EVALUATION OF THE CONTRACT
NC State Extension
Campus Box 7602
NC State University
Raleigh NC 27695-7602
Phone: (919) 515-2813
Care should be taken to examine all aspects of the contract. Typically, such contracts are written to protect the company, not the landowner. As such, the contract outlines responsibilities and rights of the two parties but are typically one-sided in that they protect the developer/contractor’s rights but may greatly limit the landowner’s rights. One must remember, the developer/contractor is approaching the agreement to protect himself from as much liability as possible and to make a profit. It is not the intent of this article to outline all considerations of a contract. However, a few of the major issues that need to be considered are listed below. It is highly recommended to consult legal counsel prior to signing the contract.
Potential contractual considerations include:
- Can the contract or any agreement/obligation of the contract be sold, transferred or assigned to another party. If so, what are the terms? The ability to sell a contractual obligation may mean that the company or individual you contract with today is not the same tomorrow. Too, if allowed, the company/contractor to which the agreement is transferred may be limited in liability or simply not agree to all original terms. In some cases, transferal of the agreement may be to a company/contractor that does not have the ability to provide adequate financial backing or proper authority to meet original obligations. Simply make sure that if this clause is included in the contract that the specific conditions, terms, liability and risks associated with such transferal are outlined.
- Easement, right of ways, permission to enter the farmland at will and/or right to work of other parties should be considered carefully. Leases allow a landowner to provide a tenant exclusive rights for a specific time period. They are easily terminated. An easement provides the owner the right to continue using his/her land but transfers an interest in the property, and associated rights, to a third party. They are often recorded with the deed. As such, they are not easily terminated.
- Does the contract allow the developer/contractor access to the land at any time? Some clauses allow entry, without notification, at any time during the term of the contract. Specifically outline who has access to property and under what terms or conditions. Failure to do so may allow the contractor, developer, sub lessee or others access at any time without notification to the landowner.
- Does the contract require the landowner to protect the developer/contractor’s interest? If so, this broad term may imply legal fees, liability insurance or other matters. Avoid such clauses and terms and specify exactly what is needed by the contractor rather than a general, unclear clause that might increase the landowner’s risks. Make sure these items are specifically outlined.
- Who is liable for injury of a person during establishment, operation or maintenance of the solar panels? In some cases, landowners may become entangled in legal disputes over worker injury. Make sure to protect yourself against such situation by specifically outlining such liability and responsibilities.
- Who is responsible for disputes with sub-contractors, sub lessee or others? As a landowner, it is especially critical to separate your responsibility from those of the contractors/developers. Otherwise, legal action for which you have no control over may result.
- Do both parties have the right to terminate the agreement without cause? If not, then what are the terms of termination? Solar farms do not generate power equally. In some cases, poor performance may result in an inactive site. If so, as a landowner, do you have the right to terminate the agreement? These issues need to be clearly defined in the contract.
- If there is a dispute or legal matter, what state determines the applicable laws. Some contracts specify that all legal matters be handled by arbitration in the state of the contracting company’s origin or operation. Insist that all legal matters and disputes follow local state laws and that disputes be settled within the state that the solar farm is located.
- Consider having the contract publicly recorded. Many contractors not only do not wish for this to occur, the contract may specifically have wording preventing disclosure of terms, operation or any business matters concerning the solar farms. Rather a “memorandum” is executed. Many states do not regard these memorandums as a binding legal agreement and thus are not as enforceable as publicly recorded contracts.
- Make sure that any changes to the contract or agreements is in writing and that the party representing the contract and work has the authority to make changes to the contract. In some cases, a third-party administrating company provides sales or initial contact. These individuals or companies may or may not have authority to accept changes to a contract.
- Many lending institutions, for various liability and risk concerns, will not allow solar farms to be placed onto farms with a lien. If the farm is not fully paid, check with the lending institution. Otherwise, full payment of the remaining balance may be due should the farm be placed into a solar farm.
- Evaluate the liability of injury to workers, visitors to the site, potential environmental damage, fire, vandalism, or other unintended consequences. Liability insurance costs and needs for commercial property may greatly differ from liability insurance for farmland. As such, make sure the contract clearly specifies who owns the equipment and liability of damage to equipment or personal injury.
- Avoid clauses or phrases that are vague such as allowing entry of the developer, contractors or assignee to “undertake any activities that are necessary, helpful, appropriate or convenient in connection with, incidental to, or for the benefit of one or more projects.” Such statements give the contractor/developer or others open-ended rights and even the right for future development. Make sure to specifically outline all activities and responsibilities for all parties and specifically state that no others are implied.
New York Assembly Bill A 03340
Relates to decisions by the state board on electric generation; requires approval through public referendum prior to certification for establishing a major electric generating facility.
PROPERTY OWNERS BEWARE
By: Kelly J. Graves - Scolaro, Fetter, Grizanti, McGough & King, P.C
In the last several weeks, we have received and reviewed a flurry of solar leases and solar options to lease for numerous property owners. It appears that multiple solar companies are aggressively scouting and romancing property owners throughout the state with their promises to lease a few dozen acres and up to hundreds of acres of land with high rental rates per acre. The initial reaction is that this is a great opportunity for landowners to utilize their land and receive rental income that is significantly higher than agricultural market value rents particularly if the land is marginal farm land to begin with. However, BEWARE, because it is important to remember that the leasing documents that you are receiving were prepared by an attorney hired by the solar company so the documents tend to be prepared in a manner that is in the best interest of the solar company. The land owner's interests are not necessarily aligned with the solar company's interests!
Read more HERE
Local Emergency Planning Committees (LEPCs)
LEPC involvement in Industrial Solar
Local Emergency Planning Committees (LEPCs) are community-based organizations that assist in preparing for emergencies, particularly those concerning hazardous materials.
- Under the Emergency Planning and Community Right-to-Know Act (EPCRA), Local Emergency Planning Committees (LEPCs) must develop an emergency response plan, review the plan at least annually, and provide information about hazardous materials in the community to citizens. Plans are developed by LEPCs with stakeholder participation. The LEPC membership must include (at a minimum):
- Elected state and local officials
- Police, fire, civil defense, and public health professionals
- Environment, transportation, and hospital officials
- Representatives from community groups and the media
Some required elements of the community emergency response plan, developed by the LEPC, include:
- Identification of facilities and transportation routes of extremely hazardous substances
- Description of emergency response procedures, on and off site
- Designation of a community coordinator and facility emergency coordinator(s) to implement the plan
- Outline of emergency notification procedures
- Description of how to determine the probable affected area and population by releases
- Description of local emergency equipment and facilities and the persons responsible for them
- Outline of evacuation plans
- A training program for emergency responders (including schedules)
- Methods and schedules for exercising emergency response plans
Though LEPCs were created with the Federal law EPCRA, through the U.S. Environmental Protection Agency, they are often funded partially by the U.S. Department of Transportation's Hazardous Materials Emergency Preparedness grant program. Other sources of funding may include local jurisdictions, industry, businesses, NGOs, and other public or private grants.