Central Hudson Gas & Electric Corp. v. Public Service Commission

Brief Fact Summary.

The appellant challenges the regulation of the Public Service Commission of the State of New York that completely bans promotional advertising by an electrical utility.

Synopsis of Rule of Law.

The First Amendment, as applied to the States through the Fourteenth Amendment, protects commercial speech from unwarranted governmental regulation.

Facts.

In 1973, the Commission ordered electric utilities in New York State to cease all advertising that promotes the use of electricity. The Commission declared that all promotional advertising contrary to the national policy of conserving energy. Still, the Commission adopted the restriction because it was deemed likely to result in some dampening of unnecessary growth in energy consumption. The Commission’s order permitted informational advertising designed to encourage shifts of consumption from peak demand times to periods of low electricity demand.

Issue.

Does a regulation of the Public Service Commission of the State of New York violate the First and Fourteenth Amendments because it completely bans promotional advertising by an electrical utility?

Held.

Yes, the Commission’s order restricts commercial speech and suppression of advertising reduces the information available for consumer decisions and thereby defeats the purpose of the First Amendment. The state interests offered by the Commission as justification are insufficient as there are alternatives the Commission could have taken and yet failed.

Concurrence.

Justice Blackmun

Blackmun: There is a serious doubt whether suppression of information concerning the availability and price of a legally offered product is ever a permissible way for the State to dampen demand for or use of the product. Even though commercial speech is involved, such a regulatory measure strikes at the heart of the First Amendment. This is because it is a covert attempt by the State to manipulate the choices of its citizens, not by persuasion or direct regulation, but by depriving the public of the information needed to make a free choice. The Court would permit the State to ban all direct advertising of air conditioning, assuming that a more limited restriction on such advertising would not effectively deter the public from cooling its homes. Our cases, however, do not support this type of suppression.

Discussion.

There is an immediate connection between advertising and demand for electricity. Central Hudson would not contest the advertising ban unless it believed that promotion would increase its sales. However, the Commission’s order prevents appellant from promoting electric services that would reduce energy use by diverting demand from less efficient sources. To the extent that the Commission’s order suppresses speech that in no way impairs the State’s interest in energy conservation, the order violates the First and Fourteenth Amendments. Moreover, the Commission has not demonstrated that its interest in conservation cannot be protected adequately by more limited regulation of appellant’s commercial expression. To further its policy of conservation, the Commission could attempt to restrict the format and content of Central Hudson’s advertising. In the absence of a showing that more limited speech regulation would be ineffective, the Court cannot approve the complete suppression of Central Hudson’s advertising.