The municipal regulation of public utility facilities continues to be a topic of litigation. In April 2018, we discussed how municipalities cannot use zoning ordinances to regulate non-building facilities of public utilities. Recently, the Pennsylvania Supreme Court weighed in on whether a municipality can regulate when and how a public utility installs its improvements within the municipality’s street rights-of-way. Again, the litigation resulted in a favorable decision for the public utility.
In PPL Electric Utilities Corp. v. City of Lancaster, 2019 Pa. LEXIS 4611 (Pa. 2019), the City of Lancaster adopted an ordinance to regulate the installation of public utilities in City streets. This effort was not surprising as many municipalities look at their street rights-of-way as a critical asset that must be protected. The ordinance required, among other things, an annual occupancy fee for use of the City’s street rights-of-way and allowed the City to require utilities to remove or relocate their facilities in certain instances. PP&L, which is a certificated public utility, challenged the ordinance. The Commonwealth Court agreed with PP&L that the ordinance was preempted by Pennsylvania’s Public Utility Code and struck down the provisions that allowed the City to require utilities to remove or relocate their facilities in certain instances. The Commonwealth Court, however, allowed annual occupancy fee provision of the City’s ordinance to stand.
On appeal, the Supreme Court ruled that all the City ordinance’s provisions – including the annual occupancy fee for using City right-of-way – were preempted by the Public Utility Code. The Supreme Court, in a six to one decision, built upon its longstanding jurisprudence that public utilities are under the “all-embracive regulatory jurisdiction” of the Pennsylvania Public Utility Commission. The Court noted that the General Assembly through the enactment of the Public Utility Code (and subsequent regulations promulgated by the PUC) has occupied the entire field of public utility regulation so that municipalities have no authority to regulate public utilities.
The policy underlying the Court’s decision is rooted in the need for uniformity. Utilities provide a public service in many municipalities. Sometimes those services are linear projects that cross numerous municipal boundaries. The ability of utilities to provide that public service would be obstructed significantly if they were subject to a multitude of regulations that varied every few miles. The Court noted the danger in “inviting hundreds of municipalities to create their own patchwork of ‘supplementary’ regulations to enforce at whim.”
The recent case law makes it clear that municipalities should be wary of adopting new ordinances in an attempt to regulate public utilities. Moreover, municipalities also should be careful and consider these recent decisions before attempting to enforce older ordinance provisions that may run afoul of the PUC’s exclusive jurisdiction over public utilities.