Hommrich v. PUC – May 12, 2020 – Cmwlth. Court – reported decision
This is a PUC case but has some issues of general relevance.
Legislative Rule-Making v. Interpretive Rule-Making
The Supreme Court of Pennsylvania “has long recognized the distinction in administrative agency law between the authority of a rule adopted pursuant to an agency’s legislative rule-making power and the authority of a rule adopted pursuant to interpretive rule-making power.” Popowsky v. Pennsylvania Public Utility Commission, 910 A.2d 38, 53 (Pa. 2006) (citations omitted).
“Legislative rule-making [emphasis added] is an exercise of legislative power by an administrative agency, pursuant to a grant of legislative power by the legislative body, and is valid and is as binding upon a court as a statute if it is: (a) within the granted power, (b) issued pursuant to proper procedure, and (c) reasonable.” Id.; accord Tire Jockey Service, Inc. v. Department of Environmental Protection, 915 A.2d 1165, 1186 (Pa. 2007). “Generally, a legislative regulation establishes ‘a substantive rule creating a controlling standard of conduct.’” Borough of Pottstown v. Pennsylvania Municipal Retirement Board, 712 A.2d 741, 743 (Pa. 1998) (quoting Slippery Rock Area School District v. Unemployment Compensation Board of Review, 983 A.2d 1231, 1236 (Pa. 2009)).
“An interpretative rule [emphasis added] on the other hand depends for its validity not upon a law-making grant of power, but rather upon the willingness of a reviewing court to say that it in fact tracks the meaning of the statute it interprets.” Popowsky, 910 A.2d at 53. Legislative regulations are binding whereas interpretative regulations are merely entitled to deference. Slippery Rock, 983 A.2d at 1236.
All regulations, whether legislative or interpretative, “must be consistent with the statute under which they were promulgated.” Popowsky, 910 A.2d at 53.
PUC’s Granted Power – does the regulation fall within Legislature’s grant of authority?
“To determine whether a regulation is adopted within an agency’s granted power, we look for statutory language authorizing the agency to promulgate the legislative rule and examine that language to determine whether the rule falls within the grant of authority.” Marcellus Shale Coalition v. Department of Environmental Protection, 216 A.3d 448, 459 (Pa. Cmwlth.), appeals quashed, 223 A.3d 655 (Pa. 2019) (citing Slippery Rock, 983 A.2d at 1239-41).
We consider “the purpose of the statute and its reasonable effect” and whether “the regulation is consistent with the enabling statute.” Id. “Clearly[,] the legislature would not authorize agencies to adopt binding regulations inconsistent with the applicable enabling statutes.” Slippery Rock, 983 A.2d at 1241.
When regulation conflicts with the statute
“When . . . a regulation presents ‘an actual conflict with the statute,’ we cannot reasonably understand the regulation to be within the agency’s ambit of authority, and the statute must prevail.” Marcellus Shale, 216 A.3d at 459 (quoting AMP Inc. v. Commonwealth, 814 A.2d 782, 786 (Pa. Cmwlth. 2002), aff’d, 852 A.2d 1161 (Pa. 2004)). Indeed, “a regulation that is at variance with a statute is ineffective to change the statute’s meaning.” Geisinger Health System v. Bureau of Workers’ Compensation Fee Review Hearing Office (SWIF), 138 A.3d 133, 139 (Pa. Cmwlth. 2016).
“That is so because ‘the power of an administrative agency to prescribe rules and regulations under a statute is not the power to make law, but only the power to adopt regulations to carry into effect the will of the Legislature as expressed by the statute.’” Id. (quoting Volunteer Firemen’s Relief Association of the City of Reading v. Minehart, 227 A.2d 632, 635-36 (Pa. 1967)). “When an agency adopts regulations at variance with the statute, the regulations, and not the statute, fall by the wayside.” Id. (citing Union Electric Corporation v. Board of Property Assessment, Appeals and Review of Allegheny County, 721 A.2d 823 (Pa. Cmwlth. 1998), rev’d on other grounds, 746 A.2d 581 (Pa. 2000)).
Sometimes, the General Assembly confers broad power. For example, in Section 201(a) of the Unemployment Compensation Law,7 the General Assembly vested power in the Department of Labor and Industry (L&I) “to adopt, amend, and rescind such rules and regulations . . . as it deems necessary or suitable. Such rules and regulations shall not be inconsistent with the provisions of this act.” In Slippery Rock, our Supreme Court described this power as “broad” and one that encompassed L&I’s authority “to define by regulation terms otherwise undefined by the statute.” Slippery Rock, 983 A.2d 1239. In Pennsylvania Human Relations Commission v. Uniontown Area School District, 313 A.2d 156, 168-71 (Pa. 1973), the Supreme Court held that similar statutory language in Section 7(d) of the Pennsylvania Human Relations Act8 allowed the PHRC to promulgate a regulation that defined “de facto segregation” in such a way that it imposed strict desegregation standards and new accompanying duties on public schools. In contrast, the powers the General Assembly conferred to the PUC under the AEPS Act are much narrower. Sunrise Energy, 148 A.3d at 901. . . .
We recognize the PUC’s broad authority in regulating public utilities under the Code. As this Court recently opined, “the General Assembly intended the PUC to occupy the field of public utility regulation, in the absence of an express grant of authority to the contrary.” Delaware Riverkeeper Network v. Sunoco Pipeline L.P., 179 A.3d 670, 692 (Pa. Cmwlth.), appeal denied, 192 A.3d 1106 (Pa. 2018). However, we are not dealing with “public utilities” here. See 66 Pa. C.S. §102 (definition of “public utility”). Rather, the AEPS Act applies to “customer-generators,” which by definition are not public utilities. See Section 2 of the AEPS Act, 73 P.S. §1648.2.
We, therefore, conclude that the PUC’s authority in this matter derives solely from the AEPS Act, and not the Code. . . .Under the AEPS Act, the PUC’s authority is limited to developing “technical and net metering interconnection rules.” Section 5 of the AEPS Act, 73 P.S. §1648.5.
Reasonableness
In deciding whether a legislative regulation is reasonable. . . .a court may not substitute its own judgment for that of the agency. To demonstrate that the agency has exceeded its administrative authority, it is not enough that the prescribed system of accounts shall appear to be unwise or burdensome or inferior to another. Error or lack of wisdom in exercising agency power is not equivalent to abuse. What has been ordered must appear to be so entirely at odds with fundamental principles as to be the expression of a whim rather than an exercise of judgment. Tire Jockey, 915 A.2d at 1186 (internal quotations and citations omitted); accord Slippery Rock, 983 A.2d at 1242.
“[A]ppellate courts must accord deference to the agency and may only overturn an agency determination if the agency acted in bad faith or the regulations constituted a manifest or flagrant abuse of discretion or a purely arbitrary execution of the agency’s duties or functions.” Popowsky, 910 A.2d at 55; accord Tire Jockey, 915 A.2d at 1186.
However, when there is express, contradictory language in the statute conferring regulatory authority, a proposed regulation would be deemed “unreasonable.” See Keith v. Commonwealth, 151 A.3d 687, 695 (Pa. Cmwlth. 2016). Nevertheless, “where legislative rules are adopted within the agency’s granted power and issued pursuant to proper procedure, they enjoy a presumption of reasonableness.” Marcellus Shale, 216 A.3d at 460.
