“Just the Entry, Please”: Commonwealth Court Holds Township May Charge Flat Permit Fee but Not Variable Inspection Fees to Public Utility

Daniel C. Conlon, dconlon@tuckerlaw.com, (412) 594-3951

A township’s inspection fees charged to a public utility for street excavation work were  preempted by Pennsylvania’s Public Utility Code, but a flat permit application fee remains lawful.

Columbia Gas of Pennsylvania, Inc. v. Menallen Township, 351 A.3d 326 (Pa. Commw. Ct. 2026).

The Commonwealth Court held that the Public Utility Code field-preempted a township’s variable inspection fees that was charged on a per-hour and per-square-foot basis to supervise a utility’s pipeline installation and monitor future road conditions. The Court declared those fees unenforceable, enjoined their further collection, and ordered the township to refund $42,542.08 in inspection fees paid under protest.

Summary and Factual Background:

Columbia Gas of Pennsylvania, Inc. is a public utility that sells and distributes natural gas to approximately 444,000 retail customers across Pennsylvania and is regulated by the Pennsylvania Public Utility Commission (PUC). As part of its operations, Columbia builds and maintains a high-pressure gas pipeline network that crosses both private and public rights-of-way, including roads within Menallen Township in Fayette County.

Menallen Township enacted Ordinance 178 in 1997, which regulates the excavation of public streets and requires a permit for such work. The ordinance establishes several categories of charges: a flat $150 application fee per permit; inspection fees calculated at a minimum of $75 per hour (raised from $18–$25 per hour by resolution 221 in 2014), plus $3.67 per square foot of excavation; and a bond requirement of $25 per linear foot.

Between 2016 and 2022, Columbia performed three infrastructure projects in the Township, installing approximately 1,700 linear feet of pipe and paying $14,259 in Ordinance 178 fees. At the time Columbia filed suit, it had four additional projects pending, including three pipeline replacement projects required by PUC regulations . To obtain permits and begin work, Columbia paid $42,542.08 in Ordinance 178 fees under protest on March 10, 2023, and then filed a petition for review in the Commonwealth Court seeking declaratory and injunctive relief that the ordinance’s fee structure violated the limitations of the Second Class Township Code and that the per-hour inspection fee was ultra vires and excessive, among other claims.

Discussion:

The Court analyzed the challenged fees under the doctrine of field preemption. The General Assembly has field-preempted all state and local laws that purport to regulate public utilities, vesting the PUC with sole and exclusive jurisdiction over utility operations statewide. The Court drew on two key precedents to apply the field-preempted principles to municipal permitting fees. In PPL Electric Utilities Corp. v. City of Lancaster, 214 A.3d 639 (Pa. 2019), the Supreme Court struck down Lancaster’s annual per-linear-foot right-of-way maintenance fee as preempted because it was “materially congruent” to state-level regulatory costs already embedded in PUC-approved tariffs.

Also, in Waterford Township v. Pennsylvania Public Utility Commission, 276 A.3d 301 (Pa. Cmwlth. 2022), the Court reconciled City of Lancaster with two state statutes that give local governments authority to permit public utility work in a municipal right-of-way, and charge fees for such permits.  First, Section 1511(e) of the Business Corporation Law requires public utilities to obtain local permits to place facilities in a right-of-way. Second, Section 2322 of the Second-Class Township Code requires townships to collect fees for street opening permit applications and authorizes inspection and reinspection.

Applying the framework from the two cases cited above, the Court treated the flat $150 application fee and the variable inspection fees differently. The application fee—a flat, per-permit charge—mirrored the type of entry-focused fee upheld in Waterford Township, and the Court declined to grant summary relief to Columbia on that charge.

The Court noted the inspection fees were different. Unlike the flat fees approved in Waterford Township, Menallen Township’s inspection fees scaled with the size of each project producing total charges approximately ten times greater than those the Court had previously sanctioned.  The Court explained that “although the sheer amount of the fees is not dispositive . . . it does draw our attention to the reason for those fees, which is dispositive. The inspection fees here are . . . not merely for inspection either of ‘entry’ onto the right-of-way or of whether ‘a permittee timely commence[d] and complete[d]’ the permitted work.” Id. at 336.

The Court found that the fees’ purpose, not merely their amount, was dispositive. The Township’s own expert report made clear that the purpose for the inspection fees was to fund detailed oversight of backfill material, compaction, installation quality, and the probability of future road repairs.

As a result, the Court concluded that permitting such fees would create exactly the type of “convolution of fragmentary local regulation of public utilities” that the General Assembly enacted the Public Utility Code to prevent. Id. at 337. The Court declared the inspection fees in Ordinance 178 unenforceable as preempted, enjoined the Township from collecting those fees, and ordered restitution of all amounts paid under protest.

Practical Advice:

This decision draws a clear and practical line for municipalities that charge fees to public utilities working in public rights-of-way: the lawfulness of a fee turns not on its label, but on its purpose. A flat application or permit fee directed at managing entry to rights-of-way is permissible. A variable fee designed to fund supervision of the quality of utility work—backfill, compaction, installation standards, future road integrity is likely preempted by the PUC.

Local governments should audit existing fee ordinances and consult with their solicitors to ensure that any inspection-related charges are connected to the administrative cost of confirming that permitted work was timely completed and not to the cost of policing the quality of the utility’s installation. Fee schedules that vary by project size, by the hour, or by the square foot of excavation are particularly vulnerable under this standard, as they are difficult to characterize as anything other than a charge for substantive oversight of utility operations.

For more information about this decision and how it may impact municipal fee ordinances, public utility projects, or right-of-way permitting practices, please contact Daniel Conlon at (412) 594-3951 or at dconlon@tuckerlaw.com.