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PPL Electric Utilities Corp. v. City of Lancaster

Supreme Court of Pennsylvania

August 20, 2019


          ARGUED: March 5, 2019

          Appeal from the Order of the Commonwealth Court dated September 22, 2017, exited September 25, 2017, at No. 462 MD 2013.




         The regulation of public utilities[1] long has been entrusted to state law. Pennsylvania's Public Utilities Code ("the Code")[2] confers administrative and regulatory authority upon the Pennsylvania Public Utilities Commission (the "PUC"). In the case at hand, the City of Lancaster ("the City") enacted a measure ("Ordinance 16-2013" or "the Ordinance") that sought to superimpose municipal requirements upon state-regulated utilities that use the City's rights-of-way to deliver services. PPL Electric Utilities Corp. ("PPL") challenged the Ordinance, contending, inter alia, that it intruded upon, and thus was preempted by, the Code. The Commonwealth Court largely agreed, upholding PPL's challenge with regard to all but one of the challenged provisions of the Ordinance. The provision that the Commonwealth Court upheld authorized the City to impose an "annual occupancy fee" upon utilities that utilize its municipal rights-of-way. We hold that all of the provisions challenged by PPL, including the annual occupancy fee, are preempted by the Code. Accordingly, we affirm the Commonwealth Court's decision except with respect to its allowance for the annual occupancy fee, which latter ruling we reverse.

         I. Background

         On December 17, 2013, the City, a home rule municipality pursuant to the Home Rule Charter and Optional Plans Law, 53 Pa.C.S. §§ 2901-3171 (hereinafter, "the HRC"), [3] enacted Ordinance 16-2013, which implemented a comprehensive program for management of the City's rights-of-way. The Ordinance granted the City certain powers over, and concomitantly imposed correlative burdens upon, utilities, including the imposition of an annual occupancy (or "maintenance"[4]) fee. The City cited as authority for its Ordinance the powers putatively conferred upon it by the Third Class City Code ("TCCC"), 53 P.S. §§ 35101-39701, [5] and the HRC.

         Several Ordinance provisions are at issue. Section 263B-3 authorizes the City to conduct inspections to confirm that utility facilities comply with Code and PUC standards and do not present safety hazards. Section 263B-4(6) permits the City to direct a utility to temporarily or permanently remove, relocate, or reposition utility facilities in the right-of-way for various purposes, including repair, maintenance, installation of public improvements, or in case of emergency. Section 263D-1 authorizes the City to impose penalties for a utility's violation of any provision of the Ordinance that does not lie in the PUC's exclusive jurisdiction. Finally, Section 263B-5 permits the City to impose the aforesaid maintenance fee upon utilities for the occupancy and use of its rights-of-way.[6]

         On February 4, 2014, PPL filed a petition for review in the Commonwealth Court's original jurisdiction, seeking declaratory and injunctive relief against the City and, nominally, the PUC, which is substantively aligned with PPL. PPL, a utility regulated by the PUC under the Code, contended that the Code reflects the legislature's intention to impose a uniform, statewide regulatory scheme governing public utilities and their facilities, and vests exclusive regulatory authority in the PUC. On PPL's account, the PUC's authority extends to the location, construction, and maintenance of utility facilities, provides for the only tariff that may be imposed upon a public utility, and specifies the means of the PUC's exclusive oversight of Code and regulatory compliance. PPL also argued that the City exceeded its authority under the Municipalities Planning Code, 53 P.S. §§ 10101-11202, [7] and the Business Corporation Law of 1988 ("BCL"), 15 Pa.C.S. §§ 1101-4146.[8]

         The City filed preliminary objections in the nature of a demurrer. It contended that the Ordinance was duly enacted and consistent with its police powers. The Commonwealth Court, noting that "municipalities have no inherent powers; they possess only such powers of government as are expressly granted to them by the legislature and are necessary to carry out the same," overruled the preliminary objections and directed the City to answer PPL's Petition. PPL v. City of Lancaster, 462 M.D. 2013, slip. op. at 9 (Pa. Cmwlth. May 1, 2014) (citing Hoffman Mining Co., Inc. v. Zoning Hearing Bd. of Adams Twp., 32 A.3d 587 (Pa. 2011)).

         After further pleading, PPL filed an application for summary relief, [9] seeking judgment in its favor with regard to Counts I, II, III, and V of its Petition, embodying, respectively, PPL's challenges to Section 263B-5's maintenance fee; Section 263B-3's inspection requirements; Section 263D-1's parallel enforcement authority for Code violations; and Section 263B-6's relocation and removal provisions, all on the basis that they are impliedly preempted by the Code.

         The Commonwealth Court, sitting en banc, entered judgment in PPL's favor and against the City with respect to Counts II, III, and V, but denied relief as to Count I, upholding the City's authority to impose the maintenance fee. See PPL Elec. Utils. Corp. v. City of Lancaster, 125 A.3d 837, 853 (Pa. Cmwlth. 2015) (en banc) (hereinafter "PPL").

         The court began by reviewing principles of state-law preemption of local law-making authority. "[E]ven in areas over which municipalities have been granted power to act," the court explained, "the state may bar local governing bodies from legislating in a particular field." Id. at 844 (quoting Hoffman Mining Co., 32 A.3d at 593). Preemption takes three forms: express preemption, conflict preemption, and field preemption. See generally Hoffman Mining Co., 32 A.3d at 593-94.

         The court then considered the PUC's sweeping authority under state law. It noted that the General Assembly has sought to ensure that utilities are bound to a uniform, statewide regulatory scheme rather than a crazy quilt of local regulations, a principle this Court recognized over a century ago under the Code's predecessor statute. See York Water Co. v. York, 95 A. 396, 397 (Pa. 1915) ("The Public Service Company Law was intended to establish a complete and uniform system throughout the state for the enforcement of such powers as were conferred upon the Public Service Commission by that statute.").[10] Thus, in Duquesne Light Co. v. Upper St. Clair Township, 105 A.2d 287 (Pa. 1954) (hereinafter "Upper St. Clair"), the Township sought by ordinance to block a utility from exercising the power of eminent domain the General Assembly had granted it to condemn property for a new transmission line. The Court of Common Pleas granted the utility injunctive relief from the effect of the ordinance. This Court affirmed, citing the PUC's statutory authority to "supervise and regulate all public utilities doing business within this Commonwealth," and holding that the then-applicable Public Utility Code "excluded townships from the same field" as that governed by the Code. The Court elaborated as follows:

The [Code] demonstrates without question that the Legislature of the Commonwealth of Pennsylvania has therein expressed its policy to commit the regulation of utilities to the [PUC] . . . . We believe that this is the reason why the General Assembly entrusted the regulation of public utilities to a commission of statewide jurisdiction. Local authorities not only are ill-equipped to comprehend the needs of the public beyond their jurisdiction, but, and equally important, those authorities, if they had the power to regulate, necessarily would exercise that power with an eye toward the local situation and not with the best interests of the public at large as the point of reference. We believe that the General Assembly never intended to bestow a power upon first class townships which is in headlong conflict with the power already given the [PUC].

Id. at 293. This Court reaffirmed this principle in County of Chester v. Philadelphia Electric Co., 218 A.2d 331 (Pa. 1966) (hereinafter "Philadelphia Electric"), rejecting a county ordinance that prohibited construction of pipelines without approval of the county's planning commission.

         The Commonwealth Court also cited several of its own more recent decisions to the same effect. In doing so, the court introduced a separate statutory provision at issue in this case, Section 1511(e) of the BCL, which provides in relevant part:

A public utility corporation shall have the right to enter upon and occupy streets, highways, waters and other public ways and places for one or more of the principal purposes specified in subsection (a)[11] and ancillary purposes reasonably necessary or appropriate for the accomplishment of the principal purposes, including the placement, maintenance and removal of aerial, surface and subsurface public utility facilities thereon or therein. Before entering upon any street, highway or other public way, 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.

15 Pa.C.S. § 1511(e). The City relied upon this provision for its proviso that utilities must comply with "the lawful and reasonable regulations" of the municipalities that maintain the rights-of-way.

         The Commonwealth Court then turned to the Ordinance provisions at hand. Against precedent suggesting broad preemption against local regulation of utilities' use of local rights-of-way, the City counterposed the "reasonable regulations" caveat in BCL § 1511(e), as well as Section 1991 of the General Municipal Law, [12] which provides that a municipal authority "shall have the right to issue permits determining the manner in which public service corporations or individuals shall place, on or under or over such municipal streets or alleys, railway tracks, pipes, conduits, [or] telegraph lines." 53 P.S. § 1991.

         The Commonwealth Court rejected the City's argument that these provisions vest municipalities with the authority "to enact ordinances regulating public utilities." PPL, 125 A.3d at 849. In particular, the court noted that the TCCC provided that "[n]othing contained in [the TCCC] shall be construed to repeal any local or special laws; or to repeal the provisions of the [Code]." Id. at 849-50 (quoting 53 P.S. § 39701).[13] The court further noted that the Ordinance's provisions "implicate subjects, including the inspection and location of utility facilities and the imposition of fees and penalties, that are committed to the PUC's exclusive jurisdiction by the Code." Id. at 850.

         With regard to Section 263B-3, which authorizes the City to inspect public utilities' facilities for compliance with PUC standards, the court agreed with PPL that the provision "essentially makes the City a regulator itself." Id. Such regulation conflicts with Section 2802(20) of the Code, which expressly provides that "the independent system operator or its functional equivalent should set, and the commission shall set through regulations, inspection, maintenance, repair and replacement standards and enforce those standards." 66 Pa.C.S. § 2802(20) (emphasis added). The Code further grants the PUC the authority to appoint inspectors to oversee and investigate compliance in furtherance of Code enforcement. See id. §§ 305(c), 307 (designating PUC-employed inspectors "police officers" with commensurate statewide authority), 331 ("Powers of commission and administrative law judges"), 506 ("Inspection of facilities and records").[14]Concerning Section 263B-4(6), which would grant the City power to order a utility to remove, relocate, or reposition utility facilities when the City determines that it is "reasonably necessary," the court again turned to our holding in Philadelphia Electric that "the Legislature has vested in the [PUC] exclusive authority over the complex and technical service and engineering questions arising in the location, construction and maintenance of all public utilities facilities." PPL, 125 A.3d at 850 (quoting Phila. Elec., 218 A.2d at 333). The court noted that Code § 1505(a) expressly grants the PUC the power to identify and direct remediation of utility facilities that it finds to be "unreasonable, unsafe, inadequate, insufficient, . . . or otherwise in violation of" the Code. 66 Pa.C.S. § 1505(a). The court further noted that the PUC has promulgated regulations relating to the location of electric transmission facilities. See PPL, 125 A.3d at 851 (citing 52 Pa. Code §§ 57.19, 57.71-57.77, 57.81-57.88, 69.3101, 69.3107[15]). The court acknowledged the City's own caveat in the Ordinance that its provisions allow for "relocat[ion] and remov[al of] Facilities consistent with the regulations and standards of the PUC," Ordinance § 263B-4(6), but found that, as with Section 263B-3, this directive only made the City a co-regulator with authority overlapping with, or redundant to, that expressly granted the PUC by the General Assembly. PPL, 125 A.3d at 851.

         Section 263D-1 would authorize the City, inter alia, to bring a complaint against a public utility for violation of "a PUC regulation, standard, or order." Id. at 852 (quoting Ordinance § 263D-1(a)). It further grants the City authority to impose a fine for any violation of any Ordinance provision that lies outside the PUC's exclusive jurisdiction. This, too, the court found preempted as "an overlapping enforcement regime for public utilities." Id. Again citing 66 Pa.C.S. § 1505, the court noted that the Code authorizes the PUC to police and direct remediation of violations of the Code and PUC regulations, and further authorizes, at 66 Pa.C.S. § 3301, an action in assumpsit brought in the name of the Commonwealth to recover fines. To that end, the PUC has promulgated regulations setting forth its own investigative and enforcement apparatus, including factors and standards to guide the imposition of penalties and approval of settlements. PPL, 125

          A.3d at 852-53 (citing 52 Pa.Code §§ 57.197 ("Reliability investigations and enforcement"), 69.1201 ("Factors and standards for evaluating litigated and settled proceedings involving violations of the . . . Code and [PUC] regulations")). The court considered and rejected the City's reliance upon the Ordinance's caveat extending this enforcement authority only to areas over which the PUC does not have exclusive authority, noting that this did not vitiate the usurpation of exclusive PUC authority implicated in allowing the City to approach utilities directly concerning "the City's perceived violations of the Code or the PUC's regulations or orders," id. at 853, which again postured the City as a concurrent utility regulator in contravention of the Code's uniform system.

         With regard to Section 263B-5, which would authorize the City to impose an annual maintenance fee on public utilities with facilities in City rights-of-way, PPL argued that the fee was redundant with, and precluded by, the annual assessment fee that the PUC calculates and imposes pursuant to the Code for regulatory expenses. See 66 Pa.C.S. § 510 ("Assessment for regulatory expenses upon public utilities" in service of the "intent and purpose . . . that each public utility subject to this part shall advance to the commission its reasonable share of the cost of administering this part"). The court observed that the maintenance fee concerned burdens separate from those purportedly offset by the PUC's annual fee-specifically, the costs the City expends to maintain its rights-of-way, which are not accounted for by the Code. Noting that this Court has recognized that maintaining rights-of-way is among traditional municipal police powers, PPL, 125 A.3d at 851 (citing Adams v. New Kensington, 55 A.2d 392, 394-95 (Pa. 1947); Kittanning Borough v. Am. Nat. Gas Co., 86 A. 717, 717-18 (Pa. 1913)), the Commonwealth Court thus held that imposing fees to offset locally-incurred maintenance expenses does not constitute impermissible regulation of public utilities. Rather, the City has "the legal ability to assess fees for recovery of costs under its home rule powers" because "the Code does not preempt the imposition" of such an annual fee, provided that the fee is "reasonable in relation to the costs incurred by the City." Id.

         For these reasons, the court granted judgment in favor of PPL on its claims against every challenged provision of Ordinance 16-2013 except Section 263B-5, which the court determined was an authorized exercise of the City's home-rule authority to seek reasonable compensation for maintenance expenses associated with rights-of-way utilized by utilities.[16]

         By separate order entered on September 22, 2017, the court noted that the parties had stipulated to the discontinuance of Count IV, which had been left unresolved by the 2015 ruling, and entered judgment in favor of the City on the maintenance fees, thus adjudicating all claims as to all parties and ripening the case for appellate review. The City and PPL both appealed to this Court, raising the following issues, which we have reordered to reflect the sequence in which we address them:

By City of Lancaster
Whether Commonwealth Court erred as a matter of law in granting summary relief to PPL invalidating Sections 263B-3, 263B-4(6), and 263D-1 of [the Ordinance], where the express language of these sections neither conflicts with the jurisdiction of the [PUC] nor interferes with PPL's rights under Section 1511(e) of the [BCL]?

Brief for the City at 5.

By PPL Electric Utilities Corp. and the PUC (as stated by PPL Electric Utilities Corp.)
Whether the General Assembly's statutory purpose of ensuring reasonable utility rates for consumers across the Commonwealth through the uniform, statewide regulation of rates by the PUC pursuant to the . . . Code preempts a municipality's perpetual, annual occupancy fee on public utilities' facilities in the right-of-way?

Brief for PPL at 5.[17]

         II. Discussion[18]

         A. Statutory Interpretation and the Three Varieties of Preemption

         The case before us raises questions of state law preemption, which require us to interpret the allegedly preemptive state statutory regime. Statutory interpretation presents a question of law that we consider de novo, and the scope of our review is plenary. Nutter v. Dougherty, 938 A.2d 401, 412 n.20 (Pa. 2007). "The object of all interpretation and construction of statutes is to ascertain and effectuate the intention of the General Assembly." 1 Pa.C.S. § 1921(a). Thus, "[w]hen the words of a statute are clear and free from all ambiguity, the letter of it is not to be disregarded under the pretext of pursuing its spirit." Id. § 1921(b). In ascertaining the General Assembly's intent, we may presume, inter alia, "[t]hat the General Assembly intends the entire statute to be effective and certain." Id. § 1922(2). We also may presume "[t]hat when a court of last resort has construed the language used in a statute, the General Assembly in subsequent statutes on the same subject matter intends the same construction to be placed upon such language." Id. § 1922(4). Commensurately, when the legislature declines to amend a statute in contravention of this Court's prior interpretation of the statute, we may presume that our prior interpretation was and remains consistent with legislative intent. See Commonwealth v. Lassiter, 722 A.2d 657, 661 n.3 (Pa. 1998); Commonwealth v. Wanamaker, 296 A.2d 618, 624 (Pa. 1972).

         The questions presented concern whether and to what extent the General Assembly intended to preempt the sorts of local regulations of public utilities that the City enacted in this case. Contemporary expressions of the three varieties of preemption are legion, and they distill reams of case law to the proposition that preemption may occur when the legislature has expressly stated its intention to displace local regulation ("express preemption"), or has occupied the regulatory field in question ("field preemption"), or, finally, where the local regulation would conflict with or confound rather than advance the operation of the state law in question ("conflict preemption"). See generally Nutter, 938 A.2d at 404, 411-12.

         This Court has explained:

In a landmark case, Western Pennsylvania Restaurant Association v. City of Pittsburgh, 77 A.2d 616, 619 (Pa. 1951), this Court . . . enunciated the appropriate criteria for determining whether the Commonwealth, to the exclusion of its political subdivisions, has preempted by legislation the regulation of certain activities: There are statutes which expressly provide that nothing contained therein should be construed as prohibiting municipalities from adopting appropriate ordinances, not inconsistent with the provisions of the act or the rules and regulations adopted thereunder, as might be deemed necessary to promote the purpose of the legislation. On the other hand there are statutes which expressly provide that municipal legislation in regard to the subject covered by the state act is forbidden. Then there is a third class of statutes which, regulating some industry or occupation, are silent as to whether municipalities are or are not permitted to enact supplementary legislation or to impinge in any manner upon the field entered upon by the state; in such cases the question whether municipal action is permissible must be determined by an analysis of the provisions of the act itself in order to ascertain the probable intention of the legislature in that regard. It is of course self-evident that a municipal ordinance cannot be sustained to the extent that it is contradictory to, or inconsistent with, a state statute. Municipalities in the exercise of the police power may regulate certain occupations by imposing restrictions which are in addition to, and not in conflict with, statutory regulations. But if the general tenor of the statute indicates an intention on the part of the legislature that it should not be supplemented by municipal bodies, that intention must be given effect and the attempted local legislation held invalid. In Department of Licenses and Inspections v. Weber, 147 A.2d 326, 327 (Pa. 1959), Mr. Justice Musmanno, speaking for this Court said: 'Of course, it is obvious that where a statute specifically declares it has planted the flag of preemption in a field, all ordinances on the subject die away as if they did not exist. It is also apparent that, even if the statute is silent on supersession, but proclaims a course of regulation and control which brooks no municipal intervention, all ordinances touching the topic of exclusive control fade away into the limbo of 'innocuous desuetude.' However, where the Act is silent as to monopolistic domination and a municipal ordinance provides for a localized procedure which furthers the salutary scope of the Act, the ordinance is welcomed as an ally, bringing reinforcements into the field of attainment of the statute's objectives.

Harris-Walsh, Inc. v. Borough of Dickson City, 216 A.2d 329, 333-34 (Pa. 1966) (cleaned up[19]).

         In Hoffman Mining Co, we elaborated specifically upon field preemption:

The mere fact that the General Assembly has enacted legislation in a field does not lead to the presumption that the state has precluded all local enactments in that field; rather the General Assembly must clearly evidence its intent to preempt. Such clarity is mandated because of the severity of the consequences of a determination of preemption: If the General Assembly has preempted a field, the state has ...

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