Court Opinion

ID: 4960755
Source: CourtListenerOpinion
Date Created: 2021-09-24 14:55:45.552348+00
Date Added: 2024-06-11T08:15:47.787990
License: Public Domain

DISSENTING OPINION BY
Judge PELLEGRINI.
I respectfully dissent. The majority reverses the orders of the Board of Finance and Review (Board) subjecting Adams Electric Cooperative and other electric cooperative corporations (collectively, the Cooperatives) to the Public Utility Realty Tax1 because the majority finds that the Cooperatives, under Section 1101-A(2) of the Public Utility Realty Tax Act, 72 P.S. § 8101-A(2) (commonly known as PUR-TA), are not “electric cooperative corporation[s] furnishing public utility service” for purposes of taxation. (Emphasis added). I disagree with the majority because, under that provision, the PURTA tax is assessed upon (1) entities regulated by the Pennsylvania Public Utility Commission (PUC) or other similar state or federal agencies and (2) electric cooperatives that otherwise are not regulated but that furnish services similar to that of public utilities. Because the Cooperatives are unregulated electric cooperatives that furnish services similar to public utilities, I would hold that they are subject to PURTA and would affirm the orders of the Board.
The Cooperatives are all non-profit electric cooperative corporations formed under and subject to the former Electric Cooperative Corporation Act2 and the Electric Cooperative Law of 1990, 15 Pa.C.S. §§ 7301-7359 (Electric Cooperative Law). The Cooperatives own property necessary to and used for the transmission or distribution of electric energy, and they furnish electric energy on a wholesale basis to their member cooperatives or furnish electric energy on a retail basis to their members. The PUC has never regulated the services the Cooperatives provide to their members.
The present dispute began in 1998 when the Department of Revenue (Department) issued notices of assessment for payment of PURTA tax for the 1997 tax year. The PURTA tax is imposed by the Commonwealth on the state taxable value of utility realty. 72 P.S. § 8102-A. After the Cooperatives and the Department litigated several other issues unrelated to the ones presented here, see Majority Op. at 4-5 (outlining the procedural history of this case), this Court directed that the Cooperatives file stipulations of fact and applications for partial summary judgment. At issue in this case is whether the Cooperatives are subject to the PURTA tax.
The majority holds that the Cooperatives are not subject to the PURTA tax because they do not “furnish public utility service,” reasoning that if the General Assembly desired that all cooperatives be subject to PURTA, it would not have limited the definition of “public utility” to only those electric cooperatives “furnishing public utility service.” The majority also reasons that although PURTA is a tax statute, its subject matter is related to and must be read in conjunction with the Public Utility Code, 66 Pa.C.S. §§ 101-3316, and the Electric Cooperative Law. In effect, the majority creates a “regulation = *1171taxation” rule which is at odds with Section 1101-A(2) of PURTA.
The question of whether a specific entity is subject to regulation is one different from the question of whether that same entity is subject to taxation. The former requires an inquiry into the power of the regulatory body to subject a particular agency to its requirements as outlined in the agency’s enabling statute. For instance, there is no question that electric cooperatives have been deemed by the General Assembly to fall outside the regulatory reach of the PUC. 66 Pa.C.S. § 102 (excluding bona fide electric cooperatives from the definition of “public utility”); see also Pennsylvania Electric Company v. Morrison, 354 Pa. 472, 47 A.2d 810 (1946). As a result, electric cooperatives such as the Cooperatives in this case need not follow the requirements of the Public Utility Code and the regulations of the PUC that regulated utilities must follow.
For purposes of PURTA, however, whether the Cooperatives are subject to taxation is unrelated to whether or not they are regulated. This is clear from the definition of “public utility” under PURTA. It provides that a “public utility” is:
Any person, partnership, association, corporation or other entity furnishing public utility service under the jurisdiction of the Pennsylvania Public Utility Commission or the corresponding regulatory agency of any other state or of the United States on December 31 of the taxable year; and any electric cooperative corporation furnishing public utility service on December 31 of the taxable year, but shall not mean any public utility furnishing public utility sewage services, or municipality or municipal authority furnishing public utility services.
72 P.S. § 8101-a(2). Under this definition, the Commonwealth can assess the PURTA tax on (1) any regulated utilities furnishing public utility service and (2) any unregulated cooperatives that furnish public utility service. It also specifically exempts only the following entities: (1) any public utilities furnishing sewage services and (2) any municipalities or municipal authorities furnishing public utility services.
Under the majority’s view, PURTA does not apply and, consequently, an electric cooperative is not subject to the PURTA tax unless that cooperative “furnishes public utility service” in the regulatory sense of the word. If that were so, PURTA would only apply to regulated public utilities and there would be no reason to add the clause relating to electric cooperatives furnishing public utility service. By including that clause and by not specifically exempting electric cooperatives from PURTA, the General Assembly must have meant to subject electric cooperatives to PURTA even though such entities are unregulated because the service they provide is similar to that of a regulated utility. Under the majority’s interpretation, however, electric cooperatives are not subject to the PURTA tax unless the service they provide would bring them within the jurisdiction of the PUC or other similar regulatory body. What this interpretation does, essentially, is eliminate the entire clause that applies to electric cooperatives under Section 1101-A(2) of PURTA because none of the services provided by cooperatives fall within the jurisdiction of the PUC.
In addition, the PURTA tax is, at bottom, a tax on the property used in the furnishing of utility services, not a tax on the type of operations the company is engaged in. When property is used to provide utility service, whether the public receives that service or members of a cooperative receive that service, the property so used is properly subject to the PURTA tax. Under the majority’s interpretation, the focus is no longer on the property *1172subject to taxation, but on whether the cooperative is engaged in “furnishing public utility service” in the strict, regulatory sense of the phrase. This is at odds with the plain words of Section 1101-A(2) of PURTA.
For these reasons, I respectfully dissent.
Judge LEADBETTER joins.

. Act of June 21, 1937, P.L.1969, as amended, formerly 15 P.S. §§ 12401-12438, repealed by the Act of December 19, 1990, P.L. 834. A similar act is now found in 15 Pa.C.S. §§ 7301-7359.