Legislative Analysis
Phone: (517) 373-8080
SOLAR FACILITIES UNDER FARMLAND
http://www.house.mi.gov/hfa
DEVELOPMENT RIGHTS AGREEMENTS
Analysis available at
Senate Bill 277 as passed by the House http://www.legislature.mi.gov
Sponsor: Sen. Kristen McDonald Rivet
House Committee: Energy, Communications and Technology
Senate Committee: Energy and Environment
Complete to 11-6-23
(Enacted as Public Act 230 of 2023)
SUMMARY:
Senate Bill 277 would amend the Natural Resources and Environmental Protection Act
(NREPA) to provide that a solar facility is a permitted use for farmland under a development
rights agreement under the state’s Farmland and Open Space Preservation Program (see
Background, below). A landowner could not claim the tax credit under the program from the
time the facility is being built to the time it is completely removed (this is referred to in the bill
as the deferment period). The bill would more or less be codifying, or putting into law, what is
already current policy regarding the siting of commercial solar panels on land enrolled in the
program. 1
The bill would provide that a solar facility is a permitted use under a development rights
agreement if all of the following conditions are met:
• The land was subject to a development rights agreement before the solar facility
became a permitted use.
• The landowner and the Michigan Department of Agriculture and Rural Development
(MDARD, also called the state land use agency in this part of NREPA) amend the
development rights agreement applicable to the solar facility site. If only a portion of
the land is to be subject to a solar agreement, the land subject to the development rights
agreement would have to be divided under the applicable provisions of NREPA 2 before
the resulting agreement is amended.
• At least 60 days have gone by since the development rights agreement was recorded. 3
• The solar facility site is designed, planted, and maintained with groundcover that
achieves a score of at least 76 on the Michigan Pollinator Habitat Planning Scorecard
for Solar Sites developed by the Michigan State University Department of
Entomology 4 or is designed, planted, and maintained in compliance with Cover
Standard 327 of the United States Department of Agricultural Natural Resource
Conservation Service. 5
• A bond or irrevocable letter of credit payable to the state is maintained, from the time
the facility is being built to the time it is completely removed, as financial assurance
1
https://www.michigan.gov/mdard/-/media/Project/Websites/mdard/documents/environment/farmland/MDARD-
Policy-on-Solar-Panel-and-PA116-Land-rev20230328.pdf
2
Specifically, section 36110(4), which among other things requires the smaller parcels created by the division to meet
the minimum requirements for being enrolled in the program or be at least 40 acres in size.
3
Note: This appears to apply to the amended agreement, as under current policy, but as written could be imposing a
requirement concerning the original agreement as well.
4
https://www.canr.msu.edu/home_gardening/uploads/files/MSU_Solar_Pollinators_Scorecard_2018_October.pdf
5
https://www.nrcs.usda.gov/sites/default/files/2022-09/Conservation_Cover_327_CPS.pdf
House Fiscal Agency Page 1 of 4
 for the decommissioning of the solar facility and the return of the land to agricultural
use. The amount of the financial surety would have to be calculated by a licensed
professional engineer, and, every three years or as MDARD considers necessary, the
amount of the bond or letter of credit would have to be adjusted as necessary to ensure
that the financial assurance is sufficient for the decommissioning of the solar facility
and the return of the land to agricultural use.
• The solar facility site is designed, established, and maintained in a manner that ensures
the land can be returned to agricultural use when the facility is completely removed.
• The land is returned to normal agricultural operations and use by the first growing
season after the facility is completely removed.
Solar facility would mean a facility that is owned by an electric provider and is for the
generation of electricity using solar photovoltaic cells.
Electric provider would mean any of the following:
• Any person or entity that is regulated by the Public Service Commission for
the purpose of selling electricity to retail customers in Michigan.
• A municipally owned electric utility in Michigan.
• A cooperative electric utility in Michigan.
• An alternative electric supplier licensed under section 10a of 1939 PA 3. 6
• Electric generating equipment and associated facilities with a capacity of more
than 100 kilowatts located in Michigan that are not owned and operated by an
electric utility.
Landowner would mean a person that meets both of the following requirements:
• Has a freehold estate in land coupled with possession and enjoyment or, if land
is subject to a land contract, is the vendee.
• Has signed a development rights agreement with MDARD, and, if the land is
subject to a land contract, the vendor.
Solar agreement would mean an agreement entered into by the landowner and the solar
facility owner or operator to authorize the installation and operation of a solar facility
on all or a portion of the land and that contains all conditions specifically identified in
the bill as the responsibility of the solar facility owner or operator.
The amended development rights agreement applicable to the proposed solar facility site
would extend the existing development rights agreement beyond its original termination date
for an amount of time equal to the deferment period (the length of time from when the facility
is being built to when it is completely removed). However, that period could not exceed 90
years minus the remaining term of the development rights agreement. 7 A landowner could
6
http://legislature.mi.gov/doc.aspx?mcl-460-10a
7
The current MDARD policy provides that the amended agreement “shall extend the existing Farmland Development
Rights Agreement for a period of time that is equivalent to the amount of time the land is used to generate solar power
combined with the remaining term of the Farmland Development Rights Agreement. This will result in no net change
in the length of the Farmland Development Rights Agreement.” The bill would cap the length of time that a solar
facility can be in operation so that, when that time is added to the time left in the original agreement, the agreement
does not extend beyond 90 years after the start of construction on the solar facility site. However, a subsequent
agreement could provide for an additional deferment period.
House Fiscal Agency SB 277 as passed by the House Page 2 of 4
 enter into a subsequent amended development rights agreement to provide for an additional
deferment period.
Amended development rights agreement would mean a development rights agreement
that includes the conditions required to allow a solar facility to be installed and operated
on all or a portion of the land subject to the agreement.
The landowner could not claim a tax credit under the program during the deferment period (the
time from when the facility is being built to when it is completely removed). If a landowner
relinquishes the development rights agreement at any time during the deferment period, the
past seven years of tax credits would be payable. The past seven years of tax credits would be
calculated from the time the amended development rights agreement is recorded and would be
held until the land is returned to agricultural production at the end of the deferment period.
The electric provider could assume responsibility under a solar agreement for compliance with
the requirements described above related to groundcover, financial assurance, or designing,
establishing, and maintaining the site to ensure that it can return to agricultural use in the end.
The electric provider would have to assume responsibility under the solar agreement for
maintenance of any agricultural drain that is privately owned and necessary for exemption from
regulation under Part 301 (Inland Lakes and Streams) or Part 303 (Wetlands Protection) of
NREPA.
When the deferment period ends (that is, when the facility is completely removed), the solar
facility would no longer be a permitted use.
MCL 324.36101 and 324.36104a and proposed MCL 324.36104c and 324.36104e
BACKGROUND:
The Farmland and Open Space Preservation Program that is the subject of Senate Bill 277 is
housed in Part 361 of NREPA. The program is often referred to as the “PA 116 program,” in
reference to Public Act 116 of 1974, the Farmland and Open Space Act, the original public act
that created the program and was subsequently incorporated into NREPA. The program is
administered by the Michigan Department of Agriculture and Rural Development (MDARD). 8
Under the program, landowners apply to enroll their farmland in an agreement with the state
that restricts the use of the land to farming. These agreements last anywhere from 10 years to
90 years. As a benefit in exchange for restricting land use, the land is then exempt from certain
special assessments. In addition, participating landowners receive a tax credit on their state
income taxes. The program results in an annual income tax savings to those enrolled in the
program of approximately $61.6 million.
The act currently defines permitted uses and prohibited uses of land enrolled in the program.
Prohibited land uses would cause the property to be ineligible for enrollment in the program.
8
See https://www.michigan.gov/mdard/environment/farmland and https://www.michigan.gov/mdard/environment/f
armland/general/the-farmland-and-open-space-preservation-program
House Fiscal Agency SB 277 as passed by the House Page 3 of 4
 Presently, there are more than 42,700 development rights agreements in the state, covering 3.1
million acres of farmland that are held by approximately 15,300 landowners.
FISCAL IMPACT:
The bill would codify a current MDARD policy with respect to the siting of commercial solar
panels on land enrolled in farmland preservation programs. 9 As a result, the bill would have no
direct fiscal impact on the state or local units of government.
POSITIONS:
A representative of the Michigan Conservative Energy Forum testified in support of the bill.
(10-26-23)
The following entities indicated support for the bill (10-26-23):
• Department of Agriculture and Rural Development
• Evergreen Action
• Lightstar Renewables
• Michigan Chamber of Commerce
• Michigan Energy Innovation Business Council
• Michigan Environmental Council
• Michigan League of Conservation Voters
• Michigan Manufacturers Association
• National Grid Renewables
• Summit Ridge Energy
The Michigan Farm Bureau indicated a neutral position on the bill. (10-26-23)
Legislative Analyst: Rick Yuille
Fiscal Analyst: William H. Hamilton
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
9
See https://www.michigan.gov/whitmer/news/press-releases/2019/06/03/gov-whitmer-mdard-to-allow-
commercial-solar-panels-on-michigan-farmland
House Fiscal Agency SB 277 as passed by the House Page 4 of 4


Statutes affected:
Senate Introduced Bill: 324.36101, 324.36104
As Passed by the Senate: 324.36101, 324.36104
As Passed by the House: 324.36101, 324.36104
Senate Concurred Bill: 324.36101, 324.36104
Public Act: 324.36101, 324.36104
Senate Enrolled Bill: 324.36101, 324.36104