Appeal from the Opinion and Order of the Commonwealth Court at No. 248 M.D. 2007, dated November 16, 2009
The opinion of the court was delivered by: Mr. Chief Justice Castille
CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.
The Pennsylvania Public Utility Commission (the "Commission"), a statutory regulatory authority, appeals the decision of the Commonwealth Court to vacate an operations fee assessed against a public utility, appellee Mercury Trucking, Inc. ("Mercury"), for the operating period of July 1, 2005, through June 30, 2006 (the "2005 annual assessment"). At this Court's request, the parties also address issues related to the appropriate process by which disputes of this nature should proceed in the courts of the Commonwealth.
For the reasons that follow, we hold that judicial review of a public utility's challenge to its annual assessment shall proceed in the courts of this Commonwealth in accordance with the procedures of the Administrative Agency Law, Chapter 7, Subchapter A. Accordingly, we must quash the Commission's direct appeal. However, given that the proper procedure was unclear, and that the underlying issue merits review, we will treat the Commission's notice of appeal as a petition for allowance of appeal, which we hereby grant. On the merits, we reverse the decision of the Commonwealth Court, vacate its judgment in favor of the public utility, and reinstate the Commission's adjudication.
The Commission is the administrative agency which has the authority to oversee all public utilities doing business in the Commonwealth and which implements and enforces the Pennsylvania Public Utility Code by its regulations, orders, or otherwise. 66 Pa.C.S. § 501(a), (b); see, generally, 66 Pa.C.S. § 101 et seq. Expenditures of administering the Code are borne in part by the public utilities that the Commission regulates. See 66 Pa.C.S. § 510(a). That part of the Commission's budget collected from public utilities -- the "total assessment" -- is allocated among all Commission-regulated public utilities in the manner prescribed by Section 510(b) of the Code. See 66 Pa.C.S. § 510(b)(1)-(4).
Each utility pays a share roughly proportional to its actual or estimated gross intrastate operating revenue. See 66 Pa.C.S. § 510(b). The Section 510(b) statutory formula is a complex four-step calculation centered on the Commission's administrative expenditures and on gross intrastate operating revenues of all public utilities regulated by the Commission, during the calendar year preceding the relevant operating period. See id. The Commission receives necessary data relating to each public utility's actual gross operating revenue in Pennsylvania from the utilities ("actual revenue(s)").
According to the Public Utility Code, each utility is required to file a statement under oath reporting the utility's actual revenue for the year preceding the assessment, on or before March 31 of the assessment year. See 66 Pa.C.S. § 510(b). For any public utility that fails to file a timely actual revenue statement, the Commission is required to estimate the revenue, and the estimated gross operating revenue ("estimated revenue(s)") is used to calculate that utility's assessment, along with the allocation of the total assessment among all public utilities operating in the Commonwealth.
Appellee Mercury Trucking, Inc. operates as a public utility under the Commission's authority. In 2005, Mercury failed to file by March 31 the statement of its actual revenue for 2004. On April 29, 2005, the Commission notified Mercury of its omission. Subsequently, the Commission estimated Mercury's revenue for 2004 at $8,492,767, equal to Mercury's actual revenue for 2003 of $7,582,828 plus twelve percent, and calculated Mercury's 2005 annual operations fee based on this estimated revenue.*fn1 On August 17, 2005, the Commission issued Mercury a Notice of Assessment and General Assessment Invoice for $32,210. Mercury paid the 2005 annual assessment in full.
Concomitantly, Mercury objected to the assessment on the ground that the Commission's estimate of its 2004 revenue was excessive, and presented evidence that its actual revenue was $5,264,627 -- more than three million dollars less than the revenue estimated by the Commission. Mercury argued that it was entitled to a recalculation of its 2005 annual assessment, which it claimed should have been $19,967.02, and requested a partial refund of $12,242.98. The Commission responded that the 2004 revenue estimate was binding upon Mercury pursuant to Section 510(b) of the Code and, as a result, the 2005 operations fee was correctly assessed. The parties presented their arguments to an Administrative Law Judge ("ALJ") for rulings on Mercury's objections and on the Commission's motion to dismiss the objections. The ALJ denied the Commission's motion and, ultimately, determined that the Commission's revenue estimate was excessive and a partial refund of Mercury's assessment payment was appropriate. On May 22, 2006, a five-member adjudicatory panel of the Commission reversed the decision of the ALJ and denied Mercury's request for a refund. Mercury filed a petition for review of the Commission's decision in the Commonwealth Court's appellate jurisdiction.
In May 2007, a Commonwealth Court panel determined that Mercury's challenge should have been filed as an action at law for a refund pursuant to Section 510(d) of the Public Utility Code, and not as an appeal. The panel transferred the matter to the court's original jurisdiction, vacated the Commission's order of May 22, 2006, and directed the Commission to file a responsive pleading to Mercury's challenge within twenty days. See Mercury Trucking, Inc. v. Pa. Pub. Utility Comm'n, 923 A.2d 1244, 1247 (Pa. Cmwlth. 2007) ("Mercury Trucking I"). Judge Hannah Leavitt dissented in part, noting that the majority was "announc[ing] a ground breaking decision" with respect to the jurisdictional issue, "without allowing the parties an opportunity to brief or argue the dispositive issues." Id. at 1248.
The Commission filed a timely answer with new matter, in addition to preliminary objections to Mercury's petition for review. The court dismissed the answer and new matter as premature, and the Commission appealed the decision to this Court. We quashed the Commission's interlocutory appeal in October 2007. Subsequently, the Commonwealth Court held a hearing on the Commission's preliminary objections, which the court then overruled in March 2008. Cmwlth. Ct. Op., 3/7/2008, at 6 ("Mercury Trucking II"). The Commission filed a second appeal, which we also quashed.
The case remained dormant until March 2009, when the Commonwealth Court issued a rule for Mercury to show cause why the action should not be dismissed for failure to prosecute. Mercury responded; the court discharged the rule and directed the parties to file a stipulation of facts. In November 2009, a Commonwealth Court panel reviewed the evidence de novo and found that Mercury overpaid its 2005 annual assessment. The panel ordered the Commission to refund Mercury $12,242.98. Cmwlth. Ct. Op., 11/16/2009, at 6 ("Mercury Trucking III"). The Commission filed a direct appeal to this Court.
Upon reviewing the Commission's jurisdictional statement, we postponed decision of three issues related to jurisdiction, and directed briefing and argument on the following questions:
1. Whether a suit filed against the Commonwealth by a public utility under 66 Pa.C.S. § 510(d) from an order of the [Commission] is brought in the Commonwealth Court's original jurisdiction under 42 Pa.C.S. § 761 or in the Commonwealth Court's appellate jurisdiction under 42 Pa.C.S. § 763? Include a discussion of the [Commission]'s position in United Parcel Service, Inc. v. Pennsylvania Pub. Util. Comm'n, 789 A.2d 353 (Pa. CmwIth. 2001), vacated and remanded, 830 A.2d 941 (Pa. 2003), on this issue.
2. Whether this Court has jurisdiction under 42 Pa.C.S. § 723(a) or 42 Pa.C.S. § 724(a) to review a final order entered by the Commonwealth Court in a suit filed against the Commonwealth by a public utility under 66 Pa.C.S. § 510(d) from an order of the [Commission]?
3. Whether a suit that was filed in the Commonwealth Court's appellate jurisdiction by a public utility under 66 Pa.C.S. § 510(d) from an order of the [Commission] and thereafter transferred to and decided in the Commonwealth Court's original jurisdiction was "originally commenced" in the Commonwealth Court within the meaning of 42 Pa.C.S. § 723(a)?
4. Whether the Commonwealth Court erred as a matter of law by not finding that, pursuant to § 510(b) of the Public Utility Code, where the utility fails to supply its intrastate revenue report the Commission's revenue statement is "binding" for purposes of the assessment calculation and any subsequent assessment objection under § 510(d)?
The parties complied and filed their respective briefs. We address each issue in turn, developing the facts and arguments as necessary.
Judicial Review in Assessment Matters
A. Commonwealth Court Process: Original or Appellate Jurisdiction
The Public Utility Code, Section 510(c)-(d), delineates the administrative process for collecting annual assessments from public utilities. Upon calculation of the assessments, the Commission notifies each public utility of the amount owed, and the public utility has the opportunity to file objections with the Commission within fifteen days of receiving the notice. Objections are cognizable on several enumerated grounds, and the Commission is required to hold a hearing concerning the objections. The Commission issues findings and notifies the public utility of its decision with respect to the objections, including the amount owed. The public utility is then obliged to pay the assessment within ten days of receiving notice, on penalty of suspension or revocation of its license for operations. The Commission may institute legal action to ensure prompt payment of the assessment, and the public utility may not act to avoid or delay such payment. 66 Pa.C.S. § 510(c)-(d). The subsequent process of judicial review is the first subject of dispute between Mercury and the Public Utility Commission.*fn2
As a practical matter, Mercury initiated the case in the Commonwealth Court by filing a petition for review -- in the nature of an appeal -- from the Commission's adjudication of Mercury's objections to the 2005 assessment. The Commonwealth Court sua sponte transferred the case to its original jurisdiction, deciding the matter without relevant briefing. See Mercury Trucking I, 923 A.2d at 1248 (Leavitt, J., concurring and dissenting). In support of its decision, the panel majority simply quoted Section 510(d) of the Public Utility Code and offered no further analysis. The Commonwealth Court then acted on Mercury's petition for review as it would have on a complaint in an action at law. Id. at 1247 (quoting 66 Pa.C.S. § 510(d); 42 Pa.C.S. § 708(b)). The Commission appealed, essentially claiming that its adjudication of Mercury's objections is subject to the Commonwealth Court's review as an appeal from an agency adjudication pursuant to the Administrative Agency Law ("AAL"), 2 Pa.C.S. §§ 701-704. Conversely, Mercury insists that the Commission's determination of its annual assessment is subject to de novo challenge in an action at law for a refund, pursuant to the discrete review process described in Section 510(d) of the Public Utility Code, 66 Pa.C.S. § 510(d).
Specifically, the Commission argues that the AAL creates a process to appeal Commonwealth agency decisions, irrespective of whether the agency's enabling statute forecloses an appeal and/or provides an alternative method of challenging such decisions in the Commonwealth Court's original jurisdiction. See Commission's Brief at 10-12 (citing 2 Pa.C.S. § 701(a), (b)). The General Assembly, the Commission claims, adopted the AAL as a uniform process of adjudication for all administrative agency disputes, including those relating to the Commission's annual assessments. In anticipation of Mercury's argument, the Commission offers that Section 510(d) of the Code was reenacted following the 1978 adoption of the AAL, but notes that the General Assembly did not intend to supersede the uniform procedure generally applicable to the Commission as a Commonwealth agency. Commission's Brief at 12 (citing Mar. Mgmt., Inc. v. Pa. Liquor Control Bd., 611 A.2d 202 (Pa. 1992)). According to the Commission, any exemption from the AAL must be express and the Code does not contain any explicit provision to that effect. Id. (citing 2 Pa.C.S. § 106).
Moreover, the Commission emphasizes that the Public Utility Code procedure is cumbersome because it provides one "factual adjudication of the assessment objection, only to require [a second] on-the-record factual adjudication before [the] Commonwealth Court" within two years of the initial adjudication. Id. at 11-12 (citing 66 Pa.C.S. § 510(d)). The practical effects of that process, the Commission states, are to deny the parties their constitutional right to an appeal and to cause severe and unnecessary delays in concluding assessment disputes. The delay, according to the Commission, invites budgetary uncertainty and potential cash flow problems for the Commission. By comparison, the Commission claims that the AAL provides an appropriate and efficient process, consisting of an administrative adjudication, followed by an appeal of right to the Commonwealth Court within thirty days of the adjudication.
Finally, the Commission emphasizes that this matter "commenced" and received a full and fair hearing at the agency level, and was adjudicated by the agency in the first instance. The Commonwealth Court acted on Mercury's petition for review of the agency adjudication, rendering a decision grounded on stipulated facts developed during the Commission's hearings. According to the Commission, original jurisdiction is properly limited to matters commenced in the Commonwealth Court and, therefore, the panel should have decided this case within its appellate jurisdiction. Id. at 14-16 (citing 42 Pa.C.S. § 763(a); Pa. Dep't of Aging v. Lindberg, 469 A.2d 1012 (Pa. 1983) (Opinion Announcing Judgment of Court) ("Lindberg")).*fn3 The Commission concludes that the lower court panel erroneously transferred appellee's petition for review from its appellate to its original jurisdiction.
Mercury disagrees and claims that Section 510(d)-(e) of the Public Utility Code precludes an appeal from the Commission's adjudication, and mandates that the "exclusive remedy" by which to challenge an annual assessment is an action at law for a refund against the Commonwealth. Mercury's Brief at 5-6 (citing 66 Pa.C.S. § 510(d), (e)). According to Mercury, the Commission only abandoned this interpretation of Section 510 for the purposes of this litigation, although it successfully forwarded it in prior litigation. Id. at 6-8 (citing United Parcel Serv., Inc. v. Pa. Pub. Utility Comm'n, 789 A.2d 353 (Pa. Cmwlth. 2001) ("UPS I")).
Mercury maintains that the AAL is inapplicable here because Mercury challenges a Section 510 assessment and "has not appealed a final adjudication of the Commission." Mercury disputes that either the revenue estimate or the annual assessment are final adjudications of the Commission, given that the Code permits objections to the assessment. Mercury also argues that the Commission's decision on its objections to the assessment, see 66 Pa.C.S. § 510(c), is not a final adjudication because the Code permits no subsequent appellate review. Id. at 9 (quoting United Parcel Serv., Inc. v. Pa. Pub. Utility Comm'n, 933 A.2d 672, 676 (Pa. Cmwlth. 2007), appeal denied, 946 A.2d 637 (Pa. 2008) ("UPS II")). Relying on the plain language of Section 510 and subscribing to the skeletal reasoning of UPS I and UPS II, Mercury distinguishes determinations of assessment challenges from other Commission adjudications, which it concedes are subject to the AAL. Mercury claims that Section 510(d) alone is applicable here because the provision addresses the judicial review procedure specific to the type of challenge Mercury filed, and finds "misleading and without merit" the Commission's argument that Section 701 of the AAL precludes an action at law pursuant to that provision.
Mercury acknowledges that assessment objections do not commence in the Commonwealth Court but argues the fact is irrelevant, because the panel below did not decide the case on this ground. Mercury also addresses the decision in Lindberg, supra, but uses circular reasoning to find it distinguishable because the Commonwealth Court here transferred the matter to its original jurisdiction and, therefore, the action commenced in that court. Mercury faults the Commission for failing to give sufficient deference to the panel's Mercury Trucking I decision, which transferred the matter to the court's original jurisdiction.
In its reply brief, the Commission challenges Mercury's argument that the Commission's May 22, 2006, order was not a final adjudication. The Commission explains that its decision, which Mercury appealed to the Commonwealth Court, was a final administrative determination affecting Mercury's personal or property rights, and suggests to the Court that the decision's finality should result "from a practical rather than a technical interpretation, taking into account the order's ramifications." Commission's Reply Brief at 3-4. The Commission argues that agency proceedings regarding assessments are "identical" to all other Commission proceedings and should be similarly considered adjudications for the purposes of the AAL. The Commission urges the Court to reject Mercury's "linguistic gyrations" intended to avoid the plain and uniform application of the AAL.
We begin by remarking that the parties offer overlapping arguments on the several issues on which we requested briefing, and generally undertake a scattered approach to the jurisdictional questions. This difficulty requires us to comment first on several preliminary matters in an effort to clarify our decisional focus.
Our first observation is that the parties are in silent, but obvious, accord that the General Assembly did not intend for both an appeal process and an action at law for a refund to be available concurrently and provide parallel avenues of relief in the assessment paradigm. Thus, Mercury and the Commission offer competing interpretations of the relevant provisions, both of which exclude a potential compromise position. As we discuss further, infra, the statutory construct and our caselaw support the zero-sum game arguments of the parties. See, e.g., Lindberg, 469 A.2d at 1017 (where appeal is available and adequate, resort to original jurisdiction is not available).
Accordingly, we proceed in agreement with the parties on this point and address the jurisdictional question as primarily requiring a determination of whether the General Assembly intended the AAL scheme or the Section 510(d)-(e) process to be the exclusive means of challenging the Commission's assessment decisions.
Second, we note that the Commission decision subject to review by the Commonwealth Court is the determination of Mercury's objections to the initial annual assessment. In this sense, we agree with Mercury that the Commission's estimate of Mercury's revenue and the initial annual assessment are not "final orders" of the Commission subject to review for the purposes of determining appellate jurisdiction. See 42 Pa.C.S. § 763 (Commonwealth Court has "exclusive jurisdiction of appeals from final orders of government agencies"). The Public Utility Code requires a utility to exhaust the administrative process, as payment in full of the assessment and the filing of objections are prerequisites to pursuing a challenge in the Commonwealth Court. See 66 Pa.C.S. § 510(c); cf. Kowenhoven v. County of Allegheny, 901 A.2d 1003, 1010 (Pa. 2006) ("Legislature generally retains the power to channel issues . . . into a specified route of appeal."). Neither party disputes the applicability of this administrative review process. Accordingly, the question before us is limited to whether the Commission's final action upon a utility's objections to the assessment is subject to judicial review via appeal or whether relief is available exclusively via the Section 510(d) process.
In this respect, Mercury argues that the Commission's decisions regarding objections to initial assessments are also not "final orders" for jurisdictional purposes, because the Public Utility Code permits no subsequent review of such decisions. But, this argument is tautological: Mercury presumes what it is seeking to prove, that the Public Utility Code's bar on appeals is valid and an appeal process pursuant to the AAL is unavailable.
An "order," according to the Judicial Code, includes a "judgment, decision, decree, sentence and adjudication." 42 Pa.C.S. § 102. "Adjudication," according to the AAL, is a type of order, described as: "[a]ny final order, decree, decision, determination or ruling by an agency affecting personal or property rights, privileges, immunities, duties, liabilities or obligations of any or all of the parties to the proceeding in which the adjudication is made." 2 Pa.C.S. § 101. The Public Utility Code offers no relevant definitions of these or similar terms. See 66 Pa.C.S. § 101 et seq. The terms "final orders," "order," and "adjudication" are terms of art with "peculiar and appropriate meaning[s]," and which the Judicial Code and the AAL use consistently where questions of appealability and jurisdiction are concerned. See 1 Pa.C.S. § 1903. Mercury offers no purpose, and we perceive no reason, to depart from such meanings here. The Commission's decision of March 22, 2006, disposing of Mercury's objections to the 2005 annual assessment, unquestionably affected the utility's liabilities and obligations, and its property rights; ergo, Mercury was aggrieved. Accordingly, we have no reservations in viewing the Commission's decision as an adjudication and a "final order" for purposes of Section 763 of the Judicial Code. We decline to adopt Mercury's assertion to the contrary.
We are similarly unpersuaded by Mercury's argument that the Commonwealth Court's action of transferring the matter to its original jurisdiction is dispositive and forecloses plenary review of the jurisdictional question before the Court. A party, or the parties by agreement, may not vest subject matter jurisdiction in a court which does not have it otherwise. Smethport Area Sch. Dist. v. Bowers, 269 A.2d 712, 715 (Pa. 1970) ("Bowers"). Here, the Commonwealth Court transferred the matter to its original jurisdiction because it concluded that the matter was filed in the wrong division of the court. If appeal is taken to a division of court to which such matter is not allocated by law, the court, upon assessing the jurisdictional defect, may transfer the record to the proper division. 42 Pa.C.S. §§ 708(a)-(d); 5103(c). The Commonwealth Court's transfer decision is a proper subject of plenary appellate review by this Court.
Finally, we address Mercury's contentions regarding the Commission's position in UPS I and UPS II. UPS I is a 2001 decision of the Commonwealth Court which set the precedent for the panel decision below. In UPS I, as here, the Commonwealth Court transferred a utility's petition for review of an assessment decision to its original jurisdiction. 789 A.2d at 357. In support of the decision, the UPS I panel recited the Commission's argument and quoted the Public Utility Code, but offered no further analysis of the issue. The parties did not seek further review in this Court.
In UPS II, a 2007 decision of the Commonwealth Court, the panel quashed an interlocutory appeal as improvidently granted, on the ground that the Commission's assessment decisions are not subject to appeal. UPS II, 933 A.2d at 676 (citing Mercury Trucking I, 923 A.2d 1244; 66 Pa.C.S. § 510(d)). The court noted that when UPS was granted permission to appeal, Mercury Trucking I had not yet been filed but the decision now governed the disposition of the case; the panel offered no further analysis. This Court denied permission to appeal the UPS II decision, and Mr. Justice Saylor filed a dissenting statement. See 946 A.2d at 637.
In this appeal, we invited the parties to address the UPS I decision. In this regard, Mercury appears to forward a two-pronged argument that either the Commission is precluded from challenging the lower court's decision by its position in UPS I, or that the Commission's stance here should not be accorded any deference because it was adopted for the first time in pending litigation. But, the legal basis of Mercury's argument is undeveloped and, at least with respect to its first prong, is without support. To the extent this first part of the argument implicates estoppel, Mercury forwards no claim that it relied on the Commission's position in UPS I, detrimentally or otherwise, in filing its challenge in the Commonwealth Court. In fact, Mercury pursued an administrative agency appeal initially and not an action at law for a refund. The second prong of Mercury's argument regarding deference given the Commission's prior position has some resonance at law as a general matter, see Rendell v. Pa. State Ethics Comm'n, 983 A.2d 708, 716 n.8 (Pa. 2009), but we see little relevance in application of the legal principle sub judice. Issues regarding the subject matter jurisdiction of the Commonwealth Court are not within the bailiwick of the Commission's expertise and are not generally entitled to deference in either case. See Nationwide Ins. Co. v. Schneider, 960 A.2d 442, 450 (Pa. 2008) ("Schneider") (ordinary rule of deference to agency's interpretation is premised on agency's regulatory expertise and is not applied where case does not involve issues within such expertise); cf. Commonwealth v. Conklin, 897 ...