Colon de Mejias v. Malloy

The Second Circuit Court of Appeals affirmed the rejection of constitutional claims challenging Connecticut’s transfers of funds from the Energy Conservation and Load Management Fund and Clean Energy Fund (the Energy Funds) to the State’s General Fund. The Second Circuit agreed with the federal district court for the District of Connecticut that the appellants—who were electric distribution company customers who paid charges to the Energy Funds pursuant to tariffs—did not have a contractual right to prevent transfer of the funds. The Second Circuit therefore found that the appellants failed to plead a violation of the Contract Clause. The Second Circuit also found that the appellants did not have a property interest in monies in the Energy Funds. The appellate court therefore agreed that the law transferring the funds was not a tax, and that the taxpayer standing doctrine—which provides that taxpayers generally have standing to challenge imposition of taxes but not tax revenue expenditures—barred the appellants’ Equal Protection claim, which was based on allegations that the transfers to the General Fund amounted to a tax that customers of municipalities were not required to pay.