Board of County Commissioners of Washington County, et al. v. Perennial Solar, LLC,
No. 1022, September Term 2016.


MUNICIPAL CORPORATIONS > LOCAL LEGISLATION

If the General Assembly has preempted a certain field, municipalities have no authority to
legislate in that field.

MUNICIPAL CORPORATIONS > RELATION TO STATE
MUNICIPAL CORPORATION > CONCURRENT AND                                  CONFLICTING
EXERCISE OF POWER BY STATE AND MUNICIPALITY

Local governing bodies are impliedly preempted from regulating the location and/or
construction of generating stations that require a Certificate of Public Convenience and
Necessity (“CPCN”) by broad legislative grant of power to the Public Service Commission.
PUA §7-207.

PUBLIC UTILITIES > PUBLIC SERVICE COMMISSIONS OR BOARDS >
JUDICIAL REVIEW OR INTERVENTION

The Public Service Commission is not limited to authorizing CPCNs to electric companies
under PUA §7-207(b)(1)(i). Instead, any “person” may apply for a CPCN to construct a
generating station. The Public Service Commission’s denial of a CPCN application does
not diminish the Commission’s jurisdiction.
Circuit Court for Washington County
Case No. 21-C-15-055848
                                                                                                 REPORTED

                                                                                   IN THE COURT OF SPECIAL APPEALS

                                                                                              OF MARYLAND

                                                                                                   No. 1022

                                                                                            September Term, 2016
                                                                                  _____________________________________

                                                                                  BOARD OF COUNTY COMMISSIONERS
                                                                                    OF WASHINGTON COUNTY, et al.

                                                                                                      v.

                                                                                         PERENNIAL SOLAR, LLC
                                                                                  _____________________________________

                                                                                      Berger,
                                                                                      Reed,
                                                                                      Salmon, James P.
                                                                                          (Senior Judge, Specially Assigned),

                                                                                                   JJ.
                                                                                  _____________________________________

                                                                                            Opinion by Reed, J.
                                                                                  _____________________________________


                                                                                      Filed: November 15, 2018



 Pursuant to Maryland Uniform Electronic Legal
Materials Act
(§§ 10-1601 et seq. of the State Government Article) this document " authentic.




                             2018-11-15
                             09:16-05:00


Suzanne C. Johnson, Acting Clerk
       Appellee, Perennial Solar, LLC (“Perennial”), filed an application for a special

exception and variance to construct a solar panel farm in Washington County, Maryland.

On November 4, 2015, the Washington County Board of Zoning Appeals (“the Board”)

granted the application. Appellants, the Board of County Commissioners of Washington

County and several aggrieved residents, appealed the decision to the Circuit Court for

Washington County. On a preliminary motion filed by Perennial, the court determined that

the authority of the Board of Zoning Appeals and the circuit court to consider the

application for special exception is preempted by state law. The court dismissed the appeal

with instruction that the Board of Zoning Appeals vacate its decision. Appellants challenge

the state law preemption finding and present three questions for our review, which we have

consolidated into two and rephrased:

       I. Did the circuit court err in ruling that state law preempts local zoning authority,
          with respect to the solar energy generating facility, proposed in this matter?

       II. Whether Perennial Solar is a “public service company” and therefore subject to
           regulation by state law.


For the reasons that follow, we affirm the decision of the circuit court.

                       FACTUAL AND PROCEDURAL BACKGROUND

       On September 17, 2015, Perennial filed an application for special exception and

variance with the Board of Zoning Appeals to construct and operate a Solar Energy
Generating System (“SEGS”)1 in Cearfoss, Maryland, on around eighty-six acres of land.

According to the Washington County Zoning Ordinance,2 the proposed site is located in

an Agricultural (Rural) zoning district. The County permits a SEGS in this district but only

by a special exception. The SEGS is designed to produce ten megawatts of electricity to be

sold and transferred offsite to the wholesale electricity market. The electricity generated

would be sufficient to power over two thousand homes.

       A hearing was held before the Board of Zoning Appeals (“the Board”) on October

21, 2015. Multiple witnesses testified both in favor and in opposition of granting the special

exception. After considering the matter for two weeks, the Board granted the request for

special exception and variance on November 4, 2015.3 As required by Maryland statute,

Perennial then applied for a Certificate of Public Convenience and Necessity (“CPCN”)

permit in order to construct the SEGS.4 Neighboring landowners appealed the decision to

the Circuit Court for Washington County.


       1
         A SEGS is a grid-tie solar facility consisting of multiple solar arrays whose
primary purpose is to generate electricity for distribution and/or sale into the public utility
grid and not for onsite consumption. Washington County Zoning Ordinance Article 28A.
       2
          Under Article 5A of the Washington County Zoning Ordinance, Agricultural
(Rural) zoning districts are intended “to provide for continued farming activity and the
many uses that do not require public water and sewage facilities and which may be more
suitably located outside of the urban-type growth of the larger communities of the County.”
       3
         The Board of Zoning Appeals granted the request for special exception by a vote
of 3-1, and granted the request for variance by a vote of 4-0.
       4
          Public Utilities Article §7-207(b)(1)(i) states that a party may not begin
construction on a generating station unless that party obtains a CPCN from the Maryland
Public Service Commission. Perennial applied for the CPCN on November 23, 2015, and
the application is pending.
                                              2
       Before the hearing, Perennial filed a Motion for Pre-Appeal Determination alerting

the court to an issue of subject matter jurisdiction. In short, Perennial argued that the

Maryland Public Services Commission (“PSC”), and its law codified in the Public Utilities

Article of the Maryland Code, has exclusive jurisdiction for approving the SEGS proposed

by Perennial, including site location approval. Perennial requested that the appeal be

dismissed. Appellants opposed the motion, arguing that legislative intent reveals that local

regulation of SEGS – particularly their location – is not preempted by state law. After a

hearing, the circuit court agreed with Perennial and granted the motion. The court

determined that Public Utilities Article (“PUA”) §7-207 preempts the Washington County

Zoning Ordinance and that the PSC has exclusive jurisdiction to approve the type of SEGS

proposed by Perennial. This appeal followed.

                                       DISCUSSION

                                 A. Parties’ Contentions
       Appellants argue that PSC approval of the SEGS at the proposed location would be

inconsistent with the local planning and zoning controls of the Washington County Zoning

Ordinance. The conflict, Appellants continue, should be resolved in favor of local

government. Appellants attempt to distinguish this case from Howard County v. Potomac

Electric Power Co., 319 Md. 511 (1990), where the Court of Appeals held that local

governing bodies are impliedly preempted from regulating construction of certain electric

power lines. Appellants argue that, unlike with power lines, the location of SEGS does not

present a sufficiently compelling public interest, and the Public Utilities Article laws do



                                             3
not occupy the entire field of SEGS. Appellants also assert that the PSC has jurisdiction

only to regulate public service companies, which does not include Perennial.

       Perennial counters arguing, “[f]or the type of solar energy generating system

proposed in this matter, the statutory law and case law are clear that the authority to

determine whether and where the SEGS may be built and operated rests solely within the

purview of the PSC.” Perennial relies on Howard County, discussed below, to support its

argument that jurisdiction of its application for special exception lies solely with the PSC,

not the local government. Perennial also maintains that the PSC laws “concerning

generating systems are not limited to electric companies or public service companies.”

                                 B. Standard of Review

       This case presents questions of both preemption and jurisdiction. Both are questions

of law to be determined by this Court de novo. See County Comm’rs of Kent County v.

Claggett, 152 Md. App. 70, 91 (2003) (“In this case, the appellants do not challenge the

court’s factual findings. They challenge the court’s legal finding of preemption based on

those factual findings. Accordingly, our standard of review is de novo.”).

                                        C. Analysis

                             1. Preemption by Implication

       The question we aim to answer is whether PUA §7-207, which grants the PSC

general regulatory powers over generating stations, including SEGS, preempts local zoning

regulation regarding the location and construction of such generating stations. “Preemption

of local law by state law can be express or implied or can occur when local law conflicts



                                             4
with State law.”5 East Star, LLC v. County Comm’rs of Queen Anne’s County, 203 Md.

App. 477, 485 (2012). Relevant to this case, preemption by implication occurs when a local

law “deals with an area in which the [General Assembly] has acted with such force that an

intent by the State to occupy the entire field must be implied.” Talbot County v. Skipper,

329 Md. 481, 488 (1993). Therefore, our inquiry is focused on “whether the General

Assembly has manifested a purpose to occupy exclusively a particular field.” East Star,

203 Md. App. at 486. If we render a holding in favor of preemption, that means local

legislative bodies are prohibited from enacting any legislation in the field that is preempted.

See Ad + Soil v. County Comm’rs of Queen Anne’s County, 307 Md. 307 (1985).

       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

       5
         Express preemption occurs when the General Assembly, by statutory language,
prohibits local legislation in a field. Ad + Soil, Inc. v. County Comm'rs, 307 Md. 307, 324
(1986). Conflict preemption occurs “when [a local law] prohibits activity which is intended
to be permitted by state law, or permits an activity which is intended to be prohibited by
state law.” Skipper, 329 Md. at 487, n. 4. The parties here argue only implied preemption;
therefore, we do not address express or conflict preemption.

                                              5
              the state legislation, and 7) whether a two-tiered regulatory
              process existing if local laws were not preempted would
              engender chaos and confusion.

Allied Vending, Inc. v. Bowie, 332 Md. 279, 299-300 (1993) (citations omitted).

Nevertheless, the comprehensiveness with which the Legislature has spoken about the

issue is the primary indicator of implied preemption. Id. See also, Skipper, 329 Md. at 492

(quoting Howard County, supra) (“[t]he primary indicia of a legislative purpose to preempt

an entire field of law is the comprehensiveness with which the General Assembly has

legislated in the field.”). In light of the comprehensiveness of PUA §7-207, we hold that

state law impliedly preempts local zoning regulation of SEGS that require a CPCN. We

explain.

       In regard to generating stations, PUA §7-207 “defines the nature and extent of the

PSC’s regulatory powers and responsibilities.” Howard County v. Potomac Electric Power

Co., 319 Md. 511, 518 (1990). Specifically, it details the application process required to

construct a generating station in Maryland. According to PUA §7-207(b)(1)(i), a person

may not begin construction of a generating station “[u]nless a certificate of public

convenience and necessity for the construction is first obtained from the [PSC.]”

       Two sections, §§7-207.1 and 7-207.2, provide exemptions from the general §7-207

application process for certain types of generating systems. §7-207.1 allows an exemption

for generating systems that: (i) are constructed to produce less than 70 megawatts, with

electricity produced onsite sold only on the wholesale market to the local electric company;

(ii) are wind-based or (iii) are constructed to produce less than 25 megawatts and use at

least 10% of the electricity produced onsite. Projects falling under §7-207.1 are still

                                             6
required to get PSC approval, but a CPCN is not issued. §7-207.2 allows an exemption

from the CPCN requirement for a generating station that produces at least 2 megawatts of

power and is exempt from the CPCN permit by §7-207.1. If the exemptions of §§7-207.1

or 7-207.2 do not apply, any person attempting to construct a generating system must apply

for and receive a CPCN permit pursuant to §7-207(b)(1)(i). Although Perennial meets the

threshold for an exemption under §7-207.2, it doesn’t satisfy the requirements of §7-207.1

because the proposed SEGS would produce less than 25 megawatts but none of the

electricity will be used onsite. See §7-207.1(a)(2). If the project had qualified for a CPCN

exemption, Perennial would need to obtain the Commission’s approval, see §§7-207.1(b)

and 7-207.2(b), along with any approvals or permits required by other State and local

government agencies.

       Once the application is submitted, the PSC is required to provide notice to interested

parties, including “the governing body of each county or municipal corporation in which

any portion of the generating station . . . is proposed to be constructed[.]” PUA §7-2-

7(c)(1)(ii). Additionally, the “Department of Planning shall forward the application to each

appropriate State unit and unit of local government for review, evaluation, and comment

regarding the significance of the proposal to State, area-wide, and local plans or programs.”

PUA §7-207(c)(2).

       The PSC must also “provide an opportunity for public comment and hold a public

hearing” on the CPCN application. See PUA §7-207(d)(1). Lastly, before taking final

action on an application for a CPCN, the PSC must give “due consideration” to the

following:

                                             7
             (1) the recommendation of the governing body of each county
                 or municipal corporation in which any portion of the
                 construction of the generating station, overhead
                 transmission line, or qualified generator lead line is
                 proposed to be located; and

             (2) the effect of the generating station, overhead transmission
                 line, or qualified generator lead line on:

                    (i)     the stability and reliability of the electric system;
                    (ii)    economics;
                    (iii)   esthetics;
                    (iv)    historic sites;
                    (v)     aviation safety as determined by the Maryland
                            Aviation Administration and the administrator of
                            the Federal Aviation Administration;
                    (vi)    when applicable, air and water pollution; and
                    (vii)   the availability of means for the required timely
                            disposal of wastes produced by any generating
                            station.
§7-207(e).

      On the other hand, Washington County’s Zoning Ordinance and Comprehensive

Plan, to which Appellants cite, are much less thorough regarding the construction of

generating stations. Washington County’s comprehensive plan promotes the preservation

of agricultural uses adjacent to rural villages such as Cearfoss (the SEGS proposed

location). With respect to areas adjacent to rural villages, the comprehensive plan

recommends, inter alia, that the County:

             Require development on the edge of a Rural Village to be
             designed to extend the fabric of the existing development and
             [e]nsure that the natural edge between the village and the
             adjacent agricultural or opens space area is maintained.


                                              8
Appellants argue that a SEGS at the proposed location would not “extend the existing

development” in that area. It is important to note, however, that this portion of the

comprehensive plan is merely a recommendation. See HNS Dev. v. Baltimore County, 425

Md. 436, 457–58 (2012) (quoting Mayor & Council of Rockville v. Rylyns, 372 Md. 514,

530 (2002)) (“As a general rule, comprehensive plans ‘which are the result of work done

by planning commissions and adopted by ultimate zoning bodies, are advisory in nature

and have no force of law absent statutes or local ordinances linking planning and zoning.

Where the latter exists, however, they serve to elevate the status of comprehensive plans

to the level of true regulatory devices.’”).

       Washington County Zoning Ordinance provides regulations for SEGS specifically.

Section 4.26 of the ordinance, titled Solar Energy Generating Systems, states:

                      The purpose of this section is to establish regulations to
              facilitate the installation and construction of Solar Energy
              Generating Systems as defined in Section 28A (hereinafter
              “SEGS”) for landowners, subject to reasonable restrictions
              which will preserve the public health and safety.

                     SEGS shall be permitted as a land use and specified in
              Sections 3.3 and 21.32 of this ordinance. However, SEGS shall
              be prohibited as a use in defined Priority Preservation Areas,
              Rural Legacy Areas, and Antietam Overlay zones.

The section describes in great detail the design standards to which SEGSs must adhere,

including appearance, height, lot size, and lighting requirements. It also provides design

standards for SEGSs in airport zones.

       Based on the comprehensiveness of §7-207, local zoning regulations and

comprehensive plans are impliedly preempted by state law for SEGSs requiring a CPCN.


                                               9
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 PSC issued a CPCN authorizing construction of overhead transmission lines designed

to carry an excess of 69,000 volts. Id. at 514. PEPCO then petitioned the Board of Appeals

of both Montgomery County and Howard County, where the lines would run, for special

exceptions to their respective zoning requirements to permit the construction. Id. at 517.

Montgomery County granted the special exception subject to conditions, while Howard

County denied it. Id. On appeal of both decisions, the Court of Appeals held that CPCN

law preempted local land use and zoning requirements, holding that “it is clear that, in the

field of public utility service, the General Assembly intended to grant broad powers to the

PSC to execute its principal duty of assuring adequate electrical service statewide.” Id. at

524.

       The Court based its decision on the comprehensiveness of PSC laws governing

generating stations and transmission lines and the advisory role of local governing bodies.

It noted that:



                                            10
              The provisions of Article 78, and in particular §54A, make no
              reference to local governing bodies; the only language giving
              recognition to local authorities in the proceedings for granting
              a certificate of public convenience and necessity is that in §54A
              which states that the PSC shall make its determination after
              “due consideration of the recommendations of such governing
              bodies.” Manifestly, this language implies that the
              recommendations from other state agencies and local
              governing bodies are advisory only and not controlling.

       Id. at 525-26. Ultimately, the Court held that “local governing bodies are impliedly

preempted from regulating construction of transmission lines carrying in excess of 69,000

volts by broad legislative grant of power to Public Service Commission to regulate

construction of overhead transmission lines.” Id. at 511.

       Appellants’ attempt to distinguish Howard County from the case at bar fails.

Appellants argue that the “explicit[] premise[]” and “essence of the decision in Howard

County is that the need of the community for high-voltage transmission lines was of such

public benefit and significance that local zoning should be preempted[,]” and such public

interest does not exist for SEGS. We find no language in Howard County to support such

an assertion. The holding, which is the same conclusion we reach in the case before us,

rested on the fact that “Article 78 is substantially more comprehensive and no PSC rule or

order requires compliance with local zoning ordinances as a precondition for obtaining a

certificate of public convenience and necessity.” Id. at 525.

       Appellants also draw our attention to Fiscal and Policy Note to Senate Bill 887

(2013). In pertinent part, the note reads:

              PSC is the lead agency for licensing the siting, construction,
              and operation of power plants in the State. If a generation
              station is granted an exemption from the CPCN requirement,

                                             11
              PSC evaluation is limited to ensuring safety and reliability of
              the electric system. All other issues other than safety and
              reliability of the electric system are left up to other State and
              local agencies.

Appellants argue that because a CPCN is required “for some but not all solar photovoltaic

system-based generating stations, it cannot be said that the legislative body intended to

preempt the entire field.” We do not agree. Exempting certain generating stations from the

CPCN requirement does not lessen the comprehensiveness of §7-207. Furthermore,

Perennial’s proposed SEGS is not exempt from the CPCN requirement, and the PSC

remains the lead agency for this project. Therefore, following the logic of the Court of

Appeals in Howard County v. Potomac Electric Power Co., 319 Md. 511 (1990) and the

legislative intent discussed supra, we hold that the PSC preempts, by implication, local

zoning regulation and thus affirm the circuit court.

                                   2. PSC Jurisdiction

       Lastly, Appellants argue that Perennial is not governed by PSC law because “[t]he

Public Service Commission regulates only solar photovoltaic systems operated by public

service companies.” This argument is without merit.

       Appellants cite to PUA §2-113(a)(1)(i), which states that the PSC shall supervise

and regulate public service companies within its jurisdiction. “Public Service Company” is

defined as “a Common Carrier Company, Electric Company, Gas Company, Sewage

Disposal Company, Telegraph Company, Telephone Company, Water Company, or any

combination of public service companies.” PUA §1-101(x)(1). It is undisputed that

Perennial is not a public service company. The statute does not state, however, that the


                                             12
PSC’s jurisdiction is limited to public service companies only. In fact, the statute expressly

provides that “[t]he powers and duties listed in this title do not limit the scope of the general

powers and duties of the Commission provided for by this division.” PUA §2-113(b).

       PUA §7-207(b)(1)(i) states that “a person may not begin construction in the State

of a generating station” until a CPCN permit is obtained. A “person” is defined as an

“individual, receiver, trustee, guardian, personal representative, fiduciary, or representative

of any kind and any partnership, firm, association, corporation or other entity.” PUA §1-

101(u). Contrary to Appellants’ assertions, the applicable statute here, 7-207(b)(1)(i), is

not limited to public services companies. Perennial is “a person” seeking to construct a

generating station in Maryland, and, therefore, is required to get a CPCN through the PSC.

       Appellants draw our attention to a decision by the PSC for a CPCN application, In

Re: Potomac Edison Co., 100 Md. P.S.C. 276, 2009 WL 3517701 (2009), where the PSC

found that §7-207(b)(3) authorizes it to issue a CPCN only to an electric company.

Appellants misinterpret the decision. The PSC determined that it could not issue a CPCN

to a non-electric company because “§7-207(b)(3) . . . limits the Commission’s authority to

issue CPCNs for transmission lines designed to carry a voltage in excess of 69,000 volts to

‘electric compan[ies][.]’” PUA §7-207(b)(3) is a different section of the statute than the

one before us now. Unlike with transmission lines, the PSC is not limited to authorizing

CPCNs to electric companies under §7-207(b)(1)(i). Instead, any “person” may apply for

a CPCN to construct a generating station. Furthermore, PSC’s denial of a CPCN

application does not diminish PSC jurisdiction. To answer Appellants’ question simply:

Perennial, in its attempt to construct a SEGS, is subject to PSC regulation.

                                               13
JUDGMENT OF THE CIRCUIT COURT
FOR     WASHINGTON     COUNTY
AFFIRMED; COSTS TO BE PAID BY
APPELLANTS.




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