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Board of County Commissioners of Washington County v. Perennial Solar, LLC

Court of Appeals of Maryland

July 15, 2019

BOARD OF COUNTY COMMISSIONERS OF WASHINGTON COUNTY, MARYLAND
v.
PERENNIAL SOLAR, LLC

          Argued: May 2, 2019

          Circuit Court for Washington County Case No.: 21-C-15-055848

          Barbera, C.J. [*] Greene, McDonald, Watts, Hotten, Getty, Booth, JJ.

          OPINION

          Booth, J.

         "Here comes the sun, and I say, It's all right."

         -The Beatles, "Here Comes the Sun"

         This case involves the intersection of the State's efforts to promote solar electric generation as part of its renewable energy policies, and local governments' interest in ensuring compliance with local planning and zoning prerogatives. In this matter, we are asked to determine whether state law preempts local zoning authority with respect to solar energy generating systems that require a Certificate of Public Convenience and Necessity ("CPCN") issued by the Maryland Public Service Commission.

         This case began with an application by Perennial Solar, LLC ("Perennial") to the Washington County Board of Zoning Appeals ("Board") for a special exception and variance to construct a Solar Energy Generating System ("SEGS") adjacent to the rural village of Cearfoss in Washington County, Maryland. After the Board granted the variance and special exception, a group of aggrieved landowners sought judicial review of the Board's decision in the Circuit Court for Washington County. The Board of County Commissioners of Washington County, Maryland ("Washington County" or "the County") intervened in the case.

         While the petition for judicial review was pending, Perennial filed a motion for pre-appeal determination challenging the subject matter jurisdiction of the Circuit Court for Washington County on the ground of state law preemption by implication. Prior to considering the merits of the Board's decision, a hearing was held on Perennial's motion. The circuit court granted the motion and determined that Maryland Code, § 7-207 of the Public Utilities Article ("PU") preempts the Washington County Zoning Ordinance and that the Public Service Commission ("PSC") has exclusive jurisdiction to approve the type of SEGS proposed by Perennial. Washington County appealed the case to the Court of Special Appeals. In a reported opinion, the intermediate appellate court affirmed the judgment of the circuit court. Bd. of Cty. Comm'rs of Washington Cty., et al. v. Perennial Solar, LLC, 239 Md.App. 380 (2018).

         Washington County petitioned this Court for a writ of certiorari. We granted certiorari to consider the following question:[1]

Does state law preempt local zoning authority with respect to solar energy generating systems that require a Certificate of Public Convenience and Necessity issued by the Maryland Public Service Commission?

         For the reasons set forth herein, we answer in the affirmative and affirm the judgment of the Court of Special Appeals.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Perennial filed an application in September of 2015 with the Board for a special exception and variance[2] to construct a SEGS[3] on two contiguous farms totaling 86 acres. The farms are adjacent to Cearfoss, a community designated as a Rural Village[4] in the Washington County Comprehensive Plan. The proposed site is located in the Agricultural-Rural ("AR") zoning district[5] in the Washington County Zoning Ordinance ("Zoning Ordinance"). The Zoning Ordinance permits SEGS as a land use in the AR zoning district by special exception. Perennial's SEGS is designed to produce ten megawatts of electricity, all of which is to be sold and transferred offsite to a wholesale electricity market. The electricity generated by the SEGS would be enough to power 2, 100 homes.

         The Board held a public hearing on Perennial's application in October of 2015. Testimony was given by witnesses in favor of and in opposition to Perennial's application.[6]The Board also accepted written evidence from both sides relating to the application.

         After considering the matter for two weeks, the Board met, deliberated, and granted the request for a special exception and a variance.[7] The Board issued a written opinion in November of 2015 in which it determined, among other things, that the intended use conforms to the Washington County Comprehensive Plan and is compatible with the existing neighborhood. The Board found that the site is not located within a Priority Preservation Area, a Rural Legacy Area, or within the Antietam Overlay Zone, which are all areas where SEGS are prohibited under the Washington County Zoning Ordinance. After describing the evidence and testimony, the Board concluded that there was no probative evidence showing that the SEGS would have any greater adverse effects above and beyond those inherently associated with the special exception use irrespective of its location within the zone. The Board granted the variance from the minimum setback to allow the SEGS to be built over the common property line separating the two contiguous parcels, finding that strict compliance with the setback requirements would cause practical difficulty for the project and that a variance to a zero-foot setback would not cause any harm to public safety or welfare.

         A group of aggrieved landowners sought judicial review of the Board's decision in the Circuit Court for Washington County. Washington County intervened in the case. While the petition for judicial review was pending, Perennial filed a motion for pre-appeal determination challenging the circuit court's subject matter jurisdiction on the ground of state law preemption by implication. Perennial argued that under PU § 7-207, the PSC has exclusive jurisdiction for approval of the proposed SEGS, including site location. Washington County and the aggrieved landowners opposed the motion, arguing that the legislative intent reveals that local regulation of SEGS, and particularly, their location, is not preempted by state law.

         After a hearing, the circuit court granted Perennial's motion, holding that local zoning authority is preempted by PU § 7-207. The circuit court dismissed the petition for judicial review and remanded the matter to the Board with instructions to vacate its opinion and the grant of a special exception and variance. Washington County and the aggrieved landowners appealed the decision of the circuit court to the Court of Special Appeals. In a reported opinion, the intermediate appellate court applied Maryland case law outlining the applicable factors when considering the doctrine of implied preemption. Perennial Solar, 239 Md.App. 380. The Court of Special Appeals noted that "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.'" Id. at 386 (quoting Talbot Cty. v. Skipper, 329 Md. 481, 488 (1993)). The Court stated that when undertaking a preemption analysis, its "inquiry is focused on 'whether the General Assembly has manifested a purpose to occupy exclusively a particular field.'" Id. (quoting East Star, LLC v. Cty. Comm'rs of Queen Anne's Cty., 203 Md.App. 477, 485 (2012)).

         After reviewing the comprehensive statutory scheme associated with the PSC's review and approval process for generating stations, including the broad authority conferred by the General Assembly upon the PSC, the Court of Special Appeals held as follows:

Based on the comprehensiveness of [PU] § 7-207, 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.

Perennial Solar, 239 Md.App. at 390. The intermediate appellate court noted that this Court reached the same conclusion in Howard County v. Potomac Electric Power Co., 319 Md. 511 (1990). The Court of Special Appeals concluded its analysis in Perennial Solar by stating that "following the logic of the Court of Appeals in Howard County . . . and the legislative intent discussed supra, we hold that the PSC preempts, by implication, local zoning regulation and thus affirm the circuit court."[8] Perennial Solar, 239 Md.App. at 392. For the reasons set forth herein, we affirm the judgment of the Court of Special Appeals.

         II. STANDARD OF REVIEW

         This case involves a purely legal issue-whether PU § 7-207, which grants the PSC general regulatory powers over generating stations, including SEGS, preempts local zoning authority with respect to the location and construction of SEGS. As this determination involves a question of law, our standard of review is de novo. See Koste v. Town of Oxford, 431 Md. 14, 25 (2013) ("When an issue involves an interpretation and application of a Maryland constitutional, statutory or case law, an appellate court must determine whether the trial court's conclusions are legally correct under a de novo standard of review.") (internal citations omitted); see also Schisler v. State, 394 Md. 519, 535 (2006).

         III. PARTIES' CONTENTIONS[9]

         Perennial's contention is that the PSC's regulatory authority established by the Public Utilities Article over the siting and construction of SEGS preempts local zoning approval by implication. Perennial argues that the General Assembly has given the PSC broad authority to take final action to determine the siting of SEGS which require a certificate of public convenience and necessity, and that the comprehensive nature of the statute indicates the Legislature's intent to occupy the entire field. In support of its position that PU § 7-207 preempts local zoning ordinances in the context of site selection and approval of SEGS, Perennial relies upon Howard County v. Potomac Electric Power Co., et al., 319 Md. 511 (1990), in which this Court held that Article 78, § 54A-the same statute at issue in this case[10]-preempted by implication county zoning ordinances regulating the location and construction of overhead transmission lines in excess of 69, 000 volts.

         As additional support for its preemption argument, Perennial contends that recent legislative amendments to PU § 7-207 enacted by the General Assembly in 2017 reinforce the Legislature's intent that local governments have an advisory role in the CPCN process, but that the PSC has the ultimate decision-making authority. Perennial further argues that the General Assembly's recent rejection of alternative proposed amendments to PU § 7-207, which would have required that an applicant receive zoning approval from a local government prior to the PSC issuing a CPCN, reinforces the General Assembly's intent to preempt local zoning authority.

         Washington County argues that the express power granted by the General Assembly to local and municipal zoning authorities to implement planning and zoning controls has not been expressly or impliedly preempted by state law with respect to the approval and location of SEGS. The County relies upon Ad Soil, Inc. v. County Commissioners of Queen Anne's County, 307 Md. 307 (1986), contending that Ad Soil stands for the proposition that the doctrine of preemption does not allow for preemption in part. Because the General Assembly has prescribed a role for local government in the CPCN process under PU § 7-207, including the consideration of local planning and zoning, the County argues that the General Assembly has not evidenced an unequivocal intent to preempt the "entire field" or to preclude local legislative bodies from enacting any ordinances and laws pertaining to the location of SEGS in their respective jurisdictions.

         The County attempts to distinguish Howard County on the basis that: (1) the case dealt with the siting and construction of a 500, 000 volt transmission line extending for 10.5 miles through two counties, thus differing in scope, size, coverage area, environmental impact, and purpose; (2) under the facts of Howard County, PEPCO applied for and received a CPCN well in advance of the county special exception approval processes in the respective jurisdictions; and (3) unlike the Washington County Zoning Ordinance, which permits SEGS by special exception and incorporates compliance with PSC regulations by express reference, the county ordinances at issue in Howard County purported to vest extensive authority in the local zoning boards over the construction of overhead transmission lines exceeding 69, 000 volts, to the potential impediment of the PSC's discharge of its statutory authority.

         Finally, the County argues that the 2017 legislative amendments to PU §7-207, as well as the PSC's own regulations, support the County's position that local zoning ordinances are not preempted by the statutory CPCN application and approval process.

         IV. DISCUSSION

         This Court has frequently explained that Maryland state law may preempt local law in one of three ways: (1) preemption by conflict; (2) express preemption; or (3) implied preemption. Altadis U.S.A., Inc. v. Prince George's Cty., 431 Md. 307, 311 (2013); Talbot Cty. v. Skipper, 329 Md. 481, 487-488 (1993); Allied Vending, Inc. v. City of Bowie, 332 Md. 279, 297-298 (1993).

         Perennial argues that the local zoning ordinances are preempted by implication. State law can preempt local ordinances by implication when "the ordinance deals with an area in which the General Assembly has acted with such force that an intent to occupy the entire field must be implied." Howard Cty., 319 Md. at 522 (cleaned up) (quoting Bd. of Child Care, et al. v. Harker, et al., 316 Md. 683, 697 (1989)); see also Talbot Cty. v. Skipper, 329 Md. at 488.

         There is no particular formula for determining whether the General Assembly intended to preempt an entire area. Howard Cty., 319 Md. at 523. Nevertheless, we have stated repeatedly that "[t]he primary indicia of legislative purpose to preempt an entire field of law is the comprehensiveness with which the General Assembly has legislated in the field." Id. (quoting Bd. v. Harker, 316 Md. at 696-697); see also Altadis, 431 Md. at 316 (holding that state law comprehensively regulated the packaging, sale, and distribution of tobacco products, and thus, preempts county ordinances regulating the packaging of cigars); Skipper, 329 Md. at 489, 492 (holding that state comprehensive legislation regulating virtually all aspects of sewage sludge utilization was "strongly indicative of the legislative intent to preempt this entire field from local regulation"); Allied Vending, 332 Md. at 310 (holding that the "General Assembly has manifested an intent for the State to completely occupy the field of the sale of cigarettes through vending machines rendering any local or municipal ordinances in this area constitutionally invalid").

         In addition to reviewing the comprehensiveness of the legislation that is the subject of the preemption analysis, in Allied Vending, we summarized the secondary factors in which the Court has previously considered in determining whether a local law is preempted by implication:

1) whether local laws existed prior to the enactment of state laws governing the same subject matter, 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 local government has been addressed by state legislation, and 7) whether a two-tiered regulatory process existing if local laws were not preempted would engender chaos and confusion.

Allied Vending, 332 Md. at 299-300 (internal citations omitted).

         With the principles of implied preemption in mind, we turn to the language of the Public Utilities Article and consider the duties and authority delegated to the PSC by the General Assembly in the area of solar energy generating station approvals.

         A. Statutory Framework of the Public Utilities Article

         In response to the growing concern over climate change, the Maryland General Assembly enacted legislation intended to reduce Maryland greenhouse gas emissions. The legislation included a specific intent to move the Maryland energy market away from historical reliance on fossil fuels and enacted a Renewable Energy Portfolio Standard ("RPS")[11]. See Maryland Code, Environment Article ("EN") § 2-1201, et seq.; PU § 7-701.

         The RPS statute, PU § 7-701, et seq., was originally enacted in 2004 to facilitate the State's transition to renewable energy sources. The objective of the RPS statute is to recognize and develop the benefits associated with a diverse collection of renewable energy supplies to serve Maryland. As part of its enactment, the General Assembly specifically determined that: "the benefits of electricity from renewable energy resources, including long term decreased emissions, a healthier environment, increased energy security, and decreased reliance on and vulnerability from imported energy sources, accrue to the public at large;" and that the State needed to "develop a minimum level of these resources in the electricity supply portfolio of the State." PU § 7-702(b). The RPS includes specific targets for the share of electricity coming from solar electric generation. PU § 7-703.

         In 2009, the Maryland General Assembly enacted the Greenhouse Gas Emissions Reduction Act of 2009 ("GRRA"), a law that requires the State to reduce greenhouse gas emissions from a 2006 baseline by 25% by 2020 and by 40% by 2030. EN §§ 2-1204, 2-1204.1; PU § 7-701, et seq. During the 2019 legislative session, the General Assembly adopted the Clean Energy Jobs Act, which increases the State's RPS target to 50% by 2030. Senate Bill (“S.B.”) 516, 2019 Reg. Sess. (cross-filed as H.B. 1158). The Clean Energy Jobs Act also includes a significant increase in electricity sales derived from solar energy from 1.9% to 5.5% in 2019, and to 14.5% in 2028. Id.

         The General Assembly has delegated to the PSC[12] the authority to "implement a renewable energy portfolio standard" that applies to retail electricity sales in the State by electricity suppliers consistent with the specific timetable established by the statute. PU § 7-703(a). On an annual basis, the PSC is required to report to the General Assembly on the status of the implementation of the RPS program, including the availability of Tier 1 renewable sources such as solar energy. PU § 7-712.

         Consistent with the PSC's duties to ensure compliance with the RPS, including the specific targets for the share of electricity coming from solar electric generation, the General Assembly has also delegated to the PSC the exclusive authority to approve generating stations[13] in Maryland. Unless exempt by the statute, [14] a generating station cannot be constructed unless the PSC issues a CPCN, which is only issued after a detailed application and approval process. PU § 7-207.

         The PSC's review process of a generating station is extensive. Upon receipt of an application, the PSC provides notice of the application to: (i) the Maryland Department of Planning; (ii) the governing body, and if applicable, the executive of each county or municipal corporation in which a portion of the generating station is proposed to be constructed; (iii) the governing body of any county or municipal corporation within one-mile of the proposed location of the generating station; (iv) each member of the General Assembly representing any part of the county in which any portion of the generating station is proposed to be constructed; (v) each member of the General Assembly representing any portion of each county within one-mile of the proposed location of the generating station; and (vi) all other interested persons. PU § 7-207(c)(1). A copy of the application is also provided to each appropriate State unit and unit of local government for review, evaluation, and comment regarding the significance of the proposal to the State, area wide, and local plans or programs (see PU § 7-207(c)(2)), and to each member of the General Assembly who is provided with the statutory notice pursuant to PU § 7-207(c)(1). Id.

         The statute requires that the PSC coordinate with and include the local governing body of the county or municipality in the CPCN public hearing process, and establishes a public hearing framework designed to ensure input and public comment from interested persons in the geographic area within which the generating station is being proposed:

(d) Public hearing. - (1) The Commission shall provide an opportunity for public comment and hold a public hearing on the application for a certificate of public convenience and necessity in each county and municipal corporation in which any portion of the construction of a generating station . . . is proposed to be located.
(2) The Commission shall hold the public hearing jointly with the governing body of the county or municipal corporation in which any portion of the construction of the generating station . . . is proposed to be located, unless the governing body declines to participate in the hearing.
(3)(i) Once in each of the 4 successive weeks immediately before the hearing date, the Commission shall provide weekly notice of the public hearing and an opportunity for public comment:
1. by advertisement in a newspaper of general circulation in the county or municipal corporation affected by the application;
2. on two types of social media; and
3. on the Commission's website.
(ii) Before a public hearing, the Commission shall coordinate with the governing body of the county or municipal corporation in which any portion of the construction of the generating station . . . is proposed to be located to identify additional options for providing, in an efficient and cost effective manner, notice of the public hearing through ...

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