Waterford Twp. v. Pa. PUC ( 2022 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Waterford Township, :
Petitioner :
:
v. : No. 306 C.D. 2021
: Argued: February 7, 2022
Pennsylvania Public Utility :
Commission, :
Respondent :
BEFORE: HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
HONORABLE LORI A. DUMAS, Judge
OPINION
BY JUDGE DUMAS FILED: April 21, 2022
Petitioner Waterford Township (Township) seeks review of the
Declaratory Order entered on February 19, 2021, by the Pennsylvania Public Utility
Commission (Commission). In its Declaratory Order, the Commission rejected
certain fees authorized by the Township on the ground that these fees are preempted
by the Public Utility Code (Code).1 The Commission relied upon our Supreme
Court’s decision in PPL Electric Utilities Corporation v. City of Lancaster, 214 A.3d
639 (Pa. 2019) (City of Lancaster), which reaffirmed the General Assembly’s
intention wholly to occupy the field of utility regulation at the state level. Upon
review, however, we disagree with the Commission’s conclusion that City of
Lancaster mandates preemption of the Township’s fees as impermissible utility
regulation. Further, pursuant to Pennsylvania’s Business Corporation Law of 1988
(BCL)2 and The Second Class Township Code (SCTC),3 the Township may impose
1
66 Pa.C.S. §§ 101-3316.
2
15 Pa.C.S. §§ 1101-4162.
3
Act of May 1, 1933, P.L. 103, as amended, 53 P.S. §§ 65101-68701.
reasonable permitting fees for entry onto its public rights-of-ways (ROWs).
Accordingly, the Commission lacked authority to prohibit these fees, and we are
constrained to reverse its Declaratory Order.
Background
The relevant facts are not in dispute. The Township is a township of
the second class, located in southern Erie County, Pennsylvania. It is the local
governmental authority that bears responsibility for the maintenance of the streets,
highways, and/or other public ways of the Township. Armstrong
Telecommunications, Inc. (Armstrong) is a certificated public utility providing
telecommunications services. It is in the process of installing fiber optic cable in
public ROWs in western Pennsylvania.
Armstrong applied to the Township for road occupancy permits for
fifteen ROW locations. In October 2019, the Township issued Armstrong the
permits with the condition that Armstrong pay related permitting fees, including an
application fee ($50.00), inspection fee ($250.00), location fees ($10.00 or $20.00),4
and a refundable bond ($500.00) for each of the 15 locations. In sum, the Township
sought $4,690 in nonrefundable fees and $7,500 in refundable bond fees.
On November 12, 2019, Armstrong filed a Petition for Declaratory
Order, asking the Commission to declare that, as a public utility providing
certificated services under the Commission’s jurisdiction, Armstrong need not pay
the permitting fees charged by the Township. In response, the Township
acknowledged Armstrong’s right to enter upon public ROWs in order to place public
4
The location fees varied based on the location type. At 11 sites, the Township levied a
$10.00 fee for an opening in the ROW outside of pavement and shoulder. At the other four sites,
the Township levied a $20.00 fee for a utility pole.
2
utility facilities but averred that the BCL and the SCTC empowered the Township
to impose reasonable fees for such right of entry. Further, the Township sought to
distinguish its fees from the disputed maintenance fees at issue in City of Lancaster.
In a split decision, the Commission determined that the Township
application fee was not preempted by the Code but instead governed by the BCL.
Commission Order, 2/19/21, at 8, 12. Based on its interpretation of City of
Lancaster, the Commission further determined that the inspection of public utility
facilities fell under its exclusive jurisdiction. Id. at 8. Therefore, while it recognized
that the Township’s fees were not identical to those in City of Lancaster, the
Commission determined that the pole inspection fees and site inspection fees were
preempted. Id. at 9-11. Finally, the Commission declined to address whether the
“outside of pavement and shoulder” inspection fee or the refundable bond fee came
under the Commission’s exclusive jurisdiction. Id. at 12. According to the
Commission, there was not sufficient evidence in the record to determine whether
these fees are preempted under the Code. Id. 5,6
The Township’s Claims on Appeal
The Township first contends that the Commission lacked jurisdiction
to adjudicate this case because its permitting fees were expressly authorized by the
General Assembly in the BCL and the SCTC. See Township Br. at 4, 22-24. As
5
In our view, the Commission had sufficient information to address the “outside of
pavement and shoulder” inspection fee, which is simply another site inspection fee, like the pole
inspection fee. However, neither the Township nor Armstrong have appealed the Commission’s
failure to rule on this fee.
6
In dissent, Chairman Gladys Brown Dutrieuille interpreted City of Lancaster more
narrowly. See Statement of Chairman Dutrieuille, 2/4/21. In her view, the Commission lacked
such exclusive jurisdiction to preempt any local inspection and location requirements, particularly
where those local requirements did not constitute concurrent regulation of a public utility provider.
Id. at 1-2.
3
such, the Township asserts, a public utility should raise any objection to local
permitting fees before a court of common pleas. Id. at 25.
The Township also asserts that the Commission erroneously extended
the Supreme Court’s holding in City of Lancaster to invalidate the Township’s
permitting fees. See Township Br. at 4, 25-27. According to the Township, the
Supreme Court considered only whether the Code preempted a local government
from charging a public utility a recurring maintenance fee for its occupancy of a
ROW and not whether a local government could impose one-time permitting fees
for entry onto a ROW. See id. Thus, the Township maintains, while City of
Lancaster is instructive, we cannot infer that the Code preempts the Township from
collecting reasonable permitting fees. See id.
Finally, the Township contends that Section 1511(e) of the BCL, 15
Pa.C.S. § 1511(e), and Section 2322 of the SCTC7 specifically authorize the
Township to collect reasonable permitting fees. See Township Br. at 4, 23-25, 27-
31. The Township rejects the Commission’s assertion that its permitting fees are
preempted by the Code. Id. at 29-30. Rather, according to the Township, its fees
are permissible because the BCL and the SCTC provide more specific and more
recent authority that insulates local government from the Code’s preemptive force.
See Township Br. at 31-33.8
7
Section 2322 was added by the Act of November 9, 1995, P.L. 350, 53 P.S. § 67322.
8
In support of its assertion that its fees are reasonable, the Township further notes that its
fees are consistent with Pennsylvania Department of Transportation regulations. See Township
Br. at 27 (citing 67 Pa. Code §459.4). We do not consider whether the Township’s fees are
reasonable as that is a question for a court of common pleas in the first instance.
4
The Commission’s Counterarguments9
Proceeding from settled authority that the General Assembly has field
preempted all other state and local laws purporting to regulate public utilities, the
Commission attempts to reframe the issue before us. Whereas the Township seeks
to justify its permitting fees as something incidental to the application process
granting a utility entry onto a public ROW, the Commission casts the Township fees
as an attempt to regulate public utility facilities. See, e.g., Commission Br. at 31
(asserting that the Code preempts the Township from inspecting “utility facilities”).
There is ample support for the Commission’s arguments. See id. at 18-26 (reviewing
case law holding that the Code field preempts all other utility regulation in
Pennsylvania), 26-31 (discussing several provisions of the Code authorizing the
Commission to inspect utility facilities).
The Commission further disputes the Township’s interpretation of City
of Lancaster, asserting that the Township’s attempt to distinguish its permitting fees
from the continuing maintenance fees disallowed by the Supreme Court is erroneous.
See Commission Br. at 41. The Commission clarifies that it did not preempt the
Township fees by equating them to the maintenance fees at issue in City of Lancaster
but rather because they were imposed specifically for the purpose of inspecting
public utility facilities. Id. at 44-45.
Finally, the Commission contends that a proper interpretation of
Section 1511(e) of the BCL and Section 2322 of the SCTC reveals no conflict
between those laws and the Code. Commission Br. at 34. According to the
Commission, these provisions merely require that a public utility obtain a permit
9
The Commission does not address the Township’s assertion that the Commission lacked
authority to adjudicate this dispute. See generally Commission Br. Additionally, we have
reordered the Commission’s arguments to coincide with the Township’s presentation of issues.
5
prior to installing its facilities in a public ROW but that this local permitting power
is limited by the Commission’s exclusive jurisdiction. Id. at 37-38. Regarding
Section 2322, the Commission points to a savings clause enacted
contemporaneously and confirming that the General Assembly intended to leave the
preemptive force of the Code intact. Id. at 38-40 (discussing Section 3701(d),10
which provides “[t]his act does not repeal or modify any of the provisions of 66
Pa.C.S. (relating to public utilities)[.]” 53 P.S. § 68701(d)).
Discussion
Our review is limited to whether the Commission’s findings are
supported by substantial evidence, whether the Commission has committed an error
of law, and whether its decision has violated constitutional rights. See McCloskey
v. Pa. Pub. Util. Comm’n, 225 A.3d 192, 202 (Pa. Cmwlth. 2020). We defer to the
Commission’s interpretation of the Code unless its interpretation is clearly
erroneous. See id. On issues of law, however, the standard of our review is de novo,
and the scope of our review is plenary. Coal. for Affordable Util. Servs. & Energy
Efficiency in Pa. v. Pa. Pub. Util. Comm’n, 120 A.3d 1087, 1095 (Pa. Cmwlth.
2015). An issue regarding state law preemption presents a question of law. See
Nutter v. Dougherty, 938 A.2d 401, 412 n.20 (Pa. 2007).
1. Regarding the Commission’s Jurisdiction
Initially, we reject the Township’s contention that the Commission
lacked jurisdiction to adjudicate this case. The Commission is empowered to issue
declaratory orders to terminate controversy or uncertainty. 66 Pa.C.S. § 331(f).
Recognizing tension between the legal authority cited by the Township for its
permitting fees and the Supreme Court’s recent decision in City of Lancaster, which
10
Section 3701 was added by the Act of November 9, 1995, P.L. 350, 53 P.S. § 68701(d).
6
rejected a municipality’s attempt to defray its ongoing maintenance costs, the
Commission determined that a declaratory order was appropriate to provide
guidance on whether the Township’s proposed fees were subject to preemption. See
Commission Order at 7. The fee dispute between the Township and Armstrong
presents a real controversy, and the Commission was within its sound discretion to
address the dispute and eliminate uncertainty surrounding the parties’ legal rights.
66 Pa.C.S. §§ 331(f), 701; Cnty. of Chester v. Phila. Elec. Co., 218 A.2d 331, 332-
33 (Pa. 1966) (“[J]urisdiction in matters concerning the relationship between public
utilities and the public is in the [Commission.]”) (citation omitted); see also, e.g.,
Borough of Olyphant v. Pa. Pub. Util. Comm’n, 861 A.2d 377, 382-83 (Pa. Cmwlth.
2004) (recognizing a definite controversy where a borough sought to prevent a
certificated utility company from providing services within borough limits).
2. Impact of City of Lancaster
Turning to the Township’s substantive arguments, we recognize, as did
the Commission, that there is tension between the exclusive authority of the
Commission to regulate public utilities pursuant to the Code and certain provisions,
adopted by the General Assembly in other contexts, that appear to grant local
governments authority to administer and control access to their public ROWs. In
our view, our Supreme Court’s recent decision in City of Lancaster is informative.
In that case, the City of Lancaster (the City) enacted an ordinance
purporting to “superimpose municipal requirements upon state-regulated utilities[.]”
City of Lancaster, 214 A.3d at 641. There were four subsections of the ordinance at
issue, three of which purported to give the City authority to regulate public utility
facilities, including (1) conducting inspections to determine whether utilities were
in compliance with the Code, (2) directing utilities to move their facilities within the
7
public ROW consistent with applicable Commission regulations, and (3) fining
utilities for violations of City ordinances. See id. at 642. The fourth authorized
annual maintenance fees for the occupancy and use of its ROWs. Id.
PPL Electric Utilities Corporation (PPL) challenged the ordinance on
the grounds that its provisions were preempted by the Code and that the City had
exceeded its authority under the BCL and the Pennsylvania Municipalities Planning
Code.11 Id. After considering principles of preemption and recognizing the
sweeping authority of the Commission under state law, this Court, sitting en banc,
entered judgment against the City as to its inspection, compliance, and enforcement
provisions, but upheld the City’s authority to impose a maintenance or occupancy
fee. Id. at 643-47.
Upon review, the Supreme Court largely agreed with our analysis but
rejected our conclusion that a maintenance fee was a proper exercise of municipal
police powers. Id. at 659. The Court reasoned that the maintenance fee “reflect[ed]
the regulatory expense of overseeing utilities’ conduct within [the City’s]
jurisdiction.” Id. According to the Court, “the costs [associated with maintaining
ROWs] are materially congruent to the state-level costs embedded in the state tariff
that utilities already bear.” Id. Therefore, the Court concluded, “one cannot tenably
maintain that a municipal maintenance fee can be understood as anything but [utility
regulation].” Id.
The Supreme Court did not specifically address the recurring nature of
the City’s maintenance fee. However, we cannot ignore the context within which
the Court arrived at its decision. PPL had argued before this Court, and again before
the Supreme Court, that the City’s annual maintenance fee was redundant with the
11
See Act of July 31, 1968, P.L. 805, No. 247, as amended, 53 P.S. §§ 10101-11202.
8
annual assessment paid to the Commission for regulatory expenses. See id. at 646,
659. While the Court endorsed this comparison, we do not infer that a “one-time”
maintenance fee would survive the Court’s scrutiny. Rather, the Court indicated that
it was the regulatory purpose and effect of the City’s maintenance fee that brought
it within the preempted field of utility regulation.
The Supreme Court also did not consider whether local permitting fees,
such as those at issue in this matter, were subject to preemption. Recognizing that
Section 1511(e) of the BCL vested some authority in local government, PPL had
conceded that the City could impose reasonable fees associated with the permitting
process. Id. at 658. Thus, the issue of local permitting fees was not squarely before
the Court. Nevertheless, the Court cautioned that the scope of Section 1511(e) was
limited to permitting and reasonable regulations conditioning “entry into rights of
way[.]” Id. (emphasis in original).
We may derive several conclusions from City of Lancaster. First, it
remains beyond dispute that the General Assembly has field preempted all state
and/or local laws that purport to regulate public utilities.12 Second, the Township’s
focus on the recurring nature of the maintenance fee disallowed in City of Lancaster
is misplaced. Rather, it was the regulatory purpose or effect of the maintenance fee
that brought it within the preempted field. In other words, if a local governmental
authority is preempted from enacting any ordinance that purports to regulate a public
12
We need not belabor this point. There are three types of preemption: (1) express
preemption, when the legislature has expressly stated its intention to displace local regulation; (2)
conflict preemption, when a local regulation would conflict with the operation of state law; and
(3) field preemption, when the state has implicitly but completely occupied the regulatory field in
question. See City of Lancaster, 214 A.3d at 649. With field preemption, “the state has retained
all regulatory and legislative power for itself[,] and no local legislation in that area is permitted.”
Hoffman Mining Co., Inc. v. Zoning Hearing Bd. of Adams Twp., 32 A.3d 587, 593 (Pa. 2011)
(citation omitted).
9
utility, it matters not at all if that ordinance authorizes fees that recur periodically, at
the discretion of the local authority, or merely once. Those fees are preempted by
the Code. Finally, although local permitting fees were not at issue, the Court
signaled limited authority resides in local governments to control access and entry
onto ROWs through a permitting process.
3. Section 1511(e) of the BCL and Section 2322 of the SCTC
Directing our attention to Section 1511(e) of the BCL and Section 2322
of the SCTC, the Township asserts that the General Assembly has authorized it to
collect reasonable permitting fees and that such fees do not constitute utility
regulation. We agree.13
Section 1511(e) of the BCL provides that a public utility has the right
to enter upon and occupy public ROWs so that it may provide utility services. 15
Pa.C.S. § 1511(e). However, “[b]efore entering any [ROW], the public utility
corporation shall obtain such permits as may be required by law and shall comply
with the lawful and reasonable regulations of the governmental authority having
responsibility for the maintenance thereof.” Id. Similarly, Section 2322 of the
13
We agree that the General Assembly has authorized the Township to impose reasonable
permitting fees. However, we do not find persuasive the Township’s argument, rooted in
principles of statutory construction, that the BCL and the SCTC provide more specific and more
recent authority that insulates a local government from the Code’s preemptive force. See
Township Br. at 31-33 (citing 1 Pa.C.S. §§ 1933 (providing that a more specific provision shall
prevail over a general provision), 1936 (providing that “the statute latest in date of final enactment
shall prevail”)). The General Assembly has granted the Commission exclusive authority to inspect
the facilities of certificated public utilities. See 66 Pa.C.S. §§ 506, 1501. Without question, and
most recently in City of Lancaster, our Supreme Court has recognized that the General Assembly
has field preempted all state and/or local laws that purport to regulate public utilities. 214 A.3d at
652. That the General Assembly may have enacted the BCL more recently than the Code does not
undermine its clear intent to occupy the field of utility regulation. Further, and as noted by the
Commission, the SCTC clearly states that it does not repeal or modify any provisions of the Public
Utility Code. See 53 P.S. § 68701(d).
10
SCTC authorizes a township to condition access to its ROWs upon payment of
application and inspection fees. 53 P.S. § 67322 (“The township shall collect a fee
as determined by the Department of Transportation for processing the application
and another fee for making the inspection.”).
The Comment to Section 1511(e) clarifies that the reference to permits
is “a codification of the prior law relating to the time and manner of opening a street,
etc., and is not intended to imply a power to decide whether or not, and by whom, a
type of utility service may be offered by means of the contemplated facilities.” 15
Pa.C.S. § 1511, Comment (citation omitted). Thus, any further conditions must be
limited to purely local concerns, such as the time and manner of entry. Although
Section 2322 provides that a township may impose “conditions, restrictions[,] and
regulations” upon applicants, we think it reasonable to interpret this provision as
subject to similar limitations as the BCL, particularly in light of the SCTC savings
clause.14 In our view, such limited authority does not constitute regulation of a public
utility. See City of Lancaster, 214 A.3d at 658; see also Pa. Power Co. v. Township
of Pine, 926 A.2d 1241, 1251 (Pa. Cmwlth. 2007) (recognizing that a public utility
corporation remains subject to local street occupancy regulations).
The Commission readily concedes that the BCL and the SCTC
authorize the Township to impose permit fees for access to its ROWs. Commission
Br. at 42. Moreover, the Commission suggests that these provisions do not conflict
with the Code. See id. at 34. Notably, the Commission has not identified any
“conditions, restrictions[,] and regulations” proposed by the Township that would
exceed the limitations we recognize or that would constitute utility regulation. Our
review of the Township’s permits confirms that the terms and conditions set forth
14
Section 3701(d) provides that the SCTC “does not repeal or modify any of the provisions
of 66 Pa.C.S. (relating to public utilities[.])” 53 P.S. §68701(d).
11
therein merely require that a permittee timely commence and complete its work or
be subject to further fees. See Armstrong Petition for Declaratory Order, 11/12/19,
Exhibit B (Township Permits). This is consistent with the limitations identified
above.
We also reject the Commission’s attempt to recast the Township’s
inspection and location fees as the inspection of public utility facilities. Clearly,
they are not maintenance fees, nor is there any reason to suspect their purpose is to
facilitate inspection of utility facilities for Code compliance or enforcement of Code
regulations. Simply, if a public utility applies for access to a particular ROW, the
local government responsible for maintaining the ROW may confirm by inspection
that the applicant has acted in conformity with its application. The Township’s
inspection and location fees enable this confirmation. In our view, they are
permissible.
Conclusion
Because we discern neither regulatory purpose nor effect in the
Township’s permitting fees, they are not preempted by the Code. Pursuant to the
BCL and the SCTC, the Township may impose reasonable permitting fees for access
onto its ROWs, subject to any challenge to their reasonableness. Accordingly, we
reverse the Commission’s Declaratory Order.
LORI A. DUMAS, Judge
12
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Waterford Township, :
Petitioner :
:
v. : No. 306 C.D. 2021
:
Pennsylvania Public Utility :
Commission, :
Respondent :
ORDER
AND NOW, this 21st day of April, 2022, the Declaratory Order entered
by the Pennsylvania Public Utility Commission in the above-captioned matter on
February 19, 2021, is REVERSED.
LORI A. DUMAS, Judge