Waterford Twp. v. Pa. Pub. Util. Comm'n

276 A.3d 301

WATERFORD TOWNSHIP, Petitioner

v.PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent

No. 306 C.D. 2021

Commonwealth Court of Pennsylvania.

Argued February 7, 2022

Decided April 21, 2022

Arthur D. Martinucci, Erie, for Petitioner.

Tiffany L. Tran, Assistant Counsel, Harrisburg, for Respondent.

BEFORE: HONORABLE MICHAEL H. WOJCIK, Judge, HONORABLE CHRISTINE FIZZANO CANNON, Judge, HONORABLE LORI A. DUMAS, Judge

OPINION BY JUDGE DUMAS

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 , 654 Pa. 203, 214 A.3d 639 (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 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 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 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

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 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 , 595 Pa. 340, 938 A.2d 401, 412 n.20 (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 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. , 420 Pa. 422, 218 A.2d 331, 332-33 (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....