Local Government Responses to Act 233 of 2023
By Andrew Moore, AICP
In late 2023, Governor Whitmer signed a package of bills targeting clean energy into law. Among them was Act 233 of 2023, which upon becoming effective on November 29, 2024, will largely preempt local control over wind, solar, and energy storage facilities throughout the state. Act 233 will have significant impacts on local units of government as utility-scale wind, solar, or energy storage companies will be able to bypass the local approval process.
Specifically, Act 233 provides for preemption of zoning and other ordinances for the following renewable energy facilities that generate or store power for off-site use:
- Solar energy facilities with a capacity of 50 megawatts or more;
- Wind energy facilities with a capacity of 100 megawatts or more; and
- Energy storage facilities with a capacity of 50 megawatts or more and an energy discharge capability of 200 megawatt hours or more.
Over the last several years, many communities have undertaken lengthy and sometimes contentious efforts to draft zoning and other provisions related to the siting of wind and solar facilities. Now, many of these communities are left wondering what to do in light of this new legislation.
While local units will need to tailor their approach based on their specific situations, there seem to be three primary options available at this time. These include (1) adopting a compatible renewable energy ordinance that mirrors the requirements of Section 226(8) of the Act, (2) adopting non-compatible ordinances governing wind, solar, and energy storage facilities, or (3) allowing all three types of renewable energy facilities upon an applicant obtaining a certificate from the Michigan Public Services Commission (MPSC).
With each approach, there are pros and cons:
Since a CREO must mirror the standards in Section 226(8) of the Act, any ordinance that is more restrictive than the Act would not qualify as a CREO. If an energy company applies for a certificate from the MPSC, they must make a one-time grant, not to exceed $75,000, to the local unit to participate in the review hearing with the MPSC. This grant does would not be required if the community has a CREO since there would be no proceeding with the MPSC.
If applying for a certificate from the MPSC, the energy company must enter into a host community agreement with the local unit and make a one-time payment of $2,000 per megawatt of nameplate capacity for “police, fire, public safety, or other infrastructure, or other projects as agreed to by the applicant and local unit.” It appears that this payment would not be required if the local unit has a CREO because the energy company would be seeking approval from the local unit, not the MPSC.
Given that a utility-scale renewable energy project must be approved either by the local unit or by the MPSC if it meets the criteria outlined in the Act, it may be in a local unit’s best interest to require energy companies to obtain a certificate so as to not forfeit the required payments. Communities will have to determine whether the potential benefits of working cooperatively with energy companies through a local review and approval process (knowing that it must approve projects that comply with the Act) is worth forfeiting both the one-time payment that would come through the host community agreement and the grant that it would receive to participate in the MPSC hearing.
Local Regulation. Many zoning ordinances currently provide for utility-scale wind and solar facilities, and most existing zoning provisions are not compatible with the siting requirements of the Act. If desired, local units may keep these existing provisions in place, or adopt their own non-compatible zoning requirements.
By adopting a non-compatible ordinance, a local unit would be assuming that energy companies will choose to work with them instead of the MPSC, which is possible if energy companies view the MPSC’s process as slow, expensive, or otherwise unattractive. If an application is denied by the local unit, the applicant may still obtain a certificate from the MPSC, so it may be appealing for an energy company to work with a local unit’s non-compatible ordinance first, and if denied, head to the MPSC.
Oddly, it appears that in approving a renewable energy project, a local unit would forfeit both the grant to participate in the MPSC hearing and the one-time payment under a host community agreement. However, if the local unit denies a project that is later granted a certificate by the MPSC, the local unit would not receive the grant to participate in the MPSC hearing but could still qualify for the one-time payment under a host community agreement.
Hands-Off. A third option is that a local unit could simply choose to not regulate projects at all and permit them anywhere if the energy company obtains a certificate from the MPSC. This approach would surrender local control to the MPSC, but allow the community to be eligible for both the grant to participate in the MPSC hearing and the one-time payment under the host community agreement.
Unfortunately, there is not much guidance on this topic as of this writing. MPSC staff was recently ordered to “engage with experts, local unit agencies, project developers and other interested persons in transparent and open meetings” beginning in March, with recommendations filed by June 21, 2024. While communities will have time to decide on an approach, it should be prepared to have a plan in place by November 2024.
Communities are encouraged to contact their attorneys, planners, and other experts to keep themselves updated on this new legislation. The planners at Williams & Works are closely following this evolving topic and are ready to help your community be prepared.