Source: https://paablog.com/ppl-elec-utils-corp-v-city-of-lancaster-direct-appeal/
Timestamp: 2019-04-21 00:26:42+00:00

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This case involves the City of Lancaster’s attempt via local ordinance to regulate public utilities’ use of Lancaster’s public rights of way (i.e., to inspect, direct alteration of, and impose fines regarding public utilities’ use of Lancaster’s public rights of way), and to levy an annual assessment for public utilities’ use of Lancaster’s public rights of way. Contending that the Pennsylvania Public Utility Commission has exclusive jurisdiction over the purported regulation, and that the Public Utility Code preempts Lancaster’s attempt to assess an annual fee for use of the public rights of way, PPL challenged the ordinance, joining the PUC as a respondent in order to bring the case in the Commonwealth Court’s original jurisdiction.
In 2015, the Commonwealth Court granted PPL’s motion for summary relief on the challenge to the regulatory aspects of the ordinance, but denied PPL’s motion as to the annual assessment. In 2017, the Commonwealth Court granted Lancaster’s motion for summary relief as to the annual assessment. Both parties appealed the issues they lost to the Supreme Court. Throughout the litigation the PUC has supported PPL’s position. Numerous interested parties have filed amicus briefs in the Supreme Court supporting either PPL’s or Lancaster’s position.
In striking down the ordinance provisions governing inspection of public utility facilities, the location of such facilities, and penalties for non-compliance, the Commonwealth Court noted that the “courts of this Commonwealth have long recognized the intent of our General Assembly that public utilities be regulated on a uniform basis by a statewide regulator and not be subject to the varied regulation of the many cities, townships, and boroughs throughout the Commonwealth,” and surveyed 100 years of cases supporting this proposition. Slip Op. at 10-18. Based on that precedent, the court held that the sections of the ordinance governing inspection of public utility facilities, the location of such facilities, and penalties for non-compliance are preempted by the Public Utility Code, and enjoined the City from enforcing those sections. Id. at 20-22, 24-26. The court reasoned that the General Assembly vested the PUC with authority over these topics, and that the ordinance created overlapping regulation of public utilities by the City. Id.
In upholding the annual assessment, however, the Commonwealth Court found that Lancaster’s ordinance is not preempted by the Public Utility Code. Id. at 22-24. The court reasoned that “maintenance of rights-of-way is within the ambit of the traditional exercise of municipal police powers and the assessment of a reasonable fee for the recovery of costs incurred by the City expended in maintaining such rights-of-way does not constitute local regulation of public utilities.” Id. at 23 (citing Adams v. New Kensington, 55 A.2d 392, 394-95 (Pa. 1947); Kittanning Borough v. American Natural Gas Co., 86 A. 717, 717-18 (Pa. 1913)).
Lancaster and its amici argue on appeal that in striking down the ordinance provisions governing inspection of public utility facilities, the location of such facilities, and penalties for non-compliance, the Commonwealth Court failed to conduct a conflict preemption analysis, ignoring specific language in each of the challenged sections that was designed to “respect the PUC’s exclusive jurisdiction” while “giving effect to the Lancaster’s authority to manage its rights-of-way.” Instead, Lancaster argues, the Commonwealth Court majority erroneously engaged in a field preemption analysis which, Lancaster argues, does not apply to public utility regulation. Had the court applied a conflict preemption analysis and focused on the express language of the ordinance, Lancaster argues, it would have found no preemption.
In response, PPL argues that regardless of whether there is a literal, physical conflict between the ordinance and the Public Utility Code, the ordinance runs contrary to the legislature’s goal in enacting the Code: to ensure safe and adequate utility service to the public, at reasonable rates, by providing for the comprehensive and uniform regulation of public utilities by a single statewide regulator, the PUC. The ordinance stands as an obstacle to this purpose because it purports to grant Lancaster concurrent regulatory authority over matters that were entrusted to the PUC in the furtherance of statewide welfare. Thus, PPL argues, Lancaster misses the point with its contention that the ordinance is unlike ordinances found to be preempted in other cases because they required a utility “to do something….” Lancaster’s ordinance is not preempted because it tells a utility to go “up” while the PUC tells the utility to go “down”, PPL explains; it is preempted because the General Assembly reserved to the PUC the exclusive authority to give direction to public utilities.
The annual occupancy fee violates PPL’s statutory right to occupy the right-of-way for purposes of providing utility service under Section 1511(e) of the Business Corporation Law, which grants public utilities the right to occupy rights-of-way, without compensating or obtaining the consent of the municipality, in order to provide service to the public.
In response, Lancaster, noting that both the majority and the dissent in the Commonwealth Court properly applied a conflict preemption analysis to conclude that the fee is lawful, argues that Lancaster is permitted to assess reasonable fees to defray the expense of exercising its police power, so long as the fees are “necessary or desirable for the public good.” Adams v. City of New Kensington, 55 A.2d 392, 395 (Pa. 1947). The City’s fees must be in the nature of cost recovery, and not a tax. See Kittanning Borough v. Am. Natural Gas Co., 86 A. 717 (Pa. 1913). Fees are unlawful if they are unreasonable in relation to the costs incurred by the municipality. Norwood Borough v. Keystone Tel., Co., 64 Pa. Super. 261, 264 (1915).
a. 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 Public Utility Commission pursuant to the Public Utility Code preempts a municipality’s perpetual, annual occupancy fee on public utilities’ facilities in the right-of-way?
b. Whether, as a matter of statutory construction, and in light of the General Assembly ‘s intent that the Public Utility Code provide for the statewide, uniform regulation of public utilities by the Public Utility Commission, a municipality ‘s limited statutory authority over public utilities cannot be construed to include the power to impose a perpetual, annual occupancy fee on public utilities’ facilities in the right-of-way?
c. Whether a municipality’s perpetual, annual occupancy fee on public utilities’ facilities in the right-of-way violates the statutory right of public utilities under 15 Pa.C.S. § 1511(e) to occupy the right-of-way for purposes of providing utility service to the public, without compensation or obtaining the consent of the municipality?

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