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Opinion: Does Executive Order 14 Cross the Threshold of Constitutionality?

Gov. Christie's measure to capture ratepayer funds dedicated to clean energy jobs effectively rewrites a statute--for which he has no legal basis.

In his brief time in office, Gov. Chris Christie has issued a series of executive orders. But it’s Executive Order 14 that might deserve the greatest scrutiny--since it raises serious questions about whether a state constitutional threshold has been crossed.

Executive Order 14 transfers some $550 million in state funds into the General Treasury to close an expected budget deficit this fiscal year of more than $2 billion. Although the office of New Jersey Governor has been called the nation’s most powerful (“an American Caesar,” in the words of columnist George F. Will), governors--even in times of crisis--are constrained by existing law. But Gov. Christie did not ask for legislation before issuing his order. As I testified in a public hearing before the Assembly Budget Committee, the state constitution does not permit the governor to assert such power--making this executive order unconstitutional.

A little background. Section 12 of the Electric Discount and Energy Competition Act (EDECA) lets public utilities impose a “societal benefits charge” (SBC) on gas and electric bills. The New Jersey Board of Public Utilities (BPU) sets the rates, and it controls how the money that’s generated is spent on the six purposes set out in EDECA: nuclear plant decommissioning; the clean-up of contaminated sites; the Universal Services Fund for indigent ratepayers; consumer education; energy efficiency; and renewable energy. The last two of those are the source of the Clean Energy Fund.

Gov. Christie's measure, however, orders the capture of $158 million in unexpended balances from that fund, diverting this money into plugging the state budget hole. Thus by a stroke of the pen has the governor set aside a statute signed into law by the last Republican to hold the office, Gov. Christine Todd Whitman, in 1999. A public utility rate dedicated to green jobs has been transformed into what looks no different from a tax--as only state tax dollars may be used to pay the State’s bills.

That’s why I testified that this capture of ratepayer funds dedicated to clean energy jobs is unconstitutional. It is why I filed a suit on behalf of the Mid-Atlantic Solar Energy Industries Association in the appellate division challenging the diversion. The Governor may have power to transfer other state tax moneys--such as local school aid--to closing a budget hole, but there is no legal basis for him to issue an order that effectively rewrites a statute.

I also testified that the order is simply unwise. Set to take effect immediately, it nullifies landmark legislation that has vaulted New Jersey into the forefront of states promoting green energy jobs that politicians from Gov. Christie to President Obama have touted as the next wave of employment growth and innovation.

Further, this executive order differs significantly from those issued by previous administrations. Gov. Tom Kean, for example, signed an order that stopped construction in wetlands to pressure balky lawmakers into enacting the Freshwater Wetlands Act. Gov. Brendan Byrne signed an order to save the “Pinelands” until laws were passed preserving this “last wilderness” and protecting its underground water reservoirs. Both were praised by environmentalists and the media. But both governors used the orders to bargain with lawmakers; once legislators passed the laws that they wanted, the orders were lifted. This executive order, on the other hand, has nothing to do with bargaining, and more to do with bypassing legislators--regardless of Gov. Christie’s contention that he’s merely attempting to meet his constitutional duty to balance the budget.

If Gov. Christie wants to use Clean Energy Funds for general tax purposes, he should ask the legislature--controlled by Democrats--to amend EDECA and convert what are now gas and electric rates into something that looks like a general tax. As unattractive as that may seem, it would allow him to follow the well-marked paths of Byrne and Kean, using the executive order as a persuasive measure for amending legislation, not as a tool to govern by fiat. Better yet, it would put the governor on the right side of the Constitution.

R. William Potter is an attorney in private practice specializing in issues confronting clean energy providers. He is based in Princeton.

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