Farmers Await New Energy Tax Credit Rules for PFAS-Polluted Land

Tax regulations expected this year could clarify whether agricultural land ruined by PFAS contamination qualifies for a 10% federal tax credit for renewable energy projects on brownfields, offering further incentives for states such as Maine that have adopted policies to reuse damaged land.

The Inflation Reduction Act of 2022 allows a 10% bonus tax credit for renewable energy projects on brownfields in qualifying “energy communities.”

Neither the law nor Department of the Treasury regulations explicitly include unfarmable agricultural land in their definition of brownfields, said Jeremy Horan, vice president of government affairs for the American Council on Renewable Energy (ACORE).

But the department is expected to issue further regulations on energy communities later this year that likely will help clarify the brownfield definition, he said.

The department’s definition of brownfields as “real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant” already suggests contaminated agricultural land could qualify, said Horan and other industry officials.

The Environmental Protection Agency’s rule designating two specific types of per- and polyfluoroalkyl substances (PFAS) to be hazardous substances also should help properties contaminated by those chemicals qualify for the tax credit, Horan said.

The EPA issued a regulation in May under the Comprehensive Environmental Response, Compensation, and Liability Act, or Superfund law, designating as hazardous substances two types of PFAS—perfluorooctanoic acid (PFOA), perfluorooctanesulfonic acid (PFOS), their salts, and closely related forms.

The “energy community bonus credit” rules expected this year are listed in the department’s 2023–2024 Priority Guidance Plan. The Treasury Department declined to comment on whether its rules will offer more insight into whether farmland that’s so polluted it can’t safely be used to raise crops or livestock would qualify as brownfields.

Certain persistent PFAS can get into crops, livestock, fish, and wildlife through plants growing on contaminated soil or water polluted by the chemicals.

Adding to State’s Effort

The tax credit would add to incentives at the state level, such as a law Maine issued last year making PFAS-contaminated farmland a priority for renewable energy.

The Maine law doesn’t offer a financial incentive, but rather a statutory directive to make PFAS-contaminated farmland a priority in the selection of projects to be permitted, said state Rep. Bill Donohue Pluecker (I), chairman of the state House Agriculture, Conservation, and Forestry Committee.

Maine’s Public Utilities Commission is developing a rule to describe how the process will work.

The state’s Department of Agriculture, Conservation and Forestry determines what farms qualify. Criteria it uses include the presence of 100 parts per billion of more of PFOS, which current science says makes it inadvisable for most agricultural purposes, the department said by email. “This figure may change over time based on evolving science and the establishment of state and federal food safety standards.”

Walden Renewables plans to seek both state permits and the federal tax credit for a solar farm it’s planning to build on a PFAS-contaminated former dairy in Maine, said Dale Knapp, the firm’s head of development for New England.

It makes sense to place solar panels on such properties, because the panels don’t significantly disturb the land—thereby possibly spreading PFAS—as many other types of development would, said Bob Cleaves, co-founder of Dirigo Solar LLC.

Maine laws and regulations protect the farm family that retains the land, for example by requiring the property be returned to the owner in its original condition, he said. Another state law that requires solar power developers have an approved decommissioning plan and accompanying financial assurance sufficient to cover the cost of decommissioning offer additional protections, he said.

Not all contaminated farms will be suitable for solar, Cleaves said. He recalled a 500-acre parcel that was heavily contaminated with PFAS but located in an area where connecting it to the transmission system would have cost almost as much as building the solar site.

“It’s not a silver bullet, but it’s definitely an incentive that has everyone’s attention,” Cleaves said, adding Maine’s statute and the tax credit “hopefully will result in significant projects that make a difference for farmers and allow developers to move forward.”

—With assistance from Daniel Moore