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Germantown Cab Co. v. Philadelphia Parking Authority

Commonwealth Court of Pennsylvania

September 13, 2017

Germantown Cab Company, Bucks County Services, Inc., Concord Limousine, Inc., Dee Dee Cab Company and MCT Transportation, Inc.
v.
Philadelphia Parking Authority Appeal of: Bucks County Services, Inc. Germantown Cab Company, Bucks County Services, Inc., Concord Limousine, Inc., Dee Dee Cab Company and MCT Transportation
v.
Philadelphia Parking Authority Appeal of: Germantown Cab Company

          Argued: May 1, 2017

          BEFORE: HONORABLE P. KEVIN BROBSON, Judge, HONORABLE JULIA K. HEARTHWAY, Judge, [1] HONORABLE JAMES GARDNER COLINS, Senior Judge.

          OPINION

          P. KEVIN BROBSON, JUDGE.

         In these consolidated appeals, Appellants Bucks County Services, Inc. (BCS) and Germantown Cab Company (GCC) (collectively, Appellants) appeal from the order of the Court of Common Pleas of Philadelphia County (common pleas), dated November 2, 2016. Common pleas denied Appellants' appeal and affirmed the decision of the Philadelphia Parking Authority (Authority), upholding the Authority's annual assessments for fiscal year 2015 imposed upon Appellants pursuant to Section 5707 of the Parking Authorities Law (Law).[2] For the reasons set forth below, we reverse.

         I. BACKGROUND

         This case involves the latest of many legal challenges to the Authority's regulation of taxicab operations in the City of Philadelphia (City). The following provides a summary of the evolving regulation of what are referred to as "partial rights" taxicabs within the City.

         A. Pre-Act 94

         Appellants hold certificates of public convenience originally granted by the Pennsylvania Public Utility Commission (PUC), which authorize Appellants to provide call and/or demand taxicab service in designated areas of Pennsylvania, including designated portions of the City. Appellants are considered partial rights taxicab companies, because they have been given authority to serve part, but not all, of the City. Prior to 2004, the PUC was solely responsible for the regulation of taxicab operations throughout Pennsylvania, including the City. With respect to taxicab service provided within the City, the PUC's duties and responsibilities were set forth in the Medallion Act, 66 Pa. C.S. §§ 2401-2416 (repealed 2004). Although Appellants were authorized to operate in designated areas in the City, they were not subject to the provisions of the Medallion Act because they are not medallion taxicabs-i.e., taxicabs that are authorized to provide call or demand taxicab service on a citywide basis. 53 Pa. C.S. § 5701; see also Bucks Cnty. Servs., Inc. v. Phila. Parking Auth., 104 A.3d 604, 610 (Pa. Cmwlth. 2014) (recognizing that the definition of taxicab under Section 5701 of the Law, 53 Pa. C.S. § 5701, includes "medallion taxicabs, which operate on a citywide basis . . . ."). Rather, partial rights taxicabs were regulated pursuant to the Public Utility Code, 66 Pa. C.S. §§ 101-3316, and the PUC's associated regulations.

         B. Act 94 and MCT Transportation

         In 2004, the General Assembly repealed the Medallion Act and transferred jurisdiction and regulation of taxicab service within the City from the PUC to the Authority through an amendment to the Law, [3] commonly referred to as Act 94.[4] The new regulatory regime established by Act 94 is set forth in Chapter 57 of the Law. Following the passage of Act 94, Section 5708 of the Law established the Philadelphia Taxicab and Limousine Regulatory Fund (Fund), which serves as the primary funding source for the Authority's regulation of taxicab service within the City. The Fund derives its revenue from the assessments and fees paid by the three utility groups-i.e., taxicabs, limousines, and dispatchers-regulated by the Authority. 53 Pa. C.S. § 5708(a).

         Initially, the Authority's annual budget and fee schedule was established and approved using the process set forth in former Section 5707(b) of the Law.[5] In MCT Transportation, Inc. v. Philadelphia Parking Authority, 60 A.3d 899 (Pa. Cmwlth.), aff'd per curiam, 81 A.3d 813 (Pa.) and 83 A.3d 85 (Pa. 2013), however, this Court held that former Section 5707(b) of the Law was unconstitutional. In that case, Appellants and certain other partial rights taxicab companies argued that former Section 5707(b) of the Law was facially unconstitutional because it was "devoid of any guidance, standards or restrictions upon the [Authority's] power to formulate its annual budget and annual fee schedule." MCT Transportation, 60 A.3d at 913. After reviewing the language of former Section 5707(b), this Court concluded that the words "necessary to advance the purposes of this chapter" expressed a broad grant of authority and imposed no limit on the creation of a budget and fee schedule. Id. at 914. This Court explained that it was for the General Assembly to decide what was "necessary, " not the Authority. Id. This Court concluded further that "the amount that a state agency should spend on itself does not lend itself to easily identifiable standards[, ]" and, therefore, our Constitution has established an elaborate budgeting process pursuant to Section 610(b) of the Administrative Code of 1929.[6]Id. This Court also concluded that the language set forth in former Section 5708 of the Law that required the Authority to allocate certain costs in a "fair and equitable" manner did not correct the constitutional problem contained in Section 5707. Id. This Court stated that the Authority's "fee schedule is driven by what the [Authority] determines its annual budget should be, and the costs of funding that budget are apportioned among utilities in any way whatsoever, whether fair or unfair." Id. As a result, this Court held that former Section 5707(b) of the Law was an unconstitutional delegation of legislative power to the Authority in violation of the separation of powers doctrine, because "[t]he General Assembly ha[d] failed to establish standards directing the [Authority's] exercise of discretion in deciding how much to spend each year" on the regulation of taxicab and limousine service within the City.[7] Id. at 915.

         C. Act 64 - Changes to the Authority's Budget and Assessment Process Post-MCT Transportation

         Following this Court's decision in MCT Transportation, the General Assembly instituted a new process for establishing the Authority's budget, fee schedule, and annual assessments through the enactment of Act 64 of 2013 (Act 64).[8] Act 64 amended Sections 5707 and 5708 of the Law and added Sections 5701.1 and 5710 to the Law. Section 5707 of the Law, which establishes, inter alia, the procedure for the submission and approval of the Authority's budget, the calculation and payment of the annual assessment, and the maintenance of the Authority's budget-related records, now provides, in pertinent part:

         (a) Budget submission.-

(1) The [A]uthority shall prepare and, through the Governor, submit annually to the General Assembly a proposed budget consistent with Article VI of the [A]ct of April 9, 1929 (P.L. 177, No. 175), [9] known as The Administrative Code of 1929, consisting of the amounts necessary to be appropriated by the General Assembly out of the funds established under section 5708 (relating to funds) necessary for the administration and enforcement of this chapter for the fiscal year beginning July 1 of the following year. The [A]uthority shall be afforded an opportunity to appear before the Governor and the Appropriations Committee of the Senate and the Appropriations Committee of the House of Representatives regarding its proposed budget. Except as provided in section 5710 (relating to fees), the [A]uthority's proposed budget shall include a proposed fee schedule.
(2) The [A]uthority's proposed budget shall include an estimate of the amount of its expenditures necessary to meet its obligation to administer and enforce this chapter. The [A]uthority shall subtract from the expenditure estimate:
(i) The estimated fees to be collected under section 5710 during the fiscal year.
(ii) Money deposited into the [F]und as payment for assessments, fees or penalties and any other moneys collected pursuant to this chapter but not allocated during a prior fiscal year. Unallocated assessment revenue from a prior fiscal year shall be applied to reduce the portion of the total assessment applicable to the utility group from which the unallocated assessment originated.
(iii) Money budgeted for disbursement from the medallion fund, if any, as part of the [A]uthority's estimated budget.
(3) The remainder so determined, herein called the total assessment, shall be allocated to and paid by the utility groups identified in subsection (c) in the manner prescribed.
(4) If the [A]uthority's budget is not approved by March 30, the [A]uthority may assess the utility groups on the basis of the last approved operating budget. At the time the budget is approved, the [A]uthority shall make any necessary adjustments in the assessments to reflect the approved budget. If, subsequent to the approval of the budget, the [A]uthority determines that a supplemental budget is needed, the [A]uthority shall submit its request for that supplemental budget simultaneously to the Governor and the chairman of the Appropriations Committee of the Senate and the chairman of the Appropriations Committee of the House of Representatives.
(b) Records.-The [A]uthority shall keep records of the costs incurred in connection with the administration and enforcement of this chapter. The [A]uthority shall also keep a record of the manner in which it determined the amount assessed against every utility group. Such records shall be open to inspection by all interested parties. The records of the [A]uthority shall be considered prima facie evidence of the facts and data therein represented, and, in a proceeding instituted to challenge the reasonableness or correctness of any assessment under this section, the party challenging the same shall have the burden of proof.
(c) Assessments.-
(1) The following relate to assessments for taxicabs:
(i) The taxicab utility group shall be comprised of each taxicab authorized by the [A]uthority pursuant to sections 5711(c) (relating to power of [A]uthority to issue certificates of public convenience) and 5714(a) and (d)(2) (relating to certificate and medallion required).
(ii) On or before March 31 of each year, each owner of a taxicab authorized by the [A]uthority to provide taxicab service on a non-citywide basis shall file with the [A]uthority a statement under oath estimating the number of taxicabs it will have in service in the next fiscal year.
(iii) The portion of the total assessment allocated to the taxicab utility group shall be divided by the number of taxicabs estimated by the [A]uthority to be in service during the next fiscal year, and the quotient shall be the taxicab assessment. The taxicab assessment shall be applied to each taxicab in the taxicab utility group and shall be paid by the owner of each taxicab on that basis.
(iv) The [A]uthority may not make an additional assessment against a vehicle substituted for another already in taxicab service during the fiscal year and already subject to assessment as provided in subparagraph (iii). The [A]uthority may, by order or regulation, provide for reduced assessments for taxicabs first entering service after the initiation of the fiscal year.
(v) The taxicab assessment for fiscal years ending June 30, 2013, and June 30, ...

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