A large-scale natural gas liquids pipeline project traversing the Commonwealth has shed light on an oft misunderstood legal principle regarding the municipal regulation of utilities. Municipalities typically operate under the assumption that essentially all land uses, including public utilities, are subject to municipal regulation to at least some degree (e.g., zoning ordinances, subdivision and land development ordinance, etc.). But, most public utility facilities actually are not subject to local regulation. A pair of recent Commonwealth Court cases reinforce this legal principle that is nearly sixty-five years old but rarely reflected in municipal ordinances.

In The Delaware River Keeper Network, et al. v. Sunoco Pipeline L.P., 2018 Pa. Commw. LEXIS 74 (February 20, 2018) and Flynn, et al. v. Sunoco Pipeline L.P., 2018 Pa Commw. Unpub. LEXIS 179 (March 26, 2018), the Commonwealth Court reviewed efforts by opponents to Sunoco Pipeline L.P.’s Mariner East 2 natural gas liquids pipeline project to block the project because the pipeline allegedly violated provisions of local land use ordinances. The local ordinances permitted gas and liquid pipeline facilities only in certain zoning districts (not including any residential districts) and required significant setbacks between pipelines and other structures. The opponents brought actions in the trial courts under Section 617 of the Municipalities Planning Code (the “MPC”) alleging that the local municipalities had failed to properly enforce the land use ordinances. The trial courts rejected the opponents’ arguments.

The Commonwealth Court affirmed the trial court in both cases – noting the long-standing principle that non-building facilities of public utility corporations are not subject to municipal zoning regulations. The Commonwealth Court looked at numerous Pennsylvania court decisions dating back to 1954, and in each decision the court held that the municipal regulation of public utilities is essentially pre-empted by the Public Utility Code. The Public Utility Commission has the sole jurisdiction to regulate the location of non-building public utility corporation facilities like the Mariner East 2 pipeline. Municipalities have jurisdiction to regulate only public utility corporation buildings.

The rationale for this legal principle was explained by the Pennsylvania Supreme Court in 1954:

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 [public utility facilities], 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. . . . If the power of the municipality were held paramount, the [Public Utility] Commission could not compel the utility to provide adequate service or in anywise control the expansion or extension of the utility’s facilities if an order of the [Public Utility] Commission conflicted with action taken by any political subdivision of the State.

Duquesne Light Co. v. Upper St. Clair Twp., 105 A.2d 287, 293 (Pa. 1954). Thus, municipalities likely would focus their regulations of public utility corporation facilities through a lens that does not consider the multi-municipal breadth of most public utility corporation projects.

Most public utility corporation facilities are components of linear projects that cross multiple municipalities rather than a typical land use project that usually is located entirely within one municipality. It would be very difficult to provide the public utility service if the project was subject to different locational restrictions and design standards every few miles as the project crossed municipal boundaries.

Countless municipal land use ordinances contain provisions attempting to regulate public utility corporation facilities without regard to the well-established principle explained above. It is typical for a municipal zoning ordinance to permit utility facilities or “essential services” in most but not all zoning districts. Even where permitted in all districts, there usually are setback requirements, minimum fence standards and other design requirements imposed by the ordinance. These provisions simply do not apply to non-building public utility facilities. Many ordinances also parrot language from Section 619 of the MPC. But, the language in Section 619 of the MPC applies only to situations where a public utility corporation petitions the Public Utility Commission to exempt a building from municipal regulation. The language of Section 619 of the MPC has no bearing on non-building facilities.

Municipalities should review their land use ordinances to determine whether their regulations are consistent with the pre-emption principle discussed above. Maintaining ordinances that contain provisions that are inconsistent with the law will create confusion for municipal officials. Those same provisions also will cause residents to have unreasonable expectations about what can be required of the public utility corporation. Public utility corporations should consider working with municipalities to design their facilities with municipal regulations in mind wherever possible, even if pre-empted, in an effort to foster a positive working relationship with the municipality.

Please feel free to contact any member of the McNees Wallace & Nurick Land Use Group for assistance with any land use or development issues and/or if you have any questions regarding this post.