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NJ Superior Court, Appellate Division, Upholds Action by Legislature to Transfer Monies Deposited into Clean Energy Fund to General Fund

By Vincent J. Mangini

On March 4, 2011, the Appellate Division of the New Jersey Superior Court, in a case captioned Mid-Atlantic Solar Energy Industries Association v. Christie, reviewed a challenge to Section six of the 2010 Supplemental Appropriations Act (P.L. 2010, c. 19), which authorized the reallocation of $158,000,000 collected under the Electric Discount and Energy Competition Act (EDECA) and deposited into the Clean Energy Fund for purposes other than those expressly set forth in the EDECA.  'The question presented by this appeal is whether the Legislature has the power to authorize another use of the portion of those monies deposited in the Clean Energy Fund, specifically their transfer into the General Fund by means of an Appropriations Act.'

In evaluating this issue, the court looked to past practices and found that '[n]otwithstanding the limitations the EDECA places upon the use of the money collected under the societal benefits charge, the Legislature has repeatedly included provisions in Appropriations Acts authorizing distributions from the Clean Energy Fund that are not provided by the EDECA, including transfers into the General Fund.'  Additionally, the court consulted case precedent and determined that the Appellate Division and the Supreme Court '[h]ave long recognized that the Legislature has the authority to change or suspend the operation of its prior enactments through an Appropriations Act.'  In light of these findings, the court upheld Section six of the 2010 Supplemental Appropriations Act as a legitimate exercise of legislative authority, which '[h]ad the same operative effect for the 2009-10 State fiscal year as an amendment to N.J.S.A. 48:3-60(a) to authorize appropriation of money collected thereunder for any purpose the Legislature might determine rather than solely the purposes originally set forth in this statute.'

The Appellate Division also rejected the plaintiff's argument that the monies deposited into the Clean Energy Fund are private rather than public funds (since they are primarily generated by the imposition of the societal benefits charge upon public utility customers) and, therefore, may not be moved into the General Fund by the Legislature.  According to the court,

[i]f the characterization of the money in the Clean Energy Fund as ‘public' were a prerequisite to upholding the Legislature's authority to transfer a portion of it into the General Fund through an Appropriations Act, the pervasive role of the Legislature and the [Board of Public Utilities] in authorizing this charge and determining the uses of the money collected thereunder would warrant this characterization.

In any event, we do not view the characterization of the money collected under social benefits charge as ‘public' or ‘private' to be dispositive of the Legislature's authority to authorize a transfer of some of that money into the General Fund.  However, this money may be characterized, the fact that the Legislature has authorized its collection and directed the purposes to which it may be allocated means that the Legislature retains the authority to change those permitted purposes.

By this case, the Appellate Division has reconfirmed that State government may transfer monies expressly reserved for clean energy programs (or for other specified purposes) to the General Fund and use them for any legitimate public function.  The court's decision in Mid-Atlantic Solar Energy Industries Association v. Christie may be viewed on Westlaw at 2011 WL 744860 (N.J.Super. A.D.) and has been approved for publication.

Full post as published by New Jersey Law Blog on March 23, 2011 (boomark / email).