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De Mejias v. Malloy

United States District Court, D. Connecticut

October 25, 2018

LETICIA COLON DE MEJIAS, ET. AL., Plaintiff,
v.
DANNEL P. MALLOY, in his official Capacity as Governor of the State of Connecticut, ET AL. Defendants.

          RULING RE: PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT (DOC. NO. 25) & DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (DOC. NO. 28)

          Janet C. Hall United States District Judge.

         I. INTRODUCTION

         The plaintiffs, Leticia Colon de Mejias, the Connecticut Fund for the Environment, Inc., Fight the Hike, Energy Efficiencies Solutions, LLC, Best Home Performance of Connecticut, Connecticut Citizen Action Group, New England Smart Energy Group, LLC, CT Weatherproof Insulation, LLC, Steven C. Osuch, Energy ESC, LLC, Jonathan Casiano, and Bright Solutions, LLC, (collectively, “plaintiffs”), filed this action against the Governor, Treasurer, and Comptroller of the State of Connecticut (collectively, “defendants”) in their official capacities. See generally Complaint (“Compl.”) (Doc. No. 1). The plaintiffs challenge the constitutionality of Connecticut's Public Act 17-2, as amended by Public Act 18-81 (the “Act”). Id. at ¶ 1.

         The Act partially depletes two legislatively created funds: the Energy Conservation and Load Management Fund (the “C&LM Fund”) and the Clean Energy Fund, both of which are financed by surcharges on the electricity bills of certain Connecticut electricity users, including all of the plaintiffs in this case. Local Rule 56(a)1 Stipulated and Agreed Statement of Undisputed Facts (“Stip. Facts”) (Doc. No. 26) at ¶¶ 3-12, 20, 21, 29, 30, 64-86. Specifically, the Act transfers money from the C&LM Fund and the Clean Energy Fund to the state's general purpose fund (the “General Fund”). Id. at ¶¶ 65-67. The plaintiffs claim that this transfer violates the Contract Clause of the United States Constitution and the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution. Compl. at ¶¶ 64-80. In addition, they assert various claims under Connecticut state law. Id. at ¶¶ 81-97.

         Pending before the court are the parties' Cross-Motions for Summary Judgment. Plaintiffs' Motion for Summary Judgment (“Pls.' Mot.”) (Doc. No. 25); Defendants' Motion for Summary Judgment (“Defs.' Mot.”) (Doc. No. 28). The plaintiffs seek summary judgment on their federal constitutional claims and their state law claim of promissory estoppel. See Pls.' Mot. at 1. The defendants seek summary judgment on all of the plaintiffs' claims. See Defs.' Mot. at 1.

         For the reasons set forth below, the plaintiffs' Motion for Summary Judgment is denied. The defendants' Motion for Summary Judgment is granted as to the plaintiffs' federal constitutional claims, and the court declines to exercise supplemental jurisdiction over the plaintiffs' remaining state law claims.

         II. BACKGROUND

         The parties have stipulated to the following facts. See Stip. Facts ¶ 1.

         A. Electric Distribution Service in Connecticut

         Two types of entities provide electric distribution service in Connecticut: (1) investor-owned electric distribution companies (the “EDCs”), and (2) municipal electric utilities (the “Municipal Utilities”). Stip. Facts at ¶ 17. The EDCs serve approximately 1.5 million residential and business customers in Connecticut, while the Municipal Utilities serve roughly 125, 000 customers. Id. at ¶ 18.

         Pursuant to section 16-2 of the Connecticut General Statutes, the Public Utilities Regulatory Authority (“PURA”) regulates the rates and services of the EDCs, but not those of the Municipal Utilities. Id. at ¶ 45. Specifically, each EDC operates pursuant to a tariff that is approved by PURA. Id. at ¶ 46. The tariffs set forth the rate schedules, terms of service, rules and regulations of service, and standard template agreements that the EDCs use in operating their electric distribution systems. Id. at ¶ 47. The tariffs may be revised, amended, supplemented, or changed by PURA, either upon accepting a filing by the EDCs or upon PURA's direction to the EDCs. Id. at ¶ 49. PURA typically approves new tariffs for the EDCs four times each year. Id.

         B. The Funds

         In 1998, the Connecticut General Assembly (the “General Assembly”) passed legislation creating the two funds at issue in this case: (1) the Energy Conservation and Load Management Fund (the “C&LM Fund”), which is codified at section 16-245m of the Connecticut General Statutes; and (2) the Clean Energy Fund, which is codified at section 16-245n of the Connecticut General Statutes. See id. at ¶¶ 19, 22, 29. Collectively, these two Funds will be referred to as the “Energy Funds.”

         1. The C&LM Fund

         Section 16-245m governs the creation and disbursement of the C&LM Fund. Specifically, it directs PURA to assess “a charge of three mills per kilowatt hour of electricity sold to each end use customer of an [EDC]” (the “C&LM Charge”). Conn. Gen. Stat. Ann. § 16-245m(a)(1). The money collected from this electricity-bill surcharge is deposited in the C&LM Fund, which the EDCs are required to create and hold “separate and apart from all other funds or accounts.” Conn. Gen. Stat. Ann. § 16-245m(b).

         Section 16-245m mandates that the money in the C&LM Fund be spent on “energy conservation and market transformation initiatives” that have been approved by Connecticut's Commissioner of Energy and Environmental Protection (the “Commissioner”). Conn. Gen. Stat. § 16-245m(b). Specifically, EDCs are directed to submit a Conservation and Load Management Plan (the “Plan”) to the Energy Conservation Management Board (the “Board”) every three years. Conn. Gen. Stat. § 16-245m(d)(1). The Plan details energy conservation and efficiency programs that will be financed by the C&LM Fund. Conn. Gen. Stat. § 16-245m(d)(5) (providing examples of programs that may be financed by the C&LM Fund). The Board, which is appointed and convened by the Commissioner, advises and assists the EDCs in the development the Plan. Conn. Gen. Stat. § 16-245m(c), (d)(1). Once the Board has approved the Plan, it transmits the Plan to the Commissioner for review. Conn. Gen. Stat. § 16-245m(d)(1). The Commissioner, in turn, “shall . . . approve, modify, or reject said plan[.]” Conn. Gen. Stat. § 16-245m(d)(1). After the Commissioner has approved the Plan, PURA authorizes disbursements from the C&LM Fund to implement the Plan.[1]Conn. Gen. Stat. § 16-245m(b).

         If the budget needed to implement the Plan exceeds the revenues collected by the C&LM Charge, PURA must make up the difference by assessing a second charge of no more than three mills per kilowatt of electricity sold to each EDC customer. Conn. Gen. Stat. § 16-245m(d)(1). This second charge is known as the “conservation adjustment mechanism” charge (the “CAM Charge”). Stip. Facts at ¶ 37.

         Together, the C&LM Charge and the CAM Charge collect approximately $156 million per year from EDC customers. Stip. Facts at ¶ 39. These monies fund a variety of energy efficiency and renewable energy programs that help EDC customers reduce the cost and amount of energy used in their homes and businesses. Id. at ¶¶ 23, 24. In addition, these programs work to “advance the efficient use of energy, reduce air pollution, reduce negative environmental impacts of greenhouse gas emissions, and promote economic development and energy security across the State.” Id. at ¶ 23. The customers of Municipal Utilities are not entitled to use these programs, because those customers do not contribute to the C&LM Fund. Id. at ¶¶ 27, 28. Instead, Municipal Utilities are required by a separate law to implement their own conservation and load management programs, which are funded by a separate charge assessed on Municipal Utility customers. See Id. at ¶ 36.

         2. The Clean Energy Fund

         Section 16-245n governs the creation and administration of the Clean Energy Fund. It requires PURA to assess a charge of not less than one mill per kilowatt hour of electricity sold to each EDC customer (the “Clean Energy Charge”). Conn. Gen. Stat. § 16-245n(b). The money collected from this electricity-bill surcharge is deposited into the Clean Energy Fund, which is administered by the Connecticut Green Bank (the “Green Bank”). Conn. Gen. Stat. § 16-245n(b), (c).

         The Green Bank is a legislatively created financial institution that leverages public and private funds to accelerate the deployment of clean energy technologies in Connecticut. Stip. Facts at ¶ 31; Conn. Gen. Stat. 16-245n(d)(1)(A) (establishing the Green Bank “as a body politic and corporate, constituting a public instrumentality and political subdivision of the state of Connecticut established and created for the performance of an essential public and governmental function.”). Towards that end, Section 16-245n(c) authorizes the Green Bank to use the Clean Energy Fund “to promote investment in clean energy in accordance with a comprehensive plan developed by [the Green Bank][.]” See also Stip. Facts at ¶ 30.

         C. The Act

         On October 27, 2017, the Governor signed Public Act 17-2.[2] Stip. Facts at ¶ 64. Section 683 of Public Act 17-2 amended section 16-245m of the Connecticut General Statutes by directing the transfer of $63.5 million each year from the C&LM Fund to Connecticut's General Fund for fiscal years 2018 and 2019.[3] Id. at ¶ 65. Section 685 of Public Act 17-2 also amended section 16-245n of the Connecticut General Statutes by directing the transfer of $14 million each year from the Clean Energy Fund to the General Fund for fiscal years 2018 and 2019. Id. at ¶ 66.

         On May 15, 2018, the Governor signed Public Act 18-81, which reduced the amount of money transferred from the C&LM Fund to the General Fund in fiscal year 2019 from $63.5 million to $53.5 million.[4] Id. at ¶ 67. However, Public Act 18-81 left unchanged the $63.5 million transfer from the C&LM Fund for fiscal year 2018 and the $14 million transfer from the Clean Energy Fund for each of fiscal years 2018 and 2019. Id.

         The required transfers for fiscal year 2018 occurred on June 25, 2018. Id. at ¶ 86. On that date, a total of $77.5 million were transferred from the C&LM Fund ($63.5 million) and the Clean Energy Fund to the General Fund ($14 million). Id.; Exhibits 18A & 18B (Doc. No. 26-6). The transfers for fiscal year 2019 are scheduled to occur on June 25, 2019. Stip. Facts at ¶ 74.

         III. ...


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