Snyder Bros., Inc. v. Pa. Pub. Util. Comm'n
198 A.3d 1056
Pa.2018Background
- Snyder Brothers, Inc. (SBI) operated 45 unconventional vertical wells using hydraulic fracturing in 2011–2012; PUC’s I&E audited producer reports and assessed unpaid impact fees, penalties, and interest.
- Act 13 imposes an annual per-well impact fee on unconventional wells; a "vertical gas well" is defined as producing more than a "stripper well," and a "stripper well" is defined as "incapable of producing more than 90,000 cubic feet of gas per day during any calendar month." 58 Pa.C.S. § 2301.
- Central dispute: whether "any calendar month" means (a) at least one month in the year (PUC’s interpretation) or (b) a single/some month such that if production falls to ≤90,000 cf/day in any one month the well is a stripper well for the year (SBI/PIOGA/Commonwealth Court’s majority).
- ALJ and PUC concluded "any" was ambiguous and deferred to the PUC’s longstanding administrative interpretation: exceeding 90,000 cf/day in any one month triggers the annual impact fee; PUC assessed fees for the wells.
- Commonwealth Court (en banc) reversed, holding "any" unambiguous and meaning one/singular month, so a single month at or below 90,000 cf/day makes the well a stripper well for the year; PUC appealed to the Pennsylvania Supreme Court.
Issues
| Issue | Plaintiff's Argument (SBI) | Defendant's Argument (PUC) | Held |
|---|---|---|---|
| Meaning of "any calendar month" in "stripper well" definition | "Any" is plain and means one/singular month; if production ≤90,000 cf/day in any one month, well is a stripper well for the year (no fee). | "Any" is ambiguous; context and Act 13’s structure show legislature intended to capture wells that exceed 90,000 cf/day even for a single month — fee applies for that year. | Court: "any" is ambiguous; applying statutory construction and context, fee applies if a well exceeds 90,000 cf/day in any single calendar month of the year. (PUC interpretation adopted.) |
| Applicability of related provisions (restimulated/nonproducing wells) to interpretation | These provisions are distinct; comparison to restimulation language is not dispositive. | Restimulation and nonproducing-well provisions use similar timing language ("during a calendar month"), supporting that exceeding 90,000 cf/day in any month triggers the fee. | Court: Read provisions harmoniously — related sections support PUC reading that one month over 90,000 cf/day triggers fee. |
| Deference to PUC administrative interpretation | PUC orders are not entitled to great deference because not promulgated via formal rulemaking and this is a pure legal question. | PUC long-standing, consistent interpretation (multiple orders since 2012) merits deference under statutory-construction canons. | Court: Gave weight to PUC’s longstanding administrative interpretation as consistent, reasonable, and aligned with legislative purpose. |
| Whether the impact fee is a tax / penal nature requiring strict/lenient construction | Fee is essentially a tax and/or penal; apply narrow construction in favor of producers (rule of lenity / tax presumption). | Impact fee is remedial, not a severance tax; penalty provisions are enforcement mechanisms—do not convert the scheme into a penal/tax statute requiring strict construction. | Court: Fee is remedial/administrative; strict tax/penal presumptions unnecessary; standard statutory-construction rules govern. |
Key Cases Cited
- Robinson Township v. Commonwealth, 147 A.3d 536 (Pa. 2016) (describing environmental and community impacts of unconventional drilling and context for regulatory measures)
- Commonwealth v. Davidson, 938 A.2d 198 (Pa. 2007) (discussion of the interpretive scope of the word "any" in statutory enumeration)
- Dechert L.L.P. v. Commonwealth of Pennsylvania, 998 A.2d 575 (Pa. 2010) (taxing statutes need not always receive the narrowest construction; construction must effectuate legislative intent)
- PUC v. Andrew Seder/The Times Leader, 139 A.3d 165 (Pa. 2016) (agency definitions supplied in statute are binding and agency interpretations merit consideration)
- Trust Under Agreement of Taylor, 164 A.3d 1147 (Pa. 2017) (statutory language must be read in context and harmonized with other provisions)