I didn't actually try <validterraintype> with GrasslandsEnvironment because I assumed <validterraintype> wouldn't work with an environment, however it does use the <TerrainType> tag with environments above. Unfortunately it didn't work, even with the <validterraintype>GrasslandsEnvironment</validterraintype> the spell can be cast anywhere. I also tried <ValidTerrainCategory>Fertile_Land</ValidTerrainCategory>   but that didn't work either.

There are some spells that can only be cast on "Friendly Territory".  Perhaps that could provide a clue as to how this can be accomplished.  This would be an interesting mechanic to give magic more flavor.