out on badly needed revenue. Its citizens are missing out on an additional source of renewable energy. Moreover, the Department of Agriculture has not articulated a reason why gas and wind production should be allowed but solar is not. And of course, there is the cynical observation, frequently present in environmental issues across the board, that the fossil fuel industry has somehow eked out better terms than the renewable energy industry (i.e., the gas production terms are even better than the wind production terms, and solar is essentially not allowed at all for grid-scale projects). Ironically, gas development – fracking – is the only one of these potential developments that poses a high risk for contaminating the farmland that would make it unsuitable for agriculture in the future.

Pennsylvania farmers should be able to use their land for utility scale solar. It will help the farmers and Pennsylvanians. The Pennsylvania Department of Agriculture already allows for similar development for oil and gas and wind. There is no reason for solar to be treated differently. Pennsylvania Clean and Green and the Farmland Preservation Trust should be amended to allow for agrivolatics.

 

[1] “Fast Facts About Agriculture and Food,” American Farm Bureau, available at https://www.fb.org/newsroom/fast-facts.

[2] “Land Use, Land Value, and Tenure,” U.S. Department of Agriculture Economic Research Service, available at https://www.ers.usda.gov/topics/farm-economy/land-use-land-value-tenure/#:~:text=Agricultural%20production%20is%20a%20major,of%20the%20U.S.%20land%20base.

[3] “Where the Soybeans Grow: An Exploration of Agricultural Land Use in Pennsylvania, 2017,” Penn State College of Agricultural Sciences, available at file:///C:/Users/jasbell/Downloads/Understanding%20PA%20Ag-2017%20Update_psu%20cecd_December%202020.pdf.

[4] Total acreage is 29,474,560. https://a-z-animals.com/blog/how-big-is-pennsylvania-see-its-size-in-miles-acres-and-how-it-compares-to-other-states/.

[5] “Where the Soybeans Grow: An Exploration of Agricultural Land Use in Pennsylvania, 2017,” Penn State College of Agricultural Sciences, available at file:///C:/Users/jasbell/Downloads/Understanding%20PA%20Ag-2017%20Update_psu%20cecd_December%202020.pdf.

[6] 72 P.S. §§ 5490 et seq.

[7] 3 P.S. § 914.1.

[8] Simon, Matt, “Growing Crops Under Solar Panels? Now There’s a Bright Idea,” Wired, Oct. 14, 2021. Available at https://www.wired.com/story/growing-crops-under-solar-panels-now-theres-a-bright-idea/.

[9] “The Potential of Agrivoltaics for the U.S. Solar Inudustry, Farmers, and Communities,”

United States Department of Energy, Office of Energy Efficiency & Renewable Energy. Available at https://www.energy.gov/eere/solar/articles/potential-agrivoltaics-us-solar-industry-farmers-and-communities; “Why is less water needed with agrivoltaics,” Enel Green Power, available at https://www.enelgreenpower.com/media/news/2023/07/agrivoltaics-water-savings.

[10] Agrivoltaics: What does that mean?” Penn State Extension, available at https://extension.psu.edu/agrivoltaics-what-does-that-mean.

[11] 72 P.S. §§ 5490 et seq.

[12] “Clean and Green,” Pennsylvania Department of Agriculture, available at https://www.agriculture.pa.gov/Plants_Land_Water/farmland/clean/pages/default.aspx#:~:text=Please%20contact%20your%20county%20tax,the%20year%20of%20a%20reassessment..

[13] 72 P.S. § 5490.3; “Farmland Preservation Annual Report Highlights: 2020,” Pennsylvania Department of Agriculture. Available at https://storymaps.arcgis.com/stories/3a837c549a5a4aff99d5dc059f693a31

[14] “Clean & Green,” Pennsylvania Department of Agriculture, available at https://www.agriculture.pa.gov/Plants_Land_Water/farmland/clean/Pages/default.aspx.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] 7 Pa. Code § 137b.73d(b).

[20] “Clean & Green,” Pennsylvania Department of Agriculture, available at https://www.agriculture.pa.gov/Plants_Land_Water/farmland/clean/Pages/default.aspx

[21] 7 Pa. Code § 137b.73.a.(b)(1).

[22] 7 Pa. Code § 137b.12(3).

[23] 3 P.S. § 914.1.

[24] “Farmland Preservation,” Pennsylvania Department of Agriculture, available at https://www.agriculture.pa.gov/Plants_Land_Water/farmland/pages/default.aspx.

[25] “Understanding Agricultural Preservation in Pennsylvania, Penn State University Agricultural Extension. Available at https://extension.psu.edu/understanding-agricultural-preservation-in-pennsylvania.

[26] Compared to the above, it appears that the vast majority of Pennsylvania farms are not encumbered by a conservation easement through this program. Farmland preservation trusts are almost exclusively concentrated in southeastern Pennsylvania. https://storymaps.arcgis.com/stories/3a837c549a5a4aff99d5dc059f693a31.

[27] Aug. 15, 2008 Memorandum to County Farmland Preservation Administrators, Douglas Wolfgang, Director of Bureau of Farmland Preservation, Pennsylvania Department of Agriculture; available at https://pennstatelaw.psu.edu/_file/aglaw/PDAMemoFarmlandPreservationAndNaturalGasExploration.pdf.

[28]Pennsylvania Department of Agriculture, “A Guide to Farmland Preservation,” available at “https://www.agriculture.pa.gov/Plants_Land_Water/farmland/Documents/A%20Guide%20to%20Farmland%20Preservation.pdf.

[29] 7 Pa. Code § 137b.1(a).

[30] “Farmland Preservation,” Pennsylvania Department of Agriculture, available at https://www.agriculture.pa.gov/Plants_Land_Water/farmland/pages/default.aspx.

[31]“ Understanding the Quiet Majority: Small Farms in Pennsylvania, 2017,” Penn State University College of Agricultural Sciences.

[32] United States Department of Energy, Office of Energy Efficiency & Renewable Energy, “The Potential of Agrivoltaics for the U.S. Solar Industry, Farmers, and Communities,” available at https://www.energy.gov/eere/solar/articles/potential-agrivoltaics-us-solar-industry-farmers-and-communities.

[33] Pennsylvania Department of Agriculture, “farmland Considerations for Siting Grid-Scale Solar Panels,” available at https://www.agriculture.pa.gov/Plants_Land_Water/Sustainability/Documents/PDA-Solar-Guidance-Final.pdf

[34] Pennsylvania Department of Agriculture, “farmland Considerations for Siting Grid-Scale Solar Panels,” available at https://www.agriculture.pa.gov/Plants_Land_Water/Sustainability/Documents/PDA-Solar-Guidance-Final.pdf