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Commonwealth Court Affirms PUC's Exclusive Jurisdiction over the Siting of Intrastate Pipeline Facilities

February 26, 2018

By: Devin T. Ryan

On February 20, 2018, the Commonwealth Court affirmed the dismissal of the Delaware Riverkeeper Network and others’ (“Plaintiffs”) challenge to Sunoco Pipeline, L.P’s (“Sunoco”) construction of the Mariner East 2 (“ME2”) pipeline in West Goshen Township, PA. See The Dela. Riverkeeper Network v. Sunoco Pipeline, L.P., Docket No. 952 C.D. 2017 (Pa. Cmwlth. 2018). In so doing, the Court reiterated the Pennsylvania Public Utility Commission’s (“PUC”) exclusive jurisdiction over public utility facilities, including the ME2 pipeline, and rejected the attempt of West Goshen Township to regulate the construction of the ME2 pipeline through its zoning powers.  

By way of background, West Goshen Township enacted a zoning ordinance in 2014 regulating the “location and setbacks for gas and liquid pipeline facilities.” Id., p. 5. In May of 2017, the Plaintiffs filed a complaint in the Court of Common Pleas of Chester County, alleging that the proposed construction of the ME2 pipeline violated this zoning ordinance and that such violation contravened the Plaintiffs’ substantive due process rights. Id. Sunoco responded by filing preliminary objections, in which it argued, among other things, that the PUC had exclusive jurisdiction over the regulation of Sunoco’s facilities and service and that the zoning ordinance was preempted by state and federal law. Id., pp. 5-6. Subsequently, the trial court issued an order sustaining in part and overruling in part Sunoco’s preliminary objections and dismissed the complaint with prejudice. Id., p. 6. Important here, the trial court sustained Sunoco’s preliminary objection contending that the court lacked subject matter jurisdiction because the PUC had exclusive jurisdiction over public utilities’ facilities and service. Id.

On appeal, the Plaintiffs raised several arguments, including that the trial court erred when it concluded that West Goshen Township’s authority to regulate the siting of the ME2 pipeline was preempted by the Public Utility Code, and, as a result, the trial court lacked subject matter jurisdiction over the suit. Id., pp. 1-2. The Plaintiffs also averred that the ME2 pipeline was not a public utility facility, so the PUC did not have jurisdiction over the pipeline’s siting and construction. Id., p. 2.

The Court rejected all of the Plaintiffs’ arguments on appeal. The Court held that West Goshen Township’s authority to regulate the pipeline’s siting was preempted on field preemption grounds, finding that the “General Assembly intended the PUC to occupy the field of public utility regulation, in the absence of an express grant of authority to the contrary.” Id., p. 38.

The Court also determined that West Goshen Township’s zoning ordinance was preempted because it conflicted with the Public Utility Code. Id., pp. 39-42. The Plaintiffs contended there was no conflict preemption because the PUC has no specific regulations governing the siting of pipelines. Id., p. 41. The Court found this point to be irrelevant because “[t]he PUC exercises its authority in several ways, including regulations and orders.” Id. Further, the Plaintiffs could file a complaint with the PUC about the location of the ME2 pipeline. Id., p. 42. If the PUC finds that Sunoco’s service or facilities are unreasonable, unsafe, inadequate, insufficient, or unreasonably discriminatory or otherwise violate the Public Utility Code, the PUC has authority under Section 1505(a) of the Public Utility Code, 66 Pa. C.S. § 1505(a), to direct the public utility to make the necessary changes. Id.

In addition, the Court rejected the Plaintiffs’ argument that under the Environmental Rights Amendment (Article I, Section 27) of the Pennsylvania Constitution, municipalities have a duty to regulate public utility facilities in order to protect public natural resources. Id., pp. 46-47. The Court determined that the Robinson II and PEDF cases relied upon by the Plaintiffs in support1 did not concern public utility services and facilities regulated by the PUC. Id., p. 46. As a result, the Court was “not persuaded that the cases signify an intent to protect public natural resources” that “trumps all other legal concerns raised by every type of party under all circumstances.” Id. The Court also observed that the Environmental Rights Amendment was adopted in 1971, but the state-wide public utility statutes date back to 1913. Id., pp. 46-47. In the Court’s view, the Plaintiffs failed to explain how the Environmental Rights Amendment could affect such “long-standing, pre-existing law involving regulation of public utilities, without expressly referring to the topic.” Id. (emphasis in original). The Court also stated that the Plaintiffs never explained how West Goshen Township’s zoning ordinance actually furthers its duty as a trustee or relates to conserving public natural resources, particularly when the ME2 pipeline “will be placed in or near a pre-existing pipeline right of way and parallel to a pre-existing pipeline.” Id., p. 47.

Finally, the Court held that the ME2 pipeline is a public utility facility because Sunoco is a public utility, based on its recent en banc decision in In re Sunoco Pipeline, L.P., 143 A.3d 1000 (Pa. Cmwlth.), appeal denied, 164 A.3d 485 (Pa. 2016), and will use the ME2 pipeline to provide intrastate pipeline transportation services that are regulated by the PUC. Id., pp. 17-19. Therefore, the PUC has exclusive jurisdiction over the reasonableness and safety of the pipeline transportation services and facilities. Id., p. 19.

The principles outlined by the Commonwealth Court have widespread impact, particularly because municipalities have attempted in recent years to test the boundaries of the PUC’s jurisdiction over public utilities’ services and facilities. Even when the PUC has not promulgated regulations over a certain aspect of such services and facilities, the Commonwealth Court’s decision makes clear that the PUC still has exclusive jurisdiction. Moreover, there were questions after the Supreme Court’s decisions in Robinson II and PEDF as to whether a municipality’s duty as a trustee under the Environmental Rights Amendment affected the scope of the PUC’s jurisdiction. As the Commonwealth Court held here, the PUC’s exclusive jurisdiction over public utilities’ services and facilities remains intact.

This article was prepared by Devin T. Ryan, Associate in the Energy & Utilities Practice Group at Post & Schell, P.C.  If you have any questions or wish to discuss the subject of this article, please contact Mr. Ryan at 717.612.6052 or dryan@postschell.com.

 

Disclaimer: This post does not offer specific legal advice, nor does it create an attorney-client relationship. You should not reach any legal conclusions based on the information contained in this post without first seeking the advice of counsel.

About the Author:

Devin Ryan

Devin T. Ryan is an Associate in the Firm's Energy & Utilities Practice Group. He represents electric, natural gas, water, and transportation network companies in a variety of proceedings before the Pennsylvania Public Utility Commission (PA PUC), including base rate proceedings, rulemaking proceedings, customer complaint proceedings, energy efficiency and conservation (EE&C) plan proceedings, application proceedings initiated under Section 1102 of the Public Utility Code, and purchased gas cost cases.  Learn More.

 

1 See Robinson Twp. v. Commonwealth, 83 A.3d 901 (Pa. 2013) (“Robinson II”); Pa. Envtl. Def. Fund v. Commonwealth, 161 A.3d 911 (Pa. 2017) (“PEDF”).