Special Appeals Court Holds PSC Preempts Local Zoning on Solar Siting

The Maryland Court of Special Appeals issued an unreported decision on August 28, 2018 that highlighted the complicated, multi-pronged test Maryland Courts use when determining when state law has prohibits local government regulation of a subject through implied preemption. Specifically, Board of County Commissioners of Washington County v. Perennial Solar, LLC held that state law allows the Public Service Commission (PSC) to preempt by implication the zoning of a local government when granting a certificate of convenience and public necessity (CPCN) for solar energy generating systems (SEGS). A CPCN is a state approval for the siting of large scale solar projects.

Two important points: First, the case is an “unreported decision” which means that it may not be cited as either precedent or persuasive authority. This limits the holding of the case to the specific matters contained in the case. Second: the decision is based on State law that was in existence prior to the adoption of HB 1350 of 2017, which now requires the PSC to give due consideration to: (i) the consistency of the application with the comprehensive plan and zoning of each county or municipal corporation in which any portion of the generation station is proposed to be located; and (ii) the efforts by affected parties to resolve any issues presented by such a county or municipal corporation.

The Facts of the Case

In 2015, Perennial Solar filed an application for a special exception and variance with the Washington County Board of Zoning Appeals to construct a SEGS on 86 acres of land zoned by the County as Agricultural (Rural). After a public hearing, the Board granted Perennial’s application. Perennial subsequently applied for a CPCN through the PSC, which was approved.

Several affected property owners challenged the PSC’s action in Circuit Court. The Circuit Court dismissed the action on a motion by Perennial, finding that the PSC decision preempted local zoning. The property owners and the Washington County Board of County Commissioners appealed the Circuit Court’s dismissal to the Court.

The Court’s Holding

There are two types of preemption – express and implied. Express preemption is where the General Assembly has clearly stated in statute that only the state is allowed to legislate in a particular policy area. Implied preemption, which is at the heart of this case, is where the General Assembly has acted with such force that an intent by the State to occupy the entire field must be implied. The case first outlined the complicated factors Maryland Courts use when reviewing implied preemption and then applied those factors to the facts of the case:

Although there is no specific formula to determine whether the General Assembly intended to preempt an entire area, Maryland courts have considered the following secondary factors relevant to whether a local law is preempted by implication:

  1. whether local laws existed prior to the enactment of the state laws governing the same subject,
  2. whether the state laws provide for pervasive administrative regulation,
  3. whether the local ordinance regulates an area in which some local control has traditionally been allowed,
  4. whether the state law expressly provides concurrent legislative authority to local jurisdictions or requires compliance with local ordinances,
  5. whether a state agency responsible for administering and enforcing the state law has recognized local authority to act in the field,
  6. whether the particular aspect of the field sought to be regulated by the local government has been addressed by the state legislation, and
  7. whether a two-tiered regulatory process existing if local laws were not preempted would engender chaos and confusion. …

Based on the comprehensiveness of §7-207 [of the Public Utilities Article], local zoning regulations and comprehensive plans are impliedly preempted by state law for SEGSs requiring a CPCN. The statute grants the PSC broad authority to determine whether and where the SEGS may be constructed and operated. It is even more evident that the Legislature intended to have the state govern SEGS approval by requiring local government input into the state’s final decision.

The Court of Appeals reached the same conclusion in Howard County v. Potomac Electric Power Co., 319 Md. 511 (1990). There, the Court considered whether the authority granted to the PSC under Article 78 (now PUA §7-207) preempted local land use and
zoning ordinances regulating the location and construction of certain transmission lines.

The Court also considered and rejected an argument by Washington County that the PSC law does not apply to Perennial Solar because it is not a “public service company.”

The Take Away

While this case is nominally about solar siting and local zoning, the broader issue for local governments is the vague and somewhat arbitrary “test” Maryland Courts use when determining implied preemption. Absent a clear rule about when a policy area is preempted by the state, local governments face uncertainty in many policy areas where both state and local regulation currently coexist.


Useful Links

HB 1350 of 2017