Pacific Gas & Electric v. Public Utilities Commission of California: Negative First Amendment Rights for Corporations


For over sixty years, Pacific Gas & Electric Company (“PG&E”) has published a newsletter entitled Progress, which contains political editorials, feature stories, and various information about utility services and bills. PG&E distributes Progress in the “extra space” of its billing envelopes – that is, the portion of the envelopes that can be filled with additional materials without incurring additional first-class postage charges.

In 1980, a utility consumer advocacy group, Toward Utility Rate Normalization (“TURN”), urged the Public Utility Commission of California (“PUCC”) to forbid PG&E from using the “extra space” to distribute its political editorials. TURN argued that ratepayers should not bear the expense of disseminating PG&E’s political views.

The PUCC determined that the “extra space” used to distribute Progress was the property of the ratepayers and ordered PG&E to apportion the “extra space” between the utility and its consumers. PUCC permitted TURN to use the “extra space” four times annually for the next two years. PG&E could use any space unused by TURN during those months and could include additional materials, provided that it paid any added postage expenses.

PG&E contested the order but was denied a rehearing by the PUCC.The utility appealed to the California Supreme Court to strike down the access requirement on first and fifth amendment grounds. PG&E argued that by forcing it to mail TURN’s message and solicitations along with its bill and newsletter, the state was violating the utility’s first amendment right not to speak, to which this note will refer as a “negative first amendment right.” TheSupreme Court first recognized that right’s application to individuals in the 1943 flag salute case of West Virginia Board of Education v. Barnette. The Court’s decision in Barnette protected an individual’s “freedom of mind’ by prohibiting the government from forcing one to “utter what is not in his mind.”

PG&E also argued that the PUCC’s grant of access to TURN was a “taking” of its property without just compensation and, therefore, repugnant to the fifth amendment. The California Supreme Court rejected these arguments and affirmed the PUCC order without a written decision. PG&E petitioned the United States Supreme Court, which granted certiorari on the first amendment question only.

In Pacific Gas & Electric Company v. Public Utility Commission of California, the U.S. Supreme Court vacated the PUCC’s order granting TURN access to the billing envelope. In a plurality decision, the Court held that the order violated PG&E’s first amendment rights because access inflicted a burden upon the utility’s protected speech. The plurality reasoned that the order would force the utility to be associated with potentially hostile views and risk forcing PG&E to respond when it might prefer to remain silent.

In recognizing PG&E’s right not to speak, Pacific broke new ground in first amendment jurisprudence. The plurality opinion, two concurrences, and two dissents contain distinct indications of substratal Supreme Court uneasiness with California’s determination that the “extra space” in billing envelopes was ratepayer property. The PUCC’s redefinition of the property rights to the “extra space” in the billing envelopes presented a conflict between the Burger Court’s “positivist” property analysis on the one hand, and its traditional “dominion” conception of property rights on the other. The Court’s failure to address the implicit property issues underlying envelope access resulted in a strained first amendment analysis. In Pacific, then, these latent property questions may have weighed as an invisible “thumb” on the Court’s decisionmaking scale.

This Comment will analyze the first amendment issues confronted in Pacific and the implicit property issues avoided by the Court. Part I focuses on the first amendment issues. It begins by examining the plurality’s conclusion that access by TURN to the envelopes’ extra space violated PG&E’s negative first amendment rights. It then assesses the principles underlying the rights of individuals not to speak, in light of the protections accorded to corporate speech, to determine whether they support the plurality’s finding of a negative first amendment right for corporations. Part I concludes by suggesting that the plurality should have fashioned an access standard more analogous to the standards for broadcasting or cable television than to the standard for newspapers, since the former media have more in common than newspapers with the medium of billing envelope insertions.

Part II examines the Burger Court’s views on the redefinition of property rights, and its decisions in cases that link speech and property rights. Such decisions indicate that the Court may have deliberately chosen to side-step the constitutionally thorny property issues implicit in this case. The Comment concludes that the plurality had little basis in precedent or constitutional theory to extend negative first amendment rights to corporations, particularly public utilities.

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