Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Snyder Brothers, Inc. v. Pennsylvania Public Utility Commission

Commonwealth Court of Pennsylvania

March 29, 2017

Snyder Brothers, Inc., Petitioner
v.
Pennsylvania Public Utility Commission, Respondent Pennsylvania Independent Oil & Gas Association, Petitioner
v.
Pennsylvania Public Utility Commission, Respondent

          Argued: February 8, 2017

          BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE JULIA K. HEARTHWAY, Judge HONORABLE JOSEPH M. COSGROVE, Judge

          OPINION

          PATRICIA A. McCULLOUGH, Judge

         Snyder Brothers Inc. (SBI) and intervenor Pennsylvania Independent Oil & Gas Association (PIOGA) (collectively, Petitioners) petition for review of the June 11, 2015 order of the Pennsylvania Public Utility Commission (Commission) denying their exceptions in part, granting them in part, and adopting as modified the initial decision and order of an administrative law judge (ALJ).[1] After careful review, we reverse.

         Background

         The decisive question presented on appeal is one of statutory interpretation and involves the definition of a "stripper well" in Act 13, [2] which unlike a "vertical gas well, "[3] does not have to pay impact fees. See Section 2302(f) of Act 13, 58 Pa.C.S. §2302(f). In pertinent part, a "stripper well" is denoted as an "unconventional gas well incapable of producing more than 90, 000 cubic feet [cf] of gas per day during any calendar month . . . ." Section 2301 of Act 13, 58 Pa.C.S. §2301 (emphasis supplied). We are asked to determine whether the General Assembly intended the word "any" to mean "one" or "every."

         The essential facts are not in dispute. The Bureau of Investigation and Enforcement (I&E) filed a complaint on January 17, 2014, alleging that SBI did not identify and pay impact fees on 24 wells in 2011 and 21 wells in 2012. In its answer and new matter, SBI claimed that the wells were stripper wells, not vertical wells, and thus subject to impact fees. SBI also noted that Act 13 does not contain a mechanism allowing it to pay the challenged fees under protest or to receive a refund if it is later determined that they had been paid erroneously. (Commission's decision at 2-3.)

         Thereafter, SBI moved for summary judgment, arguing that a "stripper well" in Act 13 unambiguously refers to a well that produces less than 90, 000 cf of gas per day in one month, or any single month, during the twelve-month reporting period. SBI also asserted, in the alternative, that the impact fees were a tax and that the term "any" in stripper well must be strictly construed in its favor as the taxpayer pursuant to section 1928(b)(3) the Statutory Construction Act of 1972 (SCA), [4] 1 Pa.C.S. §1928(b)(3) (stating that "provisions imposing taxes" shall be strictly construed). I&E countered that the word "any" made the definition of stripper well ambiguous because it could mean either "one or another taken at random" or "every, " and noted that it had received numerous inquiries from natural gas producers about how to determine which wells qualified as stripper wells. (Commission's decision at 10-13.)

         The ALJ agreed with I&E that the definition of "stripper well" was ambiguous, citing four prior orders of the Commission.[5] The ALJ noted that the Commission suggested in prior Reconsideration and Proposed Rulemaking Orders that a vertical gas well was subject to the impact fee if it produced more than 90, 000 cf of gas per day in any calendar month in a calendar year. The ALJ also found that the impact fee was not a tax because it does not raise revenue for the general funds of either the Commonwealth or the municipalities, but the revenue is distributed to affected municipalities to offset the impact of drilling. Concluding that SBI was not entitled to summary judgment, and that I&E's interpretation of "stripper well" was consistent with the Commission's previous interpretations of "vertical gas well, " the ALJ scheduled a hearing on the calculation of the fees, charges, and penalties sought by I&E. (Commission's decision at 13-15.)

         In its recommended decision, the ALJ found that SBI did not challenge the accuracy of I&E's calculations of the amount of outstanding impact and administrative fees. On this basis, the ALJ awarded: (1) interest under section 2308(a) of Act 13, 58 Pa.C.S. §2308(a), [6] and accepted I&E's proposed 3% interest rate as reasonable; (2) a mandatory penalty under section 2308(b) of Act 13, 58 Pa.C.S. §2308(b), [7] at the 25% maximum rate; and (3) a discretionary civil penalty in the amount of $50, 000.00 under section 2310(a) of Act 13, 58 Pa.C.S. §2310(a).[8]

         Petitioners filed numerous exceptions that objected to the ALJ's interpretation of the term "stripper well, " determination that the disputed impact fees were not paid in a timely fashion, and conclusion that SBI's conduct justified the imposition of interest or penalties. I&E filed responses to the exceptions explaining why the ALJ did not err. (Commission's decision at 18-27.)

         In a decision dated June 11, 2015, the Commission determined that the definition of "stripper well" was ambiguous because the word "any" was subject to multiple reasonable meanings, notably the interpretations proffered by the parties. In applying the factors for ascertaining legislative intent in section 1921(c) of the SCA, 1 Pa.C.S. §1921(c), [9] the Commission found, among other things, that adopting the interpretation put forth by Petitioners would: impede the collection of impact fees to provide relief to the municipalities affected by the drilling of gas wells in their boundaries, one of the primary purposes of Act 13; permit unscrupulous drillers to artificially lower the amounts produced in one month of the year in order to avoid paying impact fees; and contravene the General Assembly's intent, which was evidenced by the General Assembly's replacing of "a" with the word "any" in the final version of Act 13. The Commission further concluded that the ALJ's interpretation was consistent with the Commission's interpretations in the Reconsideration Order and Proposed Rulemaking Order. (Commission's decision at 37-43.)

         In addition, the Commission found no error in the ALJ's conclusion that the impact fees are not taxes because such fees are not imposed on all or many citizens, but only on some producers of natural gas as a condition and privilege for the extraction of that gas, and do not raise revenue directly for the Commonwealth's general fund. Citing our Supreme Court's decision in Dechert LLP v. Commonwealth, 998 A.2d 575, 584 n.8 (Pa. 2010) ("[W]hile any doubt or uncertainty as to the imposition of a tax must be resolved in the favor of the taxpayer, such doubt is only implicated after our efforts at statutory construction yield no definitive conclusion") (internal quotation marks and citation omitted), the Commission also determined that it was not required to construe the ambiguity in SBI's favor because the statutory construction factors led to a definitive conclusion that the General Assembly intended "any" to mean "all" or "every." Finally, the Commission concluded that the ALJ did not err in finding that SBI violated Act 13 by not paying impact fees on the wells at issue and that the imposition of interest and penalties was mandatory pursuant to sections 2308(a) and (b) of Act 13. However, the Commission agreed with Petitioners that a discretionary civil penalty was not warranted under the facts and circumstances of this case and granted the exceptions related to that issue. (Commission's decision at 43-67.)

         Petitioners then filed petitions for review with this Court. By single-judge order dated August 12, 2015, this Court granted SBI's motion for a stay and directed SBI to perfect and post a bond to cover 120% of the remaining unpaid balance of what the Commission determined SBI owed in impact fees, interest, and penalties. SBI filed an appeal bond, and the parties thereafter argued this matter before the Court en banc.

         Discussion

         On appeal to this Court, [10] Petitioners argue that the Commission erred in its interpretation of the word "any" in the definition of a "stripper well." Petitioners contend that "any" is an unambiguous term and that its plain usage in the vernacular "means 'one' - it does not mean 'each and every' or 'all.'" (SBI's brief at 17; accord PIOGA's brief at 29.) In the alternative, Petitioners assert that "any" is ambiguous, and because the impact fees are bona fide taxes, the term must be construed in their favor as taxpayers per section 1928(b)(3) of the SCA.

         Statutory Interpretation Principles

         The cardinal rule of all statutory interpretation is to ascertain and effectuate the intent of the General Assembly. O'Rourke v. Commonwealth of Pennsylvania, Department of Corrections, 778 A.2d 1194, 1201 (Pa. 2001). To accomplish that goal, "statutory language must be read in context, that is, in ascertaining legislative intent, every portion of statutory language is to be read together and in conjunction with the remaining statutory language, and construed with reference to the entire statute as a whole." Pennsylvania Gaming Control Board v. Office of Open Records, 103 A.3d 1276, 1285 (Pa. 2014).

         Where the words of a statute are clear and free from ambiguity, the legislative intent is to be gleaned from those very words, and the plain language is not to be disregarded under the pretext of pursuing its spirit. Pennsylvania Financial Responsibility Assigned Claims Plan v. English, 664 A.2d 84, 87 (Pa. 1995); Coretsky v. Board of Commissioners of Butler Township, 555 A.2d 72, 74 (Pa. 1989). "Only if a statute is unclear may a court embark upon the task of ascertaining the intent of the legislature by reviewing the necessity of the act, the object to be attained, circumstances under which it was enacted and the mischief to be remedied." Coretsky, 555 A.2d at 74. Stated somewhat differently, the statutory construction factors listed in section 1921(c) of the SCA only become pertinent when the language of the statute is ambiguous. Ramich v. Workers' Compensation Appeal Board (Schatz Electric, Inc.), 770 A.2d 318, 322 (Pa. 2001); accord Commonwealth v. Dellisanti, 876 A.2d 366, 369 (Pa. 2005). "A statute is ambiguous when there are at least two reasonable interpretations of the text under review." Warrantech Consumer Product Services, Inc. v. Reliance Insurance Co., 96 A.3d 346, 354-55 (Pa. 2014).

         The SCA instructs courts that words and phrases are to be interpreted according to their common and approved usage. Section 1903(a) of the SCA, 1 Pa.C.S. §1903(a). "The word 'any' is defined by Webster as 'one indifferently out of a number.' It is an indefinite pronominal adjective used to designate things in a general way without pointing out any one in particular." Benat v. Mutual Benefit Health and Accident Association, 159 A.2d 23, 25 (Pa. Super. 1960) (citations omitted); see Maierhoffer v. GLS Capital, Inc., 730 A.2d 547, 550 (Pa. Cmwlth. 1999) ("In common usage, 'any' means 'one or more indiscriminately from all.'") (citation omitted). To be sure, the term "any" conveys a full spectrum of quantities, including: (1) one; (2) one, some, or all regardless of quantity; (3) one or more; (4) great, unmeasured, or unlimited in amount; and (5) all. Webster's Third New International Dictionary 97 (1976). Typically, "[t]he significance of the word 'any' is discoverable in its context." Benat, 159 A.2d at 25 (citations omitted).

         Plain Language Analysis

         Section 2302(f) of Act 13 imposes, on an annual basis, scheduled impact fees on a "vertical unconventional gas well . . . ." 58 Pa.C.S. §2302(f). For purposes of impact fees, the parties concede that a "vertical gas well" and a "stripper well" differentiate each other. A vertical gas well is subject to the impact fee, while a stripper well, which does not reach the necessary production level, is not. Although there may be one instance where the two wells are not functionally the same, i.e., when a stripper well does not utilize the fracking technique, [11] there is no dispute in this case that the gas wells at issue will qualify as either stripper wells or vertical wells, depending on their level of production.

         Section 2301 of Act 13, entitled "Definitions, " defines these two types of wells as follows:

"Stripper well" - An unconventional gas well incapable of producing more than 90, 000 [cf] of gas per day during any calendar month, including production from all zones and multilateral well bores at a single well, without regard to whether the production is separately metered.
* * *
"Vertical gas well" - An unconventional gas well which utilizes hydraulic fracture treatment through a single vertical well bore and produces natural gas in quantities greater than that of a stripper well.

58 Pa.C.S. §2301 (emphasis supplied).[12]

         Viewing the plain language of the statutory provision in a common sense fashion, we agree with Petitioners that the word "any" in the definition of "stripper well" is unambiguous and it clearly and plainly means what it says - "any month." Pursuant to subsections 2302 (b) and (f) of Act 13, the impact fees are imposed for the "calendar year." 58 Pa.C.S. §2301(b) and (f).[13] Because a calendar year is a definite class consisting of twelve individual months, the most natural way to construe "any" is to interpret it to mean at least "one" month out of the year, no matter what or which month ("during any calendar month"). This reading is bolstered by the fact that "any" is located within a prepositional phrase and modifies the singular noun, "calendar month, " which signifies that only one or a singular month is contemplated in the grammatical scheme. See William A. Sabin, The Gregg Reference Manual 238, 259 (9th ed. 2001) (stating that the term "any" is singular when it modifies a singular noun). Notably, section 2301 of Act 13 does not say "in any calendar month[s], " which would tend to suggest that the General Assembly intended "any" to be the equivalent of "every" or "all" months.

         In Commonwealth v. Davidson, 938 A.2d 198 (Pa. 2007), our Supreme Court interpreted language in a statute that made it illegal to possess a certain type of image in "any book, magazine, pamphlet, slide, photograph, film, videotape, computer depiction or other material." Id. at 218-19 (citation omitted). Initially, the Supreme Court observed that "[t]he General Assembly's use of the term 'any, ' which could mean one or more items, suggests a lack of restriction or limitation, " and went on to determine whether possession of multiple images comprised one criminal offense or whether possession of a single image, in and of itself, "constitutes a distinct occurrence of offensive conduct. . . ." Id. at 219. The Supreme Court noted with paramount significance that "all of the objects listed in the statute are singular, " id., and effectively determined that "any" means "one" image, regardless of its medium, and not "every" or "all" images. On this reasoning, the Davidson court concluded that "[t]he plain language of the statute evidences the intent of the General Assembly to make each image . . . possessed by an individual a separate, independent crime." Id.

         Given the presence of singular nouns in the pertinent statutory phrase, the Supreme Court in Davidson interpreted "any" in its singular (one out of many) as opposed to plural sense (every one), and declined to construe "any" as encompassing all of the numerous images in the defendant's possession. Through logical extrapolation, this Court reaches a conclusion similar to and aligned with Davidson and, consistent with the reasoning in that opinion, we construe "any" to mean "one." Therefore, based upon the plain and unambiguous language of section 2301 of Act 13, we conclude that when an unconventional gas well cannot produce more than 90, 000 cf of gas in at least one month, it is a stripper well and is not subject to impact fees.[14]

         The Commission contends that section 2302(d) of Act 13, which governs fees for "restimulated" wells, 58 Pa.C.S. §2302(d), compels the conclusion that the General Assembly intended "any" in the definition of "stripper well" to mean "every" or "all." This provision states:

(d) Restimulated unconventional gas wells.
(1) An unconventional gas well which after restimulation qualifies as a stripper well shall not be subject to this subsection.
(2) The year in which the restimulation occurs shall be considered the first year of spudding for purposes of imposing ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.