Bd. of Cnty. Comm'rs of Wash. Cnty. v. Perennial Solar, LLC

239 Md.App. 380

196 A.3d 933

BOARD OF COUNTY COMMISSIONERS OF WASHINGTON COUNTY, et al.

v.PERENNIAL SOLAR, LLC

No. 1022, Sept. Term, 2016

Court of Special Appeals of Maryland.

November 15, 2018

Argued by: Kirk C. Downey, Deputy County Attorney of Hagerstown, MD and William C. Wantz, Hagerstown, MD, all on the brief, for Appellant.

Argued by: Andrew F. Wilkinson (Divelbiss & Wilkinson, on the brief), Hagerstown, MD, for Appellee.

Panel: Berger, Reed, James P. Salmon (Senior Judge, Specially Assigned), JJ.

Reed, J.Appellee, Perennial Solar, LLC ("Perennial"), filed an application for a special exception and variance to construct a solar panel farm in Washington County, Maryland. On November 4, 2015, the Washington County Board of Zoning Appeals ("the Board") granted the application. Appellants, the Board of County Commissioners of Washington County and several aggrieved residents, appealed the decision to the Circuit Court for Washington County. On a preliminary motion filed by Perennial, the court determined that the authority of the Board of Zoning Appeals and the circuit court to consider the application for special exception is preempted by state law.

The court dismissed the appeal with instruction that the Board of Zoning Appeals vacate its decision. Appellants challenge the state law preemption finding and present three questions for our review, which we have consolidated into two and rephrased:

I. Did the circuit court err in ruling that state law preempts local zoning authority, with respect to the solar energy generating facility, proposed in this matter?

II. Whether Perennial Solar is a "public service company" and therefore subject to regulation by state law.

For the reasons that follow, we affirm the decision of the circuit court.

FACTUAL AND PROCEDURAL BACKGROUND

On September 17, 2015, Perennial filed an application for special exception and variance with the Board of Zoning Appeals to construct and operate a Solar Energy Generating System ("SEGS")¹ in Cearfoss, Maryland, on around eighty-six acres of land. According to the Washington County Zoning Ordinance,² the proposed site is located in an Agricultural (Rural) zoning district. The County permits a SEGS in this district but only by a special exception. The SEGS is designed to produce ten megawatts of electricity to be sold and transferred offsite to the wholesale electricity market. The electricity generated would be sufficient to power over two thousand homes.

A hearing was held before the Board of Zoning Appeals ("the Board") on October 21, 2015. Multiple witnesses testified both in favor and in opposition of granting the special exception. After considering the matter for two weeks, the Board granted the request for special exception and variance on November 4, 2015.³ As required by Maryland statute, Perennial then applied for a Certificate of Public Convenience and Necessity ("CPCN") permit in order to construct the SEGS.⁴ Neighboring landowners appealed the decision to the Circuit Court for Washington County.

Before the hearing, Perennial filed a Motion for Pre-Appeal Determination alerting the court to an issue of subject matter jurisdiction. In short, Perennial argued that the Maryland Public Services Commission ("PSC"), and its law codified in the Public Utilities Article of the Maryland Code, has exclusive jurisdiction for approving the SEGS proposed by Perennial, including site location approval. Perennial requested that the appeal be dismissed. Appellants opposed the motion, arguing that legislative intent reveals that local regulation of SEGS – particularly their location – is not preempted by state law. After a hearing, the circuit court agreed with Perennial and granted the motion. The court determined that Public Utilities Article ("PUA") § 7-207 preempts the Washington County Zoning Ordinance and that the PSC has exclusive jurisdiction to approve the type of SEGS proposed by Perennial. This appeal followed.

DISCUSSION

A. Parties' Contentions

Appellants argue that PSC approval of the SEGS at the proposed location would be inconsistent with the local planning and zoning controls of the Washington County Zoning Ordinance. The conflict, Appellants continue, should be resolved in favor of local government. Appellants attempt to distinguish this case from Howard County v. Potomac Electric Power Co. , 319 Md. 511, 573 A.2d 821 (1990), where the Court of Appeals held that local governing bodies are impliedly preempted from regulating construction of certain electric power lines. Appellants argue that, unlike with power lines, the location of SEGS does not present a sufficiently compelling public interest, and the Public Utilities Article laws do not occupy the entire field of SEGS. Appellants also assert that the PSC has jurisdiction only to regulate public service companies, which does not include Perennial.

Perennial counters arguing, "[f]or the type of solar energy generating system proposed in this matter, the statutory law and case law are clear that the authority to determine whether and where the SEGS may be built and operated rests solely within the purview of the PSC." Perennial relies on Howard County , discussed below, to support its argument that jurisdiction of its application for special exception lies solely with the PSC, not the local government. Perennial also maintains that the PSC laws "concerning generating systems are not limited to electric companies or public service companies."

B. Standard of Review

This case presents questions of both preemption and jurisdiction. Both are questions of law to be determined by this Court de novo . See County Comm'rs of Kent County v. Claggett , 152 Md. App. 70, 91, 831 A.2d 77 (2003) ("In this case, the appellants do not challenge the court's factual findings. They challenge the court's legal finding of preemption based on those factual findings. Accordingly, our standard of review is de novo. ").

C. Analysis

1. Preemption by Implication

The question we aim to answer is whether PUA § 7-207, which grants the PSC general regulatory powers over generating stations, including SEGS, preempts local zoning regulation regarding the location and construction of such generating stations. "Preemption of local law by state law can be express or implied or can occur when local law conflicts with State law."⁵ East Star, LLC v. County Comm'rs of Queen Anne's County , 203 Md. App. 477, 485, 38 A.3d 524 (2012). Relevant to this case, preemption by implication occurs when a local law "deals with an area in which the [General Assembly] has acted with such force that an intent by the State to occupy the entire field must be implied." Talbot County v. Skipper, 329 Md. 481, 488, 620 A.2d 880 (1993). Therefore, our inquiry is focused on "whether the General Assembly has manifested a purpose to occupy exclusively a particular field." East Star , 203 Md. App. at 486, 38 A.3d 524. If we render a holding in favor of preemption, that means local legislative bodies are prohibited from enacting any legislation in the field that is preempted. See Ad + Soil v. County Comm'rs of Queen Anne's County, 307 Md. 307, 513 A.2d 893 (1985).

Although there is no specific formula to determine whether the General Assembly intended to preempt an entire area, Maryland courts have considered the following secondary factors relevant to whether a local law is preempted by implication:

1) whether local laws existed prior to the enactment of the state laws governing the same subject, 2) whether the state laws provide for pervasive administrative regulation, 3) whether the local ordinance regulates an area in which some local control has traditionally been allowed, 4) whether the state law expressly provides concurrent legislative authority to local jurisdictions or requires compliance with local ordinances, 5) whether a state agency responsible for administering and enforcing the state law has recognized local authority to act in the field, 6) whether the particular aspect of the field sought to be regulated by the local government has been addressed by the state legislation, and 7) whether a two-tiered regulatory process existing if local laws were not preempted would engender chaos and confusion.

Allied Vending, Inc. v. Bowie, 332 Md. 279, 299-300, 631 A.2d 77 (1993) (citations omitted). Nevertheless, the comprehensiveness with which the Legislature has spoken about the issue is the primary indicator of implied preemption. Id. See also , Skipper , 329 Md. at 492, 620 A.2d 880 (quoting Howard County, supra ) ("[t]he primary indicia of a legislative purpose to preempt an entire field of law is the comprehensiveness with which the General Assembly has legislated in the field."). In light of the comprehensiveness of PUA § 7-207, we hold that state law impliedly preempts local zoning regulation of SEGS that require a CPCN. We explain.

In regard to generating stations, PUA § 7-207"defines the nature and extent of the PSC's regulatory powers and responsibilities." Howard County v. Potomac Electric Power Co. , 319 Md. 511, 518, 573 A.2d 821 (1990). Specifically, it details the application process required to construct a generating station in Maryland. According to PUA § 7-207(b)(1)(i), a person may not begin construction of a generating station "[u]nless a certificate of public convenience and necessity for the construction is first obtained from the [PSC.]"

Two sections, §§ 7-207.1 and 7-207.2, provide exemptions from the general § 7-207 application process for certain types of generating systems. § 7-207.1 allows an exemption for generating systems that: (i) are constructed to produce less than 70 megawatts, with electricity produced onsite sold only on the wholesale market to the local electric company; (ii) are wind-based or (iii) are constructed to produce less than 25 megawatts and use at least 10% of the electricity produced onsite. Projects falling under § 7-207.1 are still required to get PSC approval, but a CPCN is not issued. § 7-207.2...