California Legislature Passes Bill to Facilitate Solar Projects on Agricultural Land

On August 31, the California Legislature passed Assembly Bill 1156 (sponsored by Assemblymember Buffy Wicks), which is intended to facilitate the development of qualifying photovoltaic solar projects on agricultural lands that are restricted by Williamson Act contracts and are located in overdrafted groundwater basins. Governor Gavin Newsom has until September 30 to decide whether to sign the bill into law.

Background

The California Land Conservation Act (more commonly known as the Williamson Act) allows cities and counties to enter into contracts with willing landowners to limit use of their property for agricultural, open space, and compatible uses. In return, the property’s tax assessment is based on its restricted use for agriculture or open space, rather than its fair market value.

Williamson Act contracts are generally for a rolling 10-year duration (i.e., an initial term of 10 years, with an additional year automatically added to the contract term on the annual renewal date, unless the local agency or the property owner decides not to renew the contract before the renewal date, in which case the contract will expire, but not until nine years later). The practical effect of the contract’s rolling term is that it is challenging to pursue development of non-agricultural and non-compatible uses given the nine years that must elapse after a landowner decides not to renew a contract.

A landowner may petition the local agency to cancel a contract (in full or in part) before the contract expires, which the local agency may approve if it finds that either (1) cancellation is consistent with the purposes of the Williamson Act or (2) cancellation is in the public interest. The landowner must pay a cancellation fee, generally equal to 12.5 percent of the fair market value of the property without the contractual restriction. The local agency may waive or extend the time for paying some or all of the cancellation fee if certain limited criteria are satisfied, including approval by the Secretary of the California Natural Resources Agency.

AB 1156

AB 1156 has two main provisions. First, it would allow for the nullification of Williamson Act contracts for qualifying solar projects if certain requirements are met. Second, it would allow for an extension of the time to pay, or the waiver of, contract cancellation fees for qualifying solar projects.

Contract Nullification

If signed into law, AB 1156 would allow for nullification of a Williamson Act contract on land that a local agency approves for use as a photovoltaic solar project if certain requirements are met:

• The project is “a photovoltaic solar facility for the purpose of providing for the collection, storage, and distribution of solar energy for the generation of electricity.”
• The project is located on land within a groundwater basin or subbasin that is in a condition of critical overdraft.
• The project is certified by the governor as an Environmental Leadership Development Project under the California Environmental Quality Act (CEQA). Such projects must meet specified labor requirements and are subject to significant fees (among other requirements), and they receive expedited judicial review if challenged in a CEQA lawsuit.
• The developer has entered into a community benefits agreement with the local government in whose jurisdiction the project would be located. The community benefits must begin to be provided to the local community no later than the start of construction of the solar and appurtenant facilities.
• The developer must engage in “meaningful outreach and engagement” as follows: mailing notice to adjacent landowners, publishing a notice in a newspaper of general circulation, and conducting a public meeting within the jurisdiction of the project to solicit input on the proposed community benefits agreement.

If the developer later decides not to build the project, it must notify the local agency, and the land will be reenrolled in a new Williamson Act contract or encumbered by an enforceable deed restriction with terms at least as restrictive as those provided by the Williamson Act.

Cancellation Fee Waivers/Extensions

AB 1156 also would allow for the extension of the time for payment, or the waiver, of Williamson Act contract cancellation fees when the cancellation is to facilitate a solar facility if certain requirements are met:

• The cancellation is to facilitate a photovoltaic solar facility for the purpose of providing for the collection, storage, and distribution of solar energy for the generation of electricity.
• The land is located within a groundwater basin or subbasin that is in a condition of critical overdraft.
• The developer has entered into a community benefits agreement with the local government within whose jurisdiction the project is to be located. The community benefits must begin to be provided to the local community no later than the start of construction of the solar and appurtenant facilities.
• The developer must engage in “meaningful outreach and engagement” as follows: mailing notice to adjacent landowners, publishing a notice in a newspaper of general circulation, and conducting a public meeting within the jurisdiction of the project to solicit input on the proposed community benefits agreement.

For the next 10 years, the Secretary of the Natural Resources Agency must approve requests for extensions of time to make cancellation payments for land that is located in a critically overdrafted groundwater basin or subbasin. In addition, for an approved cancellation to facilitate a photovoltaic solar facility, the Secretary must approve a 10-year extension of time to make all or a portion of the cancellation payment, and if the solar project has been constructed before the end of the extension of time, the Secretary must waive the cancellation payment. (The provisions described in this paragraph would expire on January 1, 2037.)

Implications

If AB 1156 is signed into law by the governor, this streamlined process for contract nullification could provide a feasible path forward for developing solar projects on certain agricultural lands that are subject to Williamson Act contracts. Allowing nullification of Williamson Act contracts for developing solar projects should help the State meet its clean energy development goals, while also facilitating alternative uses for agricultural land in water-stressed areas. The new law would also ease or eliminate the cost to solar project developers of paying contract cancellation fees. AB 1156 would go into effect January 1, 2027.

This new pathway, however, has some notable limitations. Projects must be located in areas of critical groundwater overdraft, and must meet labor and other requirements of Environmental Leadership Development Projects, which require approval by the governor. In addition, local agencies would not be shut out of this new contract nullification process, because the local agency with jurisdiction over the land must still provide its discretionary approval of a community benefits agreement. Still, contract nullification should be a viable option for many solar projects.

While there are other potential pathways to proceed with development of a solar project on land subject to a Williamson Act contract, AB 1156 (if it becomes law) could provide an important additional mechanism for doing so.