HB 729 — “Farmland Protection Act” (North Carolina) — Committee Substitute 2 (Reptd Fav Com Sub 2)
Summary
- Purpose: To reduce and ultimately eliminate the preferential property tax exclusion for solar energy electric systems sited in North Carolina, to restrict permitting of large-scale solar projects on productive farmland, and to strengthen decommissioning/financial-assurance requirements for utility‑scale solar facilities.
- Overall intent: Encourage siting of large solar projects off actively farmed land, increase local tax revenue over time, and require stronger financial protections to ensure cleanup/decommissioning.
Key provisions
1. Phase‑out of property tax exclusion for solar systems (G.S. 105‑275(45))
- Effective for taxable years beginning on or after:
- July 1, 2026: exclusion reduced from 80% to 60% of appraised value;
- July 1, 2027: reduced to 40%;
- July 1, 2028: reduced to 20%;
- July 1, 2029: exclusion repealed entirely.
- “Solar energy electric system” retained as equipment used directly and exclusively to convert solar energy to electricity.
Limits on new utility‑scale solar certificates (amend G.S. 62‑110.1)
- The Utilities Commission (the “Commission”) must not issue a certificate of public convenience and necessity for a utility‑scale solar project that is not a qualifying small power production facility under PURPA, unless the proposed site meets at least one of these criteria:
- The property is a brownfield and the developer enters a brownfields agreement with DEQ;
- The property is not currently used for agricultural or horticultural production;
- The property is timberland that has been clear‑cut and is not in production at time of application.
- The bill references the statutory definition of “utility‑scale solar” (G.S. 130A‑309.240(a)(6)).
Strengthened decommissioning, registration, and financial assurance requirements
- Amends prior law (S.L. 2023‑58) to set effective dates for registration and decommissioning obligations:
- Registration and certain decommissioning/registration requirements become effective November 1, 2025 (owners of existing projects to register by Nov. 1, 2025 or at least 90 days before construction of new projects).
- Requirements for submitting decommissioning plans and establishing financial assurance take effect under the schedule established in the amended provisions (dates referenced: November 1, 2025 and December 1, 2026), and apply to new projects and to existing projects when rebuilt or expanded after the effective dates.
- Owners must submit plans/financial assurance either by the applicable statutory deadline or prior to construction/rebuild as specified.
Who is affected
- Solar developers and investors: reduced tax incentives and tighter siting rules increase costs and may constrain projects on farmland.
- Farmers and landowners: reduces attractiveness of leasing active farmland for solar; may protect agricultural acreage.
- Local governments/county tax bases: likely increase in property tax revenue as exclusions phase out.
- Utilities and NC Utilities Commission: new statutory constraints on certificates for certain solar projects; greater oversight of decommissioning obligations.
- Rural communities and environmental regulators: changes will affect land‑use planning and reclamation responsibilities.
Potential impacts and tradeoffs
- Fiscal: phasing out the exclusion likely raises property tax revenues for counties and municipalities over 2026–2029; exact amounts depend on deployment and assessed values.
- Renewable development: may slow or redirect utility‑scale solar development toward non‑agricultural sites or brownfields; could increase project costs (financial assurance, lost tax breaks).
- Environmental/land stewardship: strengthened decommissioning and siting rules aim to reduce conversion of productive farmland and ensure funds for site remediation.
Effective dates and procedural notes
- Tax exclusion phase‑out stages apply to taxable years beginning on or after each listed July 1 (2026–2029).
- Registration and some decommissioning/financial assurance requirements reference Nov. 1, 2025 and Dec. 1, 2026 effective dates (as integrated into S.L. 2023‑58 amendments); owners of existing projects must meet registration/submission timelines or comply prior to new construction/rebuild.
- The bill was reported favorably as a committee substitute (Reptd Fav Com Sub 2) and contains serial referrals to Finance, Agriculture & Environment, Energy & Public Utilities per the committee report trail.
Note: This summary reflects the committee substitute (Edition 3) language that phases out the tax exclusion over four years and adds the siting and decommissioning provisions.
