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Renewable Energy Projects: How Should Your Township Adjust Its Zoning Approach?

Several legislative changes to regulation of wind, solar, and energy storage advanced quickly at the end of the legislative session with the aim of setting and achieving a 100% clean energy standard for Michigan’s power grid in less than twenty years. For local governments, the largest impact is on zoning, siting, and regulation of utility scale solar and wind energy projects which can now be overseen by the Michigan Public Service Commission (MPSC). Although the State has implemented significant changes to the zoning and regulations of these projects, there are different methods and approaches Townships can take to maintain a seat at the table.

 In this e-letter, we will examine the five different bills passed by the Legislature. The target on local zoning was explicit and we will examine the “one-size-fits-all” criteria enacted at the State level. Both wind and solar projects benefit from these bills as well as less common energy storage facilities—which may or may not be lithium-ion battery based. Each has “baseline” provisions for setbacks, height, and decibel levels. Additionally, if the new state procedure is utilized, new processes will be implemented as well as requirements from the energy developers, including community benefit programs within local municipalities. Read on to learn more about these bills and how your Township can position itself to advance the public policy goals of your community.

The Legislation

House Bills 5120 & 5121 and Senate Bills 271, 273, and 277 were introduced and advanced quickly as complementary policy. In particular, once the House Bills were introduced in October 2023, both sets of bills were approved and sent to the Governor in less than a month. They were promptly signed creating Public Acts 229, 230, 233, 234, and 235. Together they are a seismic shift in regulation and siting of renewable energy systems with significant state, county, and Township impacts.

The Senate bills which became Public Acts 229, 230, and 233 require a 100% clean energy standard by 2040. Different mixes of energy production can reach the target—including nuclear power. Generally, “renewable” energy is targeted as 60% of generation with “traditional” energy (e.g., nuclear or natural gas with carbon capture) making up the remaining 40%.  To support the 60% target, the House bills cover utility scale projects in wind and solar energy and even utility scale batteries or other energy storage systems.

The House bills which became Public Acts 233 and 234 effected the material changes to zoning control. In the words of the House Fiscal Agency Analysis, the new process is designed to “preempt local zoning or regulation” of wind and solar energy facilities. Rather than requiring zoning approval from local governments, renewable energy facility producers can obtain a certificate from the Michigan Public Service Commission (MPSC) to move forward with the construction of their projects. The legislation outlines requirements for the certificate application, though the MPSC has discretion over sufficiency to award a certificate. If the project satisfies the MPSC requirements and the MPSC issues a certificate, then local municipal regulation is preempted.

Utility Scale Projects – One Size Fits All

Utility scale renewable energy projects will have statewide uniform requirements or limits for material aspects of development. A project is “utility scale” and covered by the legislation if it has certain “nameplate capacity,” namely: 1) Solar projects: 50 megawatts or more; 2) Wind projects: 100 megawatts or more; and 3) Energy Storage Facilities: energy discharge capability of 200 megawatt hours or more. Smaller installations (e.g., an onsite solar array to offset electrical needs at a family farm) would follow the local process. Each type of utility project will have different setbacks and regulations. Generally, these are:

Solar

  1. Setbacks:
    • 300-foot setback from building on nonparticipating properties.
    • 50-foot setback from the edge of a public road.
    • 50-foot setback from the property line of a nonparticipating property.
  2. Maximum height: 25-feet when solar arrays are at full tilt.
  3. Noise: No louder than 55 average hourly decibels on the A-weighted scale at the wall of the nearest nonparticipating dwelling.
  4. Fencing: National Electric Code compliant.
  5. Dark sky friendly lighting solutions.

Wind

  1. Setbacks:
    • 1 times the maximum blade tip height from residences on nonparticipating properties.
    • 1 times the maximum blade tip height from buildings on participating properties.
    • 1 times the maximum blade tip height from the center line of an overhead utility line easement
    • 1 times the maximum blade tip height from the center line of a public roadway.
  2. Shadow Flicker: No more than 30 hours of shadow flicker on nonparticipating residences.
  3. Maximum height: only limited by a Determination of No Hazard to Air Navigation by the Federal Aviation Administration.
  4. Noise: No louder than 55 average hourly decibels on the A-weighted scale at the wall of the nearest nonparticipating dwelling.
  5. Dark sky friendly lighting solutions—may vary by project.

Energy Storage

  1. Setbacks:
    • 300-foot setback from building on nonparticipating properties.
    • 50-foot setback from the edge of a public road.
    • 50-foot setback from the property line of a nonparticipating property.
  2. Noise: No louder than 55 average hourly decibels on the A-weighted scale at the wall of the nearest nonparticipating dwelling.
  3. Installation Compliance: Comply with NFPA 855: “Standard for the Installation of Stationary Energy Storage Systems.”

The MPSC may adopt “any” more stringent requirements but “must determine that the requirements are necessary for compliance with state or federal environmental regulations.”

Several items that would normally be included in local zoning special use provisions are not included or contemplated by the legislation. Glare is not addressed. Post-construction studies to confirm the as-built project performs as designed are not required. Escrow funds for municipality review and enforcement are not included nor is a conflict resolution program contemplated. Standards for landscaping are not established. Insurance requirements and road repair agreements are not addressed.

Moving Forward: the MPSC Process & Compatible Ordinances

Townships can adopt a “compatible ordinance” to retain a seat at the table. Such an ordinance is defined as one that “provides for the development of energy facilities” containing “requirements of which are no more restrictive than the provisions included in section 226(8)” (emphasis added). These are the setback, height, noise and other requirements outlined above. If a municipality has such an ordinance, then the Township will process the application and not the MPSC. There will likely be disputes as to whether the “no more restrictive than” language means that townships can or cannot regulate topics not identified in the act. For example, is it field preemption or the narrower conflict preemption? One straightforward reading would require the setback, noise, and height limitations set forth in the local ordinance to match the legislation. (Townships may also have to follow and incorporate future rules and regulations adopted by the MPSC, if any.)

A narrow reading of the statute along conflict preemption principles could allow Townships to regulate land use impacts and other public welfare that the legislation does not expressly authorize. If such additional local concerns may be expressed in a compatible ordinance, the scope and extent of possible customization is unclear. Additionally, a broader reading of the statute along field preemption principles could mean any provisions beyond those matching the statute might render the ordinance as not compatible.

If the ordinance is ultimately determined to not be a “compatible ordinance,” then the project may proceed before the MPSC. When submitting to the MPSC, a developer must provide a grant to local governments in an amount determined by the MPSC to cover costs for a contested case proceeding within the MPSC. The maximum amount is $75,000.00 per affected local unit and no more than $150,000.00 total to all units. Affected local units are defined as units of “local government” where the energy facility will be located.

Additionally, the MPSC is directed to consider the percentage of land within the municipality dedicated to energy generation as a component when considering whether to grant an application. It is further directed to determine that a project “will not unreasonably diminish prime or other farmland.” Again, the statute says little, leaving it for the MPSC, developers, municipalities, and stakeholders to work out the scope of these factors.

If a developer utilizes the MPSC process to apply for a certificate for a utility-scale solar project, they must enter into a host community agreement with a township hosting the project. These agreements provide a one-time payment of $2,000 per megawatt hour of energy to a township to be used for purposes determined by the township such as emergency services, other infrastructure, or other projects as agreed to by both parties. This payment is in addition to any tax revenue or payment in lieu of taxes received by a township. This will result in payments exceeding $100,000 per project to a township with a solar project subject to the new legislation. Host community agreements may also be a place for townships to “negotiate” and contractually bind developers to project conditions consistent with past project approvals identified above.

What Townships Should Do Now

We strongly encourage Townships to explore adopting compatible renewable energy ordinances to retain forms of local control. Consider the risks and rewards of including requirements beyond those in the legislation. Think creatively about using host community agreements to protect township residents. If your township has a solar project application pending (or potential project lingering), it may be beneficial to have conversations with the developer as to their preference whether to use the MPSC process or what types of design guidelines that they would support.

This is a significant change to local zoning authority. The Legislation is not yet officially operative. After the 90-day delay following the last day of the legislative session, these public acts are not effective until February 13, 2024. Additionally, Public Act 233 takes effect one year later. To be on the safe side, townships and the MPSC should prepare, determine goals, and implement rules and regulations by the end of November 2024.

By Matthew A. Kuschel and Kyle A. O’Meara

This publication is intended for educational purposes only. This communication highlights specific areas of law and is not legal advice. The reader should consult an attorney to determine how the information applies to any specific situation.

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