Municipalities may soon have a new tool for getting utility companies to chip in for road maintenance costs resulting from the maintenance of utility lines in municipal rights-of-way. In a split decision, the Commonwealth Court decided that such fees 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.

The City of Lancaster was represented by attorneys from Eastburn and Gray including Michael J. Savona, Michael E. Peters and Hugh J. Algeo IV.