The Commonwealth Court has struck down as unconstitutional the provision of the Parking Authority Law that allows the Philadelphia Parking Authority to set its own annual budget and licensing fee schedule.

A unanimous en banc panel granted summary relief to six taxicab companies that claimed Section 5707(b) of the Parking Authority Law was unconstitutional because it gave the PPA full discretion over its budget and fee schedule with no limitations.

Judge Mary Hannah Leavitt, writing for the court, said Section 5707(b) transfers legislative power to the PPA in violation of the Pennsylvania Constitution.

"The General Assembly has failed to establish standards directing the Parking Authority’s exercise of discretion in deciding how much to spend each year to regulate common carriers providing taxicab and limousine service in Philadelphia. Additionally, the General Assembly has given the Parking Authority ‘no standards to guide or restrain [it] in setting fees’ in any fashion whatsoever," Leavitt said, quoting language from the Commonwealth Court’s 2010 decision in U.S. Organizations for Bankruptcy Alternatives v. Department of Banking.

Leavitt was joined by Judges Dan Pellegrini, Bernard L. McGinley, Renee Cohn Jubelirer, P. Kevin Brobson and Anne E. Covey.

Judge Bonnie Brigance Leadbetter concurred in the result as well as in Leavitt’s reasoning that Section 5707(b) violated the separation of powers; Leadbetter dissented with regard to Leavitt’s reasoning that Section 5707(b) also deprives the taxicab companies of their due process rights.
Leadbetter did not file an opinion.

In MCT Transportation v. Philadelphia Parking Authority, according to Leavitt, the PPA approved an annual budget and fee schedule for fiscal year 2013 on March 9, 2012.

The budget and fee schedule became effective April 15, 2012, and the PPA subsequently invoiced plaintiffs MCT Transportation Inc., Bucks County Services Inc., Concord Coach Limo, Concord Coach USA, Dee-Dee Cab Co. and Germantown Cab Co. for their fees, according to Leavitt.

When the plaintiffs failed to pay their fees by June 15, 2012, the PPA issued citations to them, threatening to impound their vehicles and impose fines, penalties and late fees, as well as suspend or revoke their certificates of public convenience, Leavitt said.

The plaintiffs filed a petition for review with the Commonwealth Court, arguing that the PPA has no statutory power to regulate them and that the PPA improperly charged them a higher fee per vehicle than medallion taxicabs, according to Leavitt.

The plaintiffs further argued that Section 5707(b) is unconstitutional because it provides no guidance and places no restrictions on the PPA’s ability to set its own budget and fee schedule, Leavitt said.

According to Leavitt, Section 5707(b) provides that the Parking Authority may set its annual budget and fee schedule in the amounts "necessary to advance the purposes of this chapter."

"First, the words ‘necessary to advance the purposes of this chapter’ impose no limit, unless one believes that in their absence the Parking Authority would adopt a budget to advance the purposes of another chapter or to set up a string of adult bookstores," Leavitt said, adding that it’s the legislature’s job to decide what is necessary for the PPA to function properly.

Leavitt said the amount the PPA should budget for itself also "does not lend itself to easily identifiable standards."

"This is why our constitution provides for an elaborate budgeting process that requires ‘inquiries and investigations’ by the governor before a budget request is even submitted to the legislature for its review," Leavitt said.

Leavitt also noted that while Section 5707(b) states that the PPA should allocate non-assignable costs to the limousine and taxicab accounts of the Philadelphia Taxicab and Limousine Regulatory Fund in a "fair and equitable manner," that is too inchoate a standard to survive a separation of powers challenge.

In addition, Leavitt said, Section 5707(b) makes no such requirement with regard to the PPA’s discretion to set its own fee schedule.

"The Parking Authority’s fee schedule is driven by what the Parking 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," Leavitt said.

Moving on to the due process issue, Leavitt agreed with the plaintiffs’ argument that Section 5707(b) provides no remedy by which taxicab companies may challenge the PPA’s fee schedule.

"Section 5707(b) requires the taxicab companies to pay a fee to the Parking Authority if they wish to stay in business," Leavitt said. "The fee can be excessive and confiscatory, but there is no relief to the utilities subject to such a fee. The taxicab companies cannot challenge the fee schedule in a hearing ‘at any stage in the process,’ either before or after the fee schedule becomes effective."

On the same day it issued its opinion in MCT Transportation, the Commonwealth Court also decided a nearly identical companion case, Philadelphia Regional Limousine Association v. PPA.

Leavitt, who also penned the opinion in that case, said the holding in MCT Transportation was dispositive.

Counsel for the plaintiffs in both cases, Michael Henry of Philadelphia, said he and his clients were pleased with the court’s rulings.

"We think the court correctly decided that the statute was unconstitutional," Henry said.

Dennis Weldon, the PPA’s general counsel, said the agency disagreed with the decision and has already appealed it to the state Supreme Court.

Zack Needles can be contacted at 215-557-2493 or zneedles@alm.com. Follow him on Twitter @ZNeedlesTLI.

(Copies of the 39-page opinion in MCT Transportation v. Philadelphia Parking Authority, PICS No. 13-0371, and the 10-page opinion in Philadelphia Regional Limousine Association v. Philadelphia Parking Authority, PICS No. 130530, are available from Pennsylvania Law Weekly. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •