The Maryland Court of Appeals has ruled that local land use is impliedly preempted by the state over the siting of large solar facilities. The Court’s decision in Board of County Commissioners of Washington County, Maryland v. Perennial Solar, LLC, means that the Maryland Public Service Commission (PSC) has the final say on the location of solar projects that require a Certificate of Public Convenience and Necessity (CPCN) from the PSC. The CPCN requirement applies to projects of at least 2 megawatts (roughly 10 acres) in size.

Preemption in General

Preemption is where the laws or regulations of a higher level of government prohibit or restrict a lower level of government from enacting laws or regulations within a specified policy area. There are three forms of preemption recognized by Maryland’s courts – conflict, express, and implied. Preemption by conflict exists where the laws or regulations of a local government directly conflict with laws or regulations adopted by the State. Express preemption is where the Maryland 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 a statute is silent on the issue of preemption but a court determines that the State has acted with such force in a policy area that an intent by the State to occupy the entire field must be implied. The courts have developed a multi-factor test that is applied on a case-by-case basis when reviewing for implied preemption.

Perennial Case History

Perennial Solar, LLC is a utility scale solar development company seeking to build an 86-acre solar energy generation system (SEGS) near the rural village of Cearfoss in Washington County. The facility would generate about 10 megawatts of electricity, which would power 2,100 homes. The proposed site is zoned as “Agricultural Rural” by the County and utility scale solar projects are allowed if the County’s Board of Zoning Appeals grants a special exception.  Perennial applied for and received a special exception and variance from the Board.

However, the Board’s decision was challenged by a group of aggrieved landowners who opposed the project. The landowners petitioned the circuit court to review the Board’s decision. The Board of County Commissioners of Washington County also joined the case on the side of the landowners.

In response, Perennial filed a motion against the petition, arguing that the PSC had exclusive jurisdiction to determine the location of solar facilities under the doctrine of implied preemption. The circuit court determined that there was implied preemption under Maryland Code, § 7-207 of the Public Utilities Article (“PU”) and dismissed the petition.

Washington County and the landowners then appealed the case to the Court of Special Appeals, which upheld the circuit court’s finding of implied preemption. Washington County then petitioned the Court of Appeals to consider the case.

The Court of Appeals Holding

In a 7-0 decision authored by Judge Brynja Booth, the Court of Appeals upheld the implied preemption finding of the Court of Special Appeals. While ultimately finding there was implied preemption, the Court did note that the PSC was required by statute to give “due consideration” to: (1) the position of the local government on a proposed solar project; (2) the consistency of the project with the local government’s comprehensive plan and zoning; and (3) the efforts of affected parties to resolve any issues presented by the local government. The land use and resolution portions of the due consideration law were added by HB 1350 of 2017 as part of a MACo legislative initiative designed to strengthen the local role in the solar siting process.

From the court’s decision:

PU § 7-207 preempts by implication local zoning authority approval for the siting and location of generating stations which require a CPCN.  The statute is comprehensive and grants the PSC broad authority to determine whether and where SEGS may be constructed.  Local land use interests are specifically designated by statute as requiring “due consideration” by the PSC.  This includes the recommendation of the governing body of each county or municipal corporation in which any portion of the construction of the generating station is proposed to be located, as well as due consideration by the PSC of the consistency of the application with the comprehensive plan and zoning for the respective local jurisdiction.

Under the plain language of the statute, local government is a significant participant in the process, and local planning and zoning concerns are important in the PSC approval process.  However, the ultimate decision-maker is the PSC, not the local government or local zoning board.  Although local zoning laws are preempted and therefore not directly enforceable by the local governments as applied to generating stations such as SEGS, they are nevertheless a statutory factor requiring due consideration by the PSC in rendering its ultimate decision.

What Does the Court’s Decision Mean for Counties? (from MACo’s Perspective)

• The PSC Process: The Court’s holding is unlikely is significantly alter the PSC’s current decision making process or the level of deference the PSC currently gives to local governments. The ruling does not change any of the laws the PSC must currently follow in making a CPCN determination and reiterated the “due consideration” requirements that provide a voice to local governments.
• Scope of the PSC: The Court’s holding did not expand or alter the types of projects subject to CPCN review by the PSC. The holding only applies to utility scale solar projects that will generate at least 2 megawatts. Smaller solar projects not subject to a CPCN remain subject to local zoning and land use requirements.
• Reduced Ability to Challenge PSC Decisions: The Court’s holding does reduce the ability of local governments to challenge a PSC decision through the judiciary. While narrow claims that the PSC failed to follow its statutory process requirements can still be brought, local governments have lost the ability to more broadly challenge the PSC’s authority.
• More Aggressive Solar Developers: The Court’s holding could embolden some solar developers to minimize or even ignore local government zoning and land use concerns. The PSC becomes the main backstop in protecting local government interests against developers who fail to work with local governments.
• New Legislation: Finally, the Court’s holding will likely further spur debate in the General Assembly about where to encourage and where to discourage utility scale solar development. Legislation introduced in the 2019 Session (HB 532/SB 744) would have created a commission to establish criteria on where such projects should go. The bill passed with Senate with amendments supported by MACo but did not move in the House. Given the Court’s decision, it is very probable that this bill and other clarifying legislation will be introduced in the 2020 Session.

News Coverage of the Case

From a Daily Record article (2019-07-17):

The Eastern Shore counties of Queen Anne’s and Kent supported Washington County’s argument for local control. Their attorney, Christopher F. Drummond, said the county commissioners were “disappointed” with the decision.

“However, practically speaking, the CPCN process at the Public Service Commission has become more sensitive to local land use and zoning issues in the past three or four years and we hope that the state agencies involved will continue to involve local governments and include reasonable conditions of CPCNs that are consistent with local requirements,” added Drummond, a Centreville solo practitioner who argued before the high court on behalf of Queen Anne’s and Kent counties. …

“The case was well argued on both sides and the decision gives important direction to all parties involved in solar energy in our state moving forward,” said [Perennial’s attorney Andrew] Wilkinson, of Wilkinson Law in Hagerstown.

From a Baltimore Sun article (2019-07-17):

PSC officials were “pleased” with the ruling, spokeswoman Tori Leonard said.

“It affirms the commission’s authority in siting generation and underscores the due consideration given by the commission to local zoning ordinances,” she said.

Baltimore County officials are reviewing the ruling, said T.J. Smith, a spokesman for County Executive Johnny Olszewski Jr. Smith said the county “will work within the confines of the ruling as we move forward with plans.”