The Pennsylvania Commonwealth Court has issued a significant ruling limiting the power of local townships to impose fees on natural gas utilities for infrastructure projects, declaring that certain inspection fees enacted by Menallen Township are preempted by state law.
In a decision filed January 2, 2026, the Court granted partial summary relief to Columbia Gas of Pennsylvania, Inc. (Columbia), striking down specific sections of Menallen Township’s Ordinance 178 that governed utility development and excavation permits. However, the Court also dismissed other parts of Columbia’s challenge, finding them premature.
The Dispute Over Ordinance 178
Columbia Gas, a major utility regulated by the Pennsylvania Public Utility Commission (PUC), challenged Menallen Township’s Ordinance 178, enacted in 1997, which requires permits for opening public streets for gas line installation or replacement.
Columbia argued that the ordinance—particularly its fee structure and regulations concerning excavation location and tree removal—was preempted by the Public Utility Code, which grants the PUC exclusive jurisdiction over utility regulation in the Commonwealth.
The Township countered that its ordinance merely regulated entry onto public rights-of-way, a power retained by local municipalities under state statutes like The Second Class Township Code, and did not constitute utility regulation.
The Court was asked to rule on cross-applications for summary relief, meaning the judges determined that the facts surrounding the legal questions were largely undisputed, allowing for a resolution based purely on law.
Counts III and IV Dismissed as Unripe
The Court first addressed Counts III and IV of Columbia’s petition, which targeted Sections 13 through 16 (Location/Relocation Provisions) and Section 21 (Penalty Provision) of the ordinance.
The Township argued these sections should be dismissed because they had never been enforced against Columbia, even after nearly a decade of utility projects. Columbia admitted this non-enforcement but argued the provisions were still ripe for review because the Supreme Court had already established that the PUC preempts local regulation of utility facility locations.
Judge Matthew S. Wolf, writing for the Court, agreed with the Township on this point, finding the challenge to these specific sections was not yet “ripe” for judicial intervention.
“Columbia has admitted, through the deposition of its corporate designee, that those provisions have never been enforced against it,” the opinion stated. The Court reasoned that if the Township has chosen not to enforce these provisions—likely due to existing state law precedent—there is no immediate, actual controversy. If the Township attempts enforcement in the future, Columbia can seek relief then.
Victory for Columbia on Inspection Fees
The central battle concerned Counts I and II, which focused on the fees charged by the Township under Section 20 of Ordinance 178, including a flat $150 Application Fee and hourly/per-square-foot Inspection and Supervision Fees. Columbia had already paid over $42,000 in these fees under protest for recent projects.
The Court distinguished between the two types of fees based on recent state case law that attempts to balance local administrative needs with statewide utility regulation.
The $150 Application Fee was deemed permissible. Citing the precedent set in *Waterford Township*, the Court found that a fixed fee related to processing an application for entry onto a right-of-way is a reasonable local administrative function authorized by The Second Class Township Code. Summary relief was denied for this specific fee.
However, the multi-tiered Inspection Fees—ranging from $18-$25 per hour (and raised by resolution to a minimum of $75 per hour)—were struck down as unlawful.
The Court found these variable, often costly, fees exceeded the scope of permissible local permitting. In the landmark *City of Lancaster* case, the state Supreme Court ruled that even municipal fees intended to cover right-of-way maintenance were preempted because they amounted to utility regulation that the PUC already handles.
Judge Wolf noted that the Inspection Fees in this case were not merely for confirming entry or checking if work started and stopped on time. Instead, the Township’s own engineer report indicated these fees were necessary to monitor the quality of installation, including backfill material and compaction, and to account for the “probability of future repairs required.”
“These Inspection Fees are, beyond any reasonable factual dispute on this record, 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,” the opinion concluded.
The Court warned that allowing such detailed, project-specific supervision fees would invite a “convolution of fragmentary local regulation of public utilities,” which the state legislature intended to prevent by centralizing regulation under the PUC.
As a result, the Court granted summary judgment for Columbia on the Inspection Fees, declaring Sections 20(2)-(4) of Ordinance 178 unenforceable, enjoining the Township from enforcing them, and ordering Menallen Township to return all fees paid by Columbia under protest related to those sections.
The Court did not reach Columbia’s separate argument that these fees were an unconstitutional tax.