Solar Leasing in Louisiana: Act 301 and Decommissioning Requirements

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As the number of solar projects continues to grow in Louisiana, a chief concern among Louisiana taxpayers is ensuring that these projects are properly decommissioning upon their abandonment.  Solar development is largely in its infancy in Louisiana, with only a handful of projects having been constructed to date.  However, lawmakers are acting now to ensure proper decommissioning years down the road.

In an effort to address this issue, the Louisiana Legislature passed Act No. 301 (formerly Senate Bill 185), which was signed by Governor Edwards on June 14, 2021 and will become effective on August 1, 2021.  Act 301 amends Louisiana Revised Statute § 30:1154 and requires the Secretary of the Department of Natural Resources (DNR) to develop regulations concerning minimum requirements for solar leases, including requirements for decommissioning and final site closure.[1] According to Senator Bret Allain (R-Franklin), author of Act 301, the purpose of this legislation is to avoid a similar issue Louisiana citizens are far more familiar with—the abandonment of orphaned oil and gas wells.  [2]  The fear, Allain explains, is “that we will end up with orphan solar farms across the state.”[3]

Several states have recently undertaken similar efforts to ensure proper decommissioning of solar projects, including the use of bonding requirements to ensure decommissioning.[4] In West Virginia, Senate Bill 492, which went into effect on July 9, 2021, provides for the establishment and implementation of a program to decommission and reclaim wind and solar electrical generation facilities upon closure.[5] The legislation requires that operators of wind and solar generation facilities post a bond to cover decommissioning costs of the facility at the end of life.  The legislation also provides for the manner in which the Department of Environmental Protection determines the bond amounts, penalties for not submitting a decommissioning bond,  and required provisions to be included in decommissioning agreements, among other things. In 2019, North Carolina passed legislation similar to Act 301 in Louisiana, requiring the state regulatory agency to enact regulations addressing decommissioning of utility-scale solar projects.[6]  Washington has legislation on the books requiring manufacturers of photovoltaic modules to take them back at end of life for proper recycling and disposal.[7]

The regulatory scheme that will be implemented by the DNR will cater to Louisiana’s unique characteristics and needs, but legislation and regulatory frameworks already developed in other states can provide meaningful guidance. Decommissioning and abandoned solar farms are some of the primary concerns held by landowners, taxpayers, and solar energy developers when it comes to solar energy development, and Act 301 represents the first step in addressing those concerns.

[1] https://www.legis.la.gov/legis/ViewDocument.aspx?d=1235566.

[2] https://www.theadvocate.com/baton_rouge/news/politics/legislature/article_9f368470-bfec-11eb-a828-cf1a27488dee.html.

[3] Id.

[4]https://www.theadvocate.com/baton_rouge/news/politics/legislature/article_a32a1bd4-d926-11eb-84da-fb17d5a5a73e.html.

[5]https://www.wvlegislature.gov/Bill_Status/bills_text.cfm?billdoc=SB492%20SUB1%20ENR.htm&yr=2021&sesstype=RS&i=492.

[6] See 2019 N.C. Sess. Laws 132, available at https://www.ncleg.gov/Sessions/2019/Bills/House/PDF/H329v5.pdf

[7] RCW 70A.510.010.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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