Oct 20, 2015

Eastburn and Gray Successful in Notable Pennsylvania Municipal Law Case

Eastburn and Gray, PC was successful in representing the City of Lancaster in two companion cases before the Commonwealth Court of Pennsylvania where two different utility providers challenged the City’s right to regulate and charge fees for occupancy of city lands designed as rights-of-way.

In the first case, a split decision, the Commonwealth Court decided that fees from the maintenance of utility lines in municipal rights-of-way were not preempted by the Public Utility Code (the Code), and may be imposed upon utility companies as long as they are reasonable and not a tax.

The City of Lancaster enacted an ordinance establishing a comprehensive program for managing the City’s Rights-of-Way. The ordinance included provisions for the management of public utilities and public utility facilities within its Rights-of-Way. PPL Electric Utilities Corp. (PPL) objected to four specific sections of the ordinance claiming they were invalid and preempted by the Code. The first authorized the City to inspect utility facilities within its Rights-of-Way to ensure they were not public safety hazards and remained in compliance with Pennsylvania Utility Commission (PUC) standards. The second authorized the City to direct a utility to temporarily or permanently remove, relocate, change, or alter facilities within its Rights-of-Way. The third imposed an annual maintenance fee for the use and occupancy of its Rights-of-Way. Finally, the fourth imposed a penalty for violating any ordinance provisions not within the exclusive jurisdiction of the PUC.

PPL filed a petition for review seeking declaratory and injunctive relief with the Commonwealth Court. First, it claimed the annual maintenance fee interfered with the PUC’s exclusive jurisdiction. Next it claimed the inspection requirements were preempted by the Code. Third, it alleged the Code preempted the imposition of penalties against it for violating the Ordinance. Fourth, it alleged the maintenance fee was an illegal tax. Lastly, it averred that the relocation and removal provision interfered with the PUC’s exclusive jurisdiction. PPL thereafter filed an application for summary relief on the first, second, third, and fifth claims.

The Commonwealth Court granted PPL’s petition as to the inspection, relocation and removal, and penalty provisions, finding that the City was essentially making itself a regulator of utilities. However, it found the annual maintenance fee to be “within the ambit of the traditional exercise of municipal powers,” and did not constitute local regulation of public utilities. So long as the fee was reasonable and not a tax, then it was permitted.

In the companion case of PPL Electric Utilities Corporation v. City of Lancaster, the facts, issues, and arguments advanced by UGI and the City of Lancaster were substantially the same as those set forth and disposed of in PPL. In PPL the Commonwealth Court held that the City was permitted to impose an annual maintenance fee upon utility companies for use and occupancy of its municipal Rights-of-Way.

In UGI’s petition for review it sought a declaration that the City’s ordinance was preempted by the Code and was invalid and unenforceable. Additionally, UGI argued that the imposition of new maintenance and sidewalk and street opening fees, as well as the cost of requiring it to submit maps and drawings, were excessive and unreasonable. The provisions at issue require utility companies to submit to the City paper and electronic copies of maps and engineering specifications depicting and certifying the location of all existing and/or updated facilities within the City’s Rights-of-Way. Additionally, the City could require utilities to reimburse it for the cost of converting maps from paper to electronic form or vice versa.

The Commonwealth Court found these provisions were preempted by the Public Utility Code. It reasoned that, in essence, these provisions allowed the City to become a regulator itself, and therefore were invalid. The Court reiterated its conclusion in PPL that the City was permitted to charge an annual maintenance fee so long as the fee was reasonable and not a tax.

Lawyers from Eastburn and Gray involved in these cases are Michael J. Savona, Michael E. Peters and Hugh J. Algeo IV. Click here to read the PPL v. City of Lancaster, 462 MD 2013 (Pa. Cmmw. Ct. Oct. 15, 2015) opinion. Click here to read the UGI v. City of Lancaster, 464 MD 2013 (Pa. Cmmw. Ct. Oct. 15, 2015) opinion.

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