# Appendix — Consolidated Edison Co. of New York v. Public Service Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_0625%3A04 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1980 - **Citation:** 447 U.S. 530 ## Text APPENDIX IN THE — Supreme Court of the United States OctosperR Term, 1979 No. 79-134 ConsoLipaTeD Epison Company or New York, Inc., Appellant, Vv. Pusuic Service CoMMISSION OF THE StTaTE OF New York, Appellee. ON APPEAL FROM THE COURT OF APPEALS OF THE STATE OF NEW YORK JURISDICTIONAL STATEMENT FILED JULY 27, 1979 PROBABLE JURISDICTION NOTED OCTOBER 1, 1979 IN THE SUPREME COURT OF THE UNITED STATES Octoser TERM, 1979 No. 79-134 ConsoLtipaTteD Epison Company or New York, Ino,, Appellant, v. Pusuiic SzRvIcE CoMMISSION OF THE State or New York, Appellee. ON APPEAL FROM THE COURT OF APPEALS OF THE STATE OF NEW YORK INDEX TO APPENDIX PAGE Chronological List of Relevant Docket Entries ............ 1 Verified Petition and Complaint of Consolidated Edi- son Company of New York, Inc. 2 I aaa Ce 10 Verified Answer of the Public Service Commission of ON cv ieinccatcteitelattleat ae ca 19 I 23 a 49 li PAGE Verified Reply of Consolidated Edison Company of New York, Ince. Judgment of New York Supreme Court, Albany County Notice of Appeal of the Public Service Commission of the State of New York to New York Supreme Court, Appellate Division, Third Judicial Department ........ Order of New York Supreme Court, Appellate Divi- sion, Third Judicial Department ....... Notice of Appeal of Consolidated Edison Company of New York, Inc. to Court of Appeals of the State of New York .......... ‘ 61 64 69 iii The following opinions, decisions, judgments and orders have been omitted in printing this appendix because they appear on the following pages in the appendix to the Juris- dictional Statement : | PAGE Public Service Commission’s Statement of Policy on Advertising and Promotional Practices of Public Utilities, issued on February 25, 1977 .... | 3la Public Service Commission’s Order Implementing Cer- tain Restrictions on Utility Advertising, issued on February 25, 1977 .................... 57a Public Service Commission’s Order Denying Petitions for Rehearing, issued on July 14, 1977 ...................... 59a Opinion of the New York Supreme Court, Albany County, issued on February 17, 1978 ...... 24a Opinion of the New York Supreme Court, Appellate Division, Third Judicial Department, issued on July eg TN aiiipienssigveilinainaicatitentniitiane 16a Opinion of the Court of Appeals of the State of New York, issued on May 1, 1979 ........ la Final Judgment of the Court of Appeals of the State of New York, entered on May 1, 1979 000... 29a . a Chronological List of Relevant Docket Entries 1l- 7-77 11-28-77 12- 5-77 2-17-78 3— 6-78 3— 6-78 7-27-78 8- 2-78 8- 9-78 8-14-78 o- 1-79 5- 1-79 6-26-79 Verified Petition and Complaint Served. Verified Answer Served. Verified Reply Served. Opinion of the New York Supreme Court, Albany County, issued. Judgment of the New York Supreme Court, Albany County, entered. Notice of Appeal to the New York Supreme Court, Appellate Division, Third Judicial De- partment, served and filed. Opinion of the New York Supreme Court, Ap- pellate Division, Third Judicial Department, issued. Order of the New York Supreme Court, Ap- pellate Division, Third Judicial Department, entered. Notice of Appeal to the Court of Appeals of the State of New York served. Notice of Appeal to the Court of Appeals of the State of New York filed. Opinion of the Court of Appeals of the State of New York issued. Final Judgment of the Court of Appeals of the State of New York entered. Notice of Appeal to the Supreme Court of the United States served and filed. Verified Petition and Complaint of Consolidated Edison Company of New York, Inc. SUPREME COURT OF THE STATE OF NEW YORK County or ALBANY Index No. 11163-77 In the Matter of ConsoLipaten Epison Company or New York, Inc., Petitioner, for a judgment pursuant to Article 78 of the CPLR, —against— Pustic Service CoMMISSION OF THE State or New York, Respondent. ConsoLipaTep Eptson Company or New York, Inc., Plaintiff, —against— Pustic Servick CoMMISSION OF THE Strate or New York, Defendant. Petitioner-Plaintiff Consonmatzp Epison Company oF New York, Inc. (Con Edison) by its attorneys, as and: for its petition and complaint herein against respondent- 3 Verified Petition and Complaint of Consolidated Edison Company of New York, Ine. defendant Pusiic Serviczk ComMMISssION OF THE STATE oF New York (the Commission), alleges: NATURE OF PROCEEDINGS 1, This is a special proceeding together with actions for a declaratory judgment and an injunction seeking, on grounds of unconstitutionality, to set aside and enjoin the enforcement of certain orders of the Commission which prohibit Con Edison and other public utility corporations in this State from utilizing printed matter inserted with bills mailed to customers (bill inserts) as a means of ex- pressing the views of such public utility corporations on “controversial matters of public policy.” Since the expres- sion of views on controversial subjects is precisely the liberty that is protected, to individuals and corporations alike, by the constitutional safeguards against infringe- ment of freedom of speech and of the press, this restric- tion on Con Edison’s freedom to communicate is a gross violation of the First Amendment to the United States Constitution as made applicable to the States by the Due Process Clause of the Fourteenth Amendment, and of similar provisions of the Constitution of the State of New York. Cause or Action ror Review Unper ArticLe 78 or tor OPLR 2. Petitioner-Plaintiff, Con Edison, is a corporation duly organized and existing under and by virtue of the laws of the State of New York, with its principal office at 4 Irving Place, New York, New York. Con Edison supplies electric service in five boroughs of New York City—Man- hattan, The Bronx, Brooklyn, Staten Island and-most of 4 Verified Petition and Complaint of Consolidated Edison Company of New York, Inc. Queens—and in portions of Westchester County; gas ser- vice in Manhattan, The Bronx and in parts of Queens and Westchester; and steam service in parts of Manhattan. _ 3, Respondent-Defendant, the Commission, is an admin- istrative body organized and existing under the Public Service Law of the State of New York, charged with the responsibility by such law of regulating the rates and ser- vice of Con Edison with respect to the furnishing of electricity and gas (Article 4) and steam (Article 4-A). The Commission’s principal office is in the City and County of Albany. 4. The orders and prohibitions at issue herein have been promulgated by the Commission under color of the au- thority granted to it by Articles 4 and 4-A of the Public Service Law. 5. Pursuant to Sections 73 and 86 of the Public Service Law, the Commission may impose forfeitures against Con Edison, or any officer, agent or employee thereof, for each violation of an order of the Commission. 6. Due to their effectiveness and relatively low cost, bill inserts constitute the principal means available to Con Edison for communicating information and views to its customers. There are no adequate alternatives. (a) Con Edison utilizes bill inserts to convey messages required by the Commission’s regulations or by law to be sent to its customers, and to communicate information on such topics as new rates, company procedures, safety in the use of the company’s services, and conservation. 5 Verified Petition and Complaint of Consolidated Edison Company of New York, Inc. (b) In addition, Con Edison has utilized bill inserts, and desires to continue to utilize bill inserts, to communicate information and its views to its customers on subjects which are of importance to them as consumers of utility services. The Commission itself, in its policy statement (hereinafter more fully referred to in paragraph 7 below), has recognized the importance of such communication by stating that “The expression of a utility’s views on a con- troversial issue may truly reflect its concern for the wel- fare of its consumers and may make a genuine contribu- tion to a public policy debate. ..” Examples of the issues presently confronting the utility industry which have a significant bearing upon its consumers, and with respect to which the Commission’s orders prohibit Con Edison from communicating its views to its customers by means of bill inserts, are the use of nuclear power to provide the needs of consumers for electric energy, the replacement of investor-owned utility service by government-owned fa- cilities, the siting of power plants and other similar matters. 7. Notwithstanding the foregoing, on February 25, 1977, the Commission issued a “Statement of Policy on Adver- tising and Promotional Practices of Public Utilities” in which it announced (at p. 11) that “we will not permit bill inserts to be used by utility companies for the purpose of advertising their opin- ions or viewpoints on controversial issues of public policy.” (A certified copy of the Commission’s Statement of Policy is annexed hereto as Exhibit I). [Printed in the appendix to the Jurisdictional Statement (31a-56a) ] 6 Verified Petition and Complaint of Consolidated Edison Company of New York, Ine. 8. The Commission’s Statement of Policy relating to the use of bill inserts was implemented by an order issued on Fpruary 25, 1977, which provides that “All utilities subject to the jurisdiction of this Com- mission shall discontinue the practice of utilizing mate- rial inserted in bills rendered to customers as a mech- anism for the dissemination of the utility’s position on controversial matters of public policy.” (A certified copy of the Commission’s February 25, 1977, order is annexed hereto as Exhibit II). [Printed in the appendix to the Jurisdictional Statement (57a-58a) ] 9. On or about March 22, 1977, Con Edison applied to the Commission for rehearing pursuant to Section 22 of the Public Service Law, and on or about June 3, 1977, Con Edison filed with the Commission a supplement to its petition for rehearing. (Copies of Con Edison’s petition for rehearing and the supplement to its petition for re- hearing are annexed hereto as Exhibits III and IV, re- spectively). [Exhibit III omitted in printing] 10. By order issued on July 14, 1977, the Commission denied Con Edison’s petition for rehearing. (A certified copy of the Commission’s July 14, 1977, order is annexed hereto as Exhibit V). [Printed in the appendix to the Jurisdictional Statement (59a-71a) ] 11. In forbidding Con Edison from using bill inserts to express its views on issues of importance to it and its customers, as hereinabove alleged, the Commission has unlawfully instituted a program of government censorship a a en Es ce St a TO A I ite 7 Verified Petition and Complaint of Consolidated Edison Company of New York, Inc. and placed a prior restraint upon Con Edison’s communi- cations with its customers in violation of Con Edison’s rights under the First and Fourteenth Amendments to the Constitution of the United States and under Article 1, §8 of the Constitution of the State of New York. 12. In adopting a standard which permits Con Edison to use bill inserts to communicate “noncontroversial” matters to customers but forbids Con Edison from using bill inserts to communicate “controversial” matters to customers, the Commission has purported to regulate speech on the basis of content in violation of the First and Fourteenth Amendments to the Constitution of the United States and Article 1, §8 of the Constitution of the State of New York. 13. In promulgating an order which purports to permit the expression of “noncontroversial” ideas but bans the dissemination of “controversial” material in bill inserts, the Commission has enunciated a standard for the reg- ulation of communicative activity which a) fails to pro- vide adequate notice of the scope of its proscription and b) fails to provide adequate guidance for its application and, thus, is void for vagueness under the First and Four- teenth Amendments to the Constitution of the United States and under Article 1, §§6 and 8 of the Constitu- tion of the State of New York. 14. As a consequence of the Commission’s orders, Con Edison is suffering irreparable injury by being prohibited from utilizing an effective and economical means of com- municating information and views to its customers on “controversial matters of public policy.” 8 Verified Petition and Complaint of Consolidated Edison Company of New York, Inc. 15. The Commission’s orders have substantially dimin- ished Con Edison’s ability to communicate information and views to its customers on issues of concern to Con Edison and its customers. 16. Con Edison has no plain, speedy, or adequate rem- edy at law. Causg or Action ror DecuaratTory J UDGMENT 17. Con Edison repeats the allegations contained in paragraphs 1-16. Causs or Action ror InsuNcTION 18. Con Edison repeats the allegations contained in paragraphs 1-16. 19. By application dated March 22, 1977, Con Edison applied to the Commission for stay of its order of Feb- ruary 20, 1977. Con Edison’s application was denied by order of the Commission issued on March 30, 1977. (A certified copy of the Commission’s order of March 30, 1977, is annexed hereto as Exhibit VI). [Omitted in printing] Wuenerore, Con Edison respectfully requests this Court to: (1) review under Article 78 of the Civil Practice Law and Rules the orders of the Public Service Commission of February 25 and July 14, 1977, to the end that judgment be entered annulling, vacating and setting aside such orders to the extent they prohibit Con Edison from utilizing bill — Sa ee a 9 Verified Petition and Complaint of Consolidated Edison Company of New York, Inc. inserts as a means of disseminating its views on contro- versial matters of public policy; (2) declare that the Public Service Commission’s orders of February 25 and July 14, 1977, to the extent they pro- hibit Con Edison from utilizing bill inserts as a means of disseminating its views on controversial matters of public policy, violate the First and Fourteenth Amend- ments to the Constitution of the United States, and Article 1, §§ 6 and 8 of the Constitution of the State of New York; (3) grant judgment enjoining the Public Service Com- mission from enforcing its orders of February 25 and July 14, 1977, to the extent such orders prohibit Con Edison from utilizing bill inserts as a means of dissem- inating its views on controversial matters of public policy; and (4) grant Con Edison such other and further relief as to the Court may seem just and proper. Dated: New York, New York November 7, 1977 (Subscription and verification omitted in printing) 10 Exhibit IV Appended to Verified Petition and Complaint BEFORE THE NEw YorkK Stare Pusutic Service ComMIssIon In the Matter of STATEMENT ON Pouicy on ADVERTISING AND PromotionaL Practices or Pusiic Urmiries PSC Case No. 27052 SUPPLEMENT TO PETITION FOR REHEARING OF ConsotipaTtep Epison Company or New York, Inc. To the Public Service Commission of The State of New York: Consolidated Edison Company of New York, Inc. hereby supplements its Petition for Rehearing dated March 22, 1977, for the purpose of bringing to the attention of the Commission the implications to this case of the decision of the United States Supreme Court on May 2, 1977 in the case of Linmark Associates, Inc. v. Willingboro, 45 U.S.L.W. 4441. By its “Statement of Policy on Advertising and Promo- tional Practices of Public Utilities’ and accompanying order, issued on February 25, 1977, the Commission pro- hibited the use of bill inserts by utility companies for the purpose of communicating their opinions or viewpoints on controversial issues of public policy. In its Petition for Rehearing dated March 22, 1977, Con Edison alleged that the prohibition was unlawful for several reasons, including the reason that the prohibition 11 Exhibit IV Appended to Verified Petition and Complaint abridged Con Edison’s freedom of speech and press in violation of the First and Fourteenth Amendments to the United States Constitution. With respect to the antici- pated argument that the prohibition is justifiable on the ground that alternative means are available for communi- cation of the utilities’ viewpoints, we pointed out (at p. 10 of our Petition for Rehearing) that the Supreme Court has said that “one is not to have the exercise of his liberty of expression in appropriate places abridged on the plea that it may be exercised in some other place.” Schneider v. State, 308 U.S. 147, 163 (1939) ; See also, Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 757-58, n. 15 (1976). The availability of alternative means of communication has been deemed to be a relevant consideration in cases involving “time, place, and manner” restrictions. As the Supreme Court stated in Virginia Pharmacy: “We have often approved [time, place, and manner restrictions] provided that they are justified without reference to the content of the regulated speech, that they serve a significant governmental interest, and that in so doing they leave open ample alternative channels for communication of the information.” Ibid. at 771. The Commission’s prohibition cannot be justified as a proper time, place, and manner restriction because it regu- lates the content of communications, and under the prin- ciples of the decisions cited above the fact that alternative means of communication are available is not a relevant consideration. However, since the matter of alternative means of communication is specifically addressed in the United States Supreme Court’s opinion in the recent Lin- 12 Exhibit IV Appended to Verified Petition and Complaint mark case, we now wish to show that even if alternatives were considered, it must be concluded that Con Edison has no adequate alternatives to bill inserts under the Lin- mark standards. In Lanmark, the Supreme Court struck down a munici- pal ordinance which prohibited the posting of real estate “For Sale” or “Sold” signs. The municipality attempted to justify the ordinance in part on the ground that it re- stricted only one method of communication, and that al- ternatives were available for communication of the sellers’ messages.* The standards utilized by the Supreme Court in analyz- ing this argument may be found in the following passage from the Linmark decision: “... serious questions exist as to whether the [Willing- boro] ordinance ‘Jeave[s] open ample alternative chan- nels for communication.’ Virginia Pharmacy, supra, 425 U.S., at 771. Although in theory sellers remain free to employ a number of different alternatives, in practice realty is not marketed through leaflets, sound trucks, demonstrations or the like. The options to which sellers realistically are relegated—primarily newspaper advertising and listing with realtors—in- volve more cost and less autonomy than ‘For Sale’ signs; are less likely to reach persons not deliberately seeking sales information; and may be less effective * At the trial of the Linmark case in the Distriet Court, the Court found that “approximately thirty percent of inquiries to [plaintiff's real estate] office are a result of ‘For Sale’ signs being posted on residences.” The opinion of the district court is repro- duced in the opinion of the Court of Appeals, Linmark Associates, Inc. v. Willingboro, 535 F.2d 786, 792, n.5. (8rd Cir. 1976). Seventy percent of plaintiffs inquiries thus came from sources other than “For Sale” signs. 13 Exhibit IV Appended to Verified Petition and Complaint media for communicating the message that is con- veyed by a ‘For Saie’ sign in front of the house to be sold. The alternatives, then, are far from satisfac- tory.” Ibid, at 4443 (citations omitted).* As indicated in the affidavit of Robert O. Lehrman, at- tached hereto and made a part hereof, Con Edison has no adequate alternatives to the use of bill inserts for com- municating to its customers its views on controversial matters of public policy. A separate mailing would be prohibitively expensive. Television and radio advertising are not suitable means of communicating lengthy messages on complicated subjects. And newspaper advertising is more costly and less effective than bill inserts. *In Linmark, the Court also considered the constitutionality of achieving governmental objectives by restricting the free flow of truthful information, and concluded that: “the First Amendment disabled the State from achieving its goal by restricting the free flow of truthful information.” Ibid. at 4444. The Court continued by referring to its decision in Virginia Pharmacy, where it rejected Virginia’s claim that the only way it could enable its citizens to find their self interest was to deny them information that is neither false nor misleading: “ 2. It is especially undesirable to cover the costs of such promotional activities in rates, thereby forcing captive cus- tomers to pay for activities designed to influence their con- sumption habits (in contrast with merely providing them with information). 3. Turning specifically to the promotion of electric re- sistance space and water heating: it conflicts with the na- tional interest in energy conservation to promote additional utilization of electricity, which by its very nature uses ap- proximately 3 Btu’s of source energy to deliver 1 usable Btu. Electric resistance heating is therefore inherently in- efficient in its use of primary energy, compared with the o4 Exhibit E Appended to Verified Answer of the Public Service Commission of the State of New York direct burning of gas or oil in furnaces, even after making allowance for the greater efficiency-in-use of the electricity than those fuels. 4. The equipment for electric resistance heating is con- siderably less costly than for gas or oil. Since builders typically have a strong incentive to hold down the first costs of construction, they may already have a distorted incentive to install the former in preference to the latter, even though the result may be to impose markedly higher annual heating costs thereafter on the purchasers, who are frequently, perhaps typically, not in a position to weigh the higher future running costs against the lower initial purchase price in making their purchase decisions. In these circumstances, it is particularly undesirable further to en- courage irrational purchase decisions by permitting the promotion of electric heating. 5. The heat pump promises to mitigate some of these efficiency disadvantages of electric resistance heating; how- ever, the effects of its widespread introduction on utility peak load and load factors are uncertain. Arguing on the side of a relaxation are the following considerations: 1. In major uses, electricity competes with oil and gas, and while we proscribe the promotion of gas, the distribu- — tion of heating oils is totally outside our control, and adver- tising by those distributors freely permitted: in these cir- cumstances, it is not only unfair but produces distorted results for consumers to be freely exposed to advertising messages by one set of competitors, while the other is totally prohibited from communicating with them. 59 Exhibit E Appended to Verified Answer of the Public Service Commission of the State of New York 2. Electricity and electrical appliances compete with all other goods and services for the consumer’s limited dollars. It is inconsistent with a consumer-sovereign and free enter- prise economy for certain goods and services to be denied the right to compete for those dollars while other competi- tors—many of which may be promoting even less energy- conserving consumption—remain unrestricted. It is the function of a regulatory Commission in such an economy to see to it that prices accurately reflect cost—not to go beyond that and dictate to consumers and businesses, di- rectly or indirectly, how they should allocate their expendi- tures. Consumers are, to be sure, entitled to protection against misleading advertising, and the foregoing consider- ations would probably not absolve the Commission from responsibility to ensure that the promotional information supplied by franchised public utilities is in fact not mis- leading. The proper solution to the possible problem, de- scribed earlier, arising from the possibility that builders may have a distorted incentive to install electric resistance heating, because of its lower first cost, is to provide pur- chasers with reliable info mation about the expected life cycle costs of buildings equipped with different heating systems. 3. The function of the Commission is to see to it that the prices of the services it regulates reflect society’s costs in supplying them, and that consumers are well-informed— not to tell consumers what advertising messages they may and may not hear. 4. Gas is in short supply, and in most territories unavail- able for use in new construction, so that for most uses the only available alternative to electricity for space heating 36 Exhibit E Appended to Verified Answer of the Public Service Commission of the State of New York is oil. Prohibition of electricity promotion thus contributes to giving oil a monopoly in that market (whether this creates a danger of monopolistic exploitation depends on the effectiveness of competition in the oil industry). 5. While promotion of heating with electricity generated _ from oil (because of its less efficient use of the primary energy source) runs counter to our national policy of re- ducing our dependence upon imported oil, the increased use of electricity generated from nuclear fuel and coal would make a positive contribution to that goal. 6. Electric space heating is environmentally preferable to the direct combustion of oil: it is less polluting to burn fuels in central electricity generating stations than in thou- sands of individual furnaces. Institutional and informational advertising The Commission does not flatly prohibit advertising of these kinds, nor does it contemplate doing so. (Institutional advertising is difficult to define except as all advertising that is not fairly clearly intended to promote sales. It usually embraces informational advertising, but in some contexts a distinction between the two is useful.) The issue on which we solicit reactions has to do with the extent to which advertising of these kinds may properly be recovered in rates, as legitimate expenses of doing business and serv- ing consumers. We do not solicit comments on two kinds of advertising our policy with respect to which is of long standing and essentially noncontroversial: 1, Advertising that provides information of direct use to consumers is a legitimate expense of doing business, and 57 Exhibit E Appended to Verified Answer of the Public Service Commission of the State of New York properly recovered in rates. This would include, for ex- ample, appeals for conservation; instructions in the proper use of equipment; information about new rates, billing practices, inspection and meter-reading; reports on matters of direct interest to the public concerning the utility com- pany’s service—service difficulties and progress in over- coming them. 2. At the other extreme, political advertising in support of or opposed to specific governmental actions—proposed legislation or referenda—may not properly be covered by rates, on the ground that it is either serving the interest or promulgating the particular opinions of management or shareholders, which may or may not coincide with those of ratepayers. Ratepayers should clearly not be expected to pay to have a company’s political views expressed. All clearly political advertising is therefore recorded in a non- operating expense account, below the line, and expenditures recorded in this account routinely excluded from the rate- making process. It is in the wide area between these two extremes that we seek guidance—the institutional advertising that is not clearly useful to utility customers, on the one hand, or clearly directed toward influencing specific legislation, on the other. There is advertising, for example, in which a company defends, justifies, or even merely explains and describes its activities. It might be argued, on the one hand, that there is no reason for ratcpayers to bear the costs of such self-justification ; that it is not of direct usefulness to them. On the other hand, it is extremely difficult to argue, espe- cially these days when public utilities are subjected to frequently unjustified public attack and criticism, that these 58 Exhibit E Appended to Verified Answer of the Public Service Commission of the State of New York are not, within limits, legitimate and indeed inescapable costs of doing business in today’s conditions. It seems un- reasonable not to afford utility managements under attack an opportunity to explain and justify themselves. It might be argued, of course, that since such expenditures are on behalf of the companies rather than in the direct service of | their ratepayers, they ought to be paid for by the share- holders. But if they are inescapable costs of doing business, and if, as in our policy, we allow shareholders returns only at the minimum level necessary to attract capital, then at least in principle if we were nominally to disallow these expenditures from rates, we would have to provide a corre- spondingly larger return on equity. It can be argued, in short, that “disallowances” of such expenditures from rates are nominal only, if not disingenuous. One of the most controversial kinds of expenditure in this area is advertising that directly or indirectly promotes the merits of nuclear power. Argument over whether the cost of advertising of this kind should be allowed in rates has assumed major proportion. It might arguably be char- acterized either as informative, and permissible, or polit- ical, and to be disallowed. The Commission has come to the view that exclusion of the costs of such advertising from rates on the traditional grounds that it can be fairly characterized as “political” is no longer adequate to protect the interest of the public generally and of ratepayers specifically. The public issues surrounding nuclear power generation are very compli- cated, and the public is being beset by discussions on mat- ters in which it is of great importance that all points of view be presented. We feel there is a definite ratepayer interest, therefore, in a free and fair public discussion of this matter, and that utility companies do have a contribu- 59 Exhibit E Appended to Verified Answer of the Public Service Commission of the State of New York tion to make to that discussion, regardless of whether we agree or disagree with the content of their messages in specific instances: after all, the Commission’s assessments today of the substantive merits of controversies like these could well prove to be wrong tomorrow. Accordingly, a majority of us has in two recent cases considered advertis- ing that presented the case in favor of nuclear generation to be informational in nature and properly included as a cost in computing ratés in modest quantities. Others of us have felt, however, that such an allowance in rates should be permitted only on condition that the company use its funds to provide something like “equal time” to reasonable statements of legitimate opposition to this position. We will appreciate reactions to this latter alternative. In addition to soliciting advice on these complicated matters, we solicit reactions to an alternative possible ap- proach to this subject. The alternative would retain our present scrutiny of advertising with a view to continuing our traditional policy, described above, with respect to advertising that can clearly be labeled as informational on the one hand and political on the other—with routine al- lowance of the former and disallowance of the latter; but would abandon the necessity for detailed scrutiny and de- termination of what to do with advertising that falls in the broad and relatively amorphous midde area. For that broad middle area of informational and insti- tutional advertising, the suggestion is that we might rou- tinely allow the companies in rates some very small pool of dollars, based roughly on past practices, probably on some sort of sliding scale—say, ranging between 1/10 and 1/25 of one percent in sales, possibly in inverse relation- ship to the size of the companies—and suspend the vexing and essentially arbitrary process of deciding with respect 60 Exhibit E Appended to Verified Answer of the Public Service Commission of the State of New York to each advertisement whether it should be allowed or dis- allowed. This proposal would obviously not solve all the problems we have described: we would still have to determine which advertisements are clearly political and/or self-serving, and specifically disallowed, and which clearly informational and of direct use to ratepayers, and therefore explicitly allowed; and parties in rate cases would still be free to question the propriety of the lump-sum allowance ‘for ad- vertising in the broad intermediate category. On the other hand, it would have the virtue of recognizing that some, modest institutional expenditures are an inescapable and legitimate cost of doing business, and get the Public Service Commission out of the business of any item-by-item content examination and evaluation of past advertisements—an activity in a sense redundant anyhow, in view of the fact that all we really do is set a reasonable level of rates for the future. If any interested parties have alternative suggestions we would be pleased to receive them. In proposing alterna- tives, we ask respondents to bear in mind the desirability of reducing the considerable amount of staff and Commis- sion time now consumed in the detailed serutiny of ad- vertising, and in hair-splitting determinations where the amount of dollars involved is close to minimal. By the Commission, SamveL R. Maptson Secretary alas ibaa sassenbiciCiten inti es 61 Verified Reply of Consolidated Edison Company of New York, Inc. SUPREME COURT OF THE STATE OF NEW YORK County or ALBANY Index No. 11163-77 (Caption omitted in printing) Petitioner-Plaintiff Conso~ipatep Epison Company oF New York, Ino. (Con Edison) by its attorneys, as and for its reply to the new matter contained in the answer of Respondent-Defendant Pustic Service CoMMISSION OF THE State or New York (the Commission), states as follows: Tue PETITIONER OBJECTS TO, AND Moves To SrRikz, THE New Matter ConrAaINEeD IN THE ANSWER HEREIN Upon THE Grounp THat Tus Court Dors Nor Haves JURISDICTION TO Review SucH Matrer 1. This is a special proceeding together with actions for a declaratory judgment and injunction commenced by Con Edison seeking, on the grounds of unconstitutionality, to set aside and enjoin enforcement of orders of the Commis- sion issued on February 25 and July 14, 1977, in Commis- sion Case No. 27052, which prohibit Con Edison and other public utility corporations in this State from utilizing bill inserts as a means of expressing the views of such public utility corporations on “controversial matters of public policy.” 2. Case No. 27036 is a separate Commission proceeding which was commenced by Complaint dated May 24, 1976 by Natural Resources Defense Council, Inc. and seven other individuals and organizations, seeking various rulings 62 Verified Reply of Consolidated Edison Company of New York, Inc. from the Commission with respect to the use of bill inserts by Con Edison. A Commission order disposing of the Complaint in Case 27036 was adopted at a session of the Commission on February 17, 1977, and was received by Con Edison on or about March 2, 1977. None of the parties to Case No. 27036 sought judicial review of the Commis- sion’s February 17, 1977 order in that proceeding, and an Article 78 proceeding for review of that order is now barred by the provisions of Section 217 of the CPLR. 3. In its Verified Answer in this proceeding, the Com- mission asserts that “The Commission’s action under review herein is a re- sult of decisions in Commission Cases numbered 27036 and 27052” (Verified Answer, 8). 4. In paragraphs 8-10 of its Verified Answer, the Com- mission describes the proceedings in Case No. 27036 and appends as Exhibits A through D to its Verified Answer the pleadings, briefs and its order in Case No. 27036. 5. After alleging certain matters relating to Case No. 27052 (Verified Answer, 11-16), the only Commission pro- ceeding which is before this Court for review, the Com- mission’s Answer concludes by asserting that “Respondent, Public Service Commission’s directives in its cases 27052 and 27036 were made only after full consideration of the positions of all parties to the proceedings. The actions taken by the Commission were in all respects just, reasonable and lawful, and in no respects arbitrary, capricious, or unlawful” (Verified Answer, 17). iain a iii ial ia 63 Vertfied Reply of Consolidated Edison Company of New York, Inc. 6. This Court has no jurisdiction to review the Commis- sion’s order in Case No, 27036. The Commission may not seek review of its own orders, and as alleged in paragraph 2 above, none of the parties to that proceeding has sought judicial review of the Commission’s order in that proceed- ing, and an Article 78 proceeding for review of that order is now barred by the provisions of Section 217 of the CPLR. 7. Review of the Commission’s order in Case No. 27036 is not necessary for review of the Commission’s orders in Case No. 27052. Case No. 27052 was a separate proceeding wholly independent from Case No. 27036 and must stand or fall on its own record; indeed, Case No. 27036 is no- where referred to by the Commission in its orders or Statement of Policy in Case No. 27052. 8. Consideration of the Commission’s Case No. 27036 would be prejudicial to Con Edison by injecting irrelevant issues into this proceeding. WuererorgE, Con Edison demands judgment striking paragraphs 8 through 10 of the Verified Answer of re- spondent, so much of paragraph 17 as refers to Case No. 27036, and Exhibits A through D attached to the Verified Answer; and prays that the relief requested in its Verified Petition and Complaint be granted. Dated: New York, New York December 5, 1977 (Subscription and verification omitted in printing) 64 Judgment of New York Supreme Court, Albany County Index No. 11163-77 At a Special Term, Part I, of the Supreme Court of the State of New York, held in and for the County of Albany, at the County Court- house, Hagle and Columbia Streets, Albany, New York, on the 9th day of December, 1977. PRESENT: Hon. Rocer J. Miner, Justice. In the Matter of Consotipatep Epison Company or New York, Inc., Petitioner, for a judgment pursuant to Article 78 of the CPLR, —against— Pusiic Service ComMiIssION oF THE StaTE or NEw York, Respondent. ConsoLipatep Epison Company or New York, Inc., Plaintiff, —against— Pusiic Service CoMMIssION OF THE STATE or NEW York, Defendant. 65 Judgment of New York Supreme Court, Albany County The above-named Petitioner-Plaintiff (“Con Edison”) having commenced a special proceeding and actions for declaratory judgment and injunction, under Article 78 and section 3001 of the Civil Practice Law and Rules, by a notice of petition and summons dated November 7, 1977, for judgment: 1. Annulling, vacating and setting aside orders of the Public Service Commission of February 25, and July 14, 1977, in a proceeding entitled “Notice of Proposed Policy Statement and Request for Comments on Advertising by Public Utilities and Electric Promotion Practices”, to the extent such orders prohibit Con Edison from utilizing bill inserts as a means of disseminating its views on contro- versial matters of public policy; 2. Declaring that the orders of the Public Service Com- mission of February 25 and July 14, 1977, ina proceeding entitled “Notice of Proposed Policy Statement and Request for Comments on Advertising by Public Utilities and Elec- tric Promotion Practices”, to the extent such orders pro- hibit Con Edison from utilizing bill inserts as a means of disseminating its views on controversial matters of public policy, violate the First and Fourteenth Amendments to the Constitution of the United States and Article 1, $§6 and 8 of the Constitution of the State of New York; 3. Enjoining the Pubiic Service Commission from en- forcing its orders of February 25 and July 14, 1977, in a proceeding entitled “Notice of Proposed Policy Statement and Request for Comments on Advertising by Public Utilities and Electric Promotion Practices”, to the extent such orders prohibit Con Edison from utilizing bill inserts 66 Judgment of New York Supreme Court, Albany County as a means of disseminating its views on controversial mat- ters of public policy; and 4. Granting Con Edison such other and further relief as to this Court may seem just and proper, And the said matters having regularly come on to be heard before me on the 9th day of December, 1977, and Petitioner-Plaintiff having appeared by Joseph D. Block, Esq. and Peter Garam, Hsq., in support of the petition and complaint, the Respondent-Defendant having appeared by Peter H. Schiff, Esq., Howard J. Read, Esq., of Counsel, in opposition thereto, LeBoeuf, Lamb, Leiby & MacRae, Esqs., Ronald D. Jones, Esq. and Andrew Gansberg, Esq., of Counsel, having appeared in support of the petition and complaint for National Fuel Gas Distribution Corporation and Orange and Rockland Utilities, Inc., amicus curiae, and upon reading and filing the notice of petition and sum- mons dated November 7, 1977, the petition and complaint, verified on the 7th day of November, 1977, and exhibits I through VI annexed thereto, the answer, verified on the 28th day of November, 1977, and exhibits A through H annexed thereto, and the reply, verified on the 5th day of December, 1977, and upon all the pleading and proceedings heretofore had herein, and after due deliberation the Court having made and filed a decision in writing on the 17th day of February, 1978, in favor of Petitioner-Plaintiff, and ‘against Respondent-Defendant, Now, on motion of Joseph D. Block, Esq., attorney for Petitioner-Plaintiff, it is ApsupDGED AND Decrzep that the relief requested in the petition and complaint be and the same hereby is granted in full; and it is further 67 Judgment of ‘New York Supreme Court, Albany County ADJUDGED AND Decreep that the orders of the Public Service Commission of February 25 and July 14, 1977, in a proceeding entitled “Notice of Proposed Policy State- ment and Request for Comments on Advertising by Public Utilities and Electric Promotion Practices”, to the extent such orders prohibit Con Edison from utilizing bill inserts as a means of disseminating its views on controversial matters of public policy, be and the same hereby are an- nulled, vacated, and set aside; and it is further ADJUDGED AND DecreEp that the orders of the Public Service Commission of February 25 and July 14, 1977, in a proceeding entitled “Notice of Proposed Policy State- ment and Request for Comments on Advertising by Public Utilities and Electric Promotion Practices”, to the extent such orders prohibit Con Edison from utilizing bill inserts as a means of disseminating its views on controversial matters of public policy, are hereby declared to violate the First and Fourteenth Amendments to the Constitution of the United States and Article 1, §§ 6 and 8 of the Con-- stitution of the State of New York; and it is further ADJUDGED aND Decreep that the Public Service Commis- sion be and hereby is permanently enjoined from enforcing its orders of February 25 and J uly 14, 1977, in a proceed- ing entitled “Notice of Proposed Policy Statement and Re- quest for Comments on Advertising by Public Utilities and Electric Promotion Practices”, to the extent such orders prohibit Con Edison from utilizing bill inserts as a means of disseminating its views on controversial matters of pub- lie policy. 68 Judgment of New York Supreme Court, Albany County Dated March 2, 1978, Hudson, N.Y. Enter. /s/ Roczr J. Miner Justice of the Supreme Court Guy S. Paquin March 6, 1978 OFFICE OF Aupany County CLERK Mar 6 1:11 PM ’78 Ausany, N.Y. 69 Notice of Appeal of the Public Service Commission of the State of New York to New York Supreme Court, Appellate Division, Third Judicial Department STATE OF NEW YORK SUPREME COURT—COUNTY OF ALBANY Index No. 11163-77 (Caption omitted in printing) Puease Take Notice that the above named Respondent- Defendant hereby appeals to the Supreme Court, Appellate Division, Third Department, from the J udgment of the Honorable Roger J. Miner, dated March 2, 1978, and en- tered in the Office of the Clerk of the County of Albany, New York, on the 6th day of March, 1978, and from each and every part of said Judgment and Order. Dated: Albany, New York March 6, 1978 (Subscription and addressees omitted in printing) 70 Order of New York Supreme Court, Appellate Division, Third Judicial Department At a Term of the Appellate Division of the Supreme Court of the State of New York, held in and for the Third Judicial Depart- ment, at the Justice Building in the City of Albany, New York, commencing on the 19th day of June, 1978. Present: Hon. A. Frankurn Manoney, Presiding Justice, Hon. Louis M. Greensiort, . Hon. Micuaret E. Sweeney, Hon. Roserr G. Mary, Hon. Ann T. Mrxott, Associate Justices. County Clerk’s Index No. 11163-77 In the Matter of ConsoLipatep Epison Company or New York, Inc., Petitioner-Respondent, For a judgment pursuant to Article 78 of the CPLR, —against— Pustic Service CoMMISSION OF THE State or New York, . Respondent-A ppellant. Consotipatep Epison Company or New York, Inc., Plaintiff-Respondent, —against— Pusiic Service CoMMISSION OF THE Strate or New York, Defendant-Appellant 71 Order of New York Supreme Court, Appellate Division, Third Judicial Department The appellant, Public Service Commission of the State of New York having appealed from a judgment of the Supreme Court of Albany County, entered on the 6th day of March, 1978, in the office of the clerk of the County of Albany, and said appeal having been presented during the above-stated term of this Court, and having been argued by Howard J. Read, Esq., of counsel for appellant, and by - Joseph D. Block, Esq., of counsel for respondent, and, after due deliberation, the Court having rendered a decision on the 27th day of July, 1978, Justices Sweeney and Main dissenting, it is hereby OrvereEp that the judgment entered March 6, 1978 be and hereby is reversed, on the law, without costs, and the order declared constitutional. ENTER: /s/ John J. O’Brien Clerk Darep anp Enterep: August 2, 1978. A True Copy: Joun J. O’Brien Clerk 72 Notice of Appeal of Consolidated Edison Company of New York, Inc. to Court of Appeals of the State of New York SUPREME COURT OF THE STATE OF NEW YORK County or ALBANY Index No. 11163-77 (Caption omitted in printing) Piease Take Norice that Consolidated Edison Company of New York, Inc. (“Con Edison”), relying upon questions directly involving the construction of the provisions of Article 1, Sections 6 and 8 of the Constitution of the State of New York and the First and Fourteenth Amendments to the Constitution of the United States, appeals as of right to the Court of Appeals of the State of New York from the order of the Appellate Division, Third Depart- ment, entered in the office of the Clerk of the Appellate Division on August 2, 1978, which order declared an order of the Public Service Commission constitutional and which order reversed on the law the judgment of the Supreme Court herein, entered in the office of the Clerk of the County of Albany on March 6, 1978. Justices Sweeney and Main of the Appellate Division, Third Department, dissented on a question of law in favor of Con Edison from the order of reversal and would vote to affirm the judgment of the Supreme Court on the law. The judgment of the Supreme Court annulled, declared unconstitutional, and permanently enjoined enforcement of orders of the Public Service Commission prohibiting utilities, including Con Edison, from utilizing bill inserts as a means of dis- 73 Notice of Appeal of Consolidated Edison Company of New York, Inc. to Court of Appeals of the State of New York seminating their views on controversial matters of public policy. Piease Take Furruer Notice that Con Edison appeals from each and every part of the order of the Appellate Division and from the whole thereof, pursuant to Section 5601(a) and (b)(1) of the Civil Practice Law and Rules. August 9, 1978 (Subscription and addressees omitted in printing) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_0625%3A04. Public record. Not legal advice.