Amicus Curiae Brief — Pacific Gas & Electric Co. v. Public Utilities Commission

F i LED

NO. 84-1044 MAY 30 1989

} ALEXANDE 2

OLEeRK

IN THE — -

Supreme Court of the United States

OCTOBER TERM, 1984

PACIFIC GAS AND ELECTRIC COMPANY,

Appellant,

V.

PUBLIC UTILITIES COMMISSION OF THE

STATE OF CALIFORNIA,

Appellee.

On Appeal from the Supreme Court of

California

BRIEF OF AMICUS CURIAE,

THE LEGAL FOUNDATION OF AMERICA

OF COUNSEL: DAVID CRUMP

BRADLEY FORD STUEBING c/o The Legal Foundation

— ad of America

South Texas College of Law

Houston, TX T1008 1303 San Jacinto

Houston, Texas 77002

(713) 659-8040

Counsel of Record

JEAN F. POWERS

Assistant Professor of Law

South Texas College of Law

— ————— SI, SS SSIS a SES

TABLE OF CONTENTS

TABLE OF AUTHORITIES

BRIEF OF AMICUS CURIAE

PRELIMINARY STATEMENT

SUMMARY OF ARGUMENT

ARGUMENT

THE COMMISSION’S APPROACH REGULATES

SPEECH ON THE BASIS OF ITS CONTENT

I.

A.

The Commission’s Approach Necessarily

Requires it to Choose Among a Wide Variety

— 1 Groups with Conflicting Points

of View

The Commission’s Approach Places It in the

Position of Performing a “Function of Editors”

The Commission’s Approach Will Reduce

Information Available to Consumers from

the Utilities that Serve Them, Because it

Will Exclude and Discourage Such Speech

THE PUC’S DECISION CANNOT BE SUPPORTED

BY MONOPOLY OR REGULATORY ARGUMENTS

A.

The Commission ’s “Wasted Space and

Property Rationales Do Not Support Its

Decision

The Utility in Question Does Not have a

Monopoly on the Media of Communications,

and its Billing Envelope is Not a Public Forum

CONCLUSION

W NW NS

11

11

12

15

TABLE OF AUTHORITIES Warren, Regulated Industries’ Automatic Cost of

Service Adjustment Clauses: Do They Increase

or Decrease Cost to the Consumer? 55 NOTRE

CASES DAME LAW. 333 (1980)

Bowles v. Willingham, 321 U.S. 503 (1944) 14

Central Hudson Gas & Electric Corporation v. Public

Service Commission, 447 U.S. 557 (1980) 10, 14

Columbia Broadcasting System v. Democratic

National Committee, 412 U.S. 94 (1973) 9,11,15

Consolidated Edison Company v. Public Service

Commission, 447 U.S. 530 (1980) 9, 10, 14

FERC v. Mississippi, 456 U.S. 742 (1982) 5

Miami Herald Publishing Company v. Tornillo,

418 U.S. 241 (1974) 8,9,15

Missouri ex. rel. Southwestern Bell Telephone

Company v. Public Service Commission,

262 U.S. 276 (1923) 14

Munn v. Illinois, 94 U.S. 113 (1877) 13

NAACP v. FPC, 425 U.S. 662 (1976) 7,14

Pacific Gas & Elec. Co. v. California Energy

Conservation & Devel. Comm'n, 461

U.S. 190 (1983) 4

Perry Education Association v. Perry Local

Educators’ Association, 103 S. Ct. 948

(1983) 13, 14, 15

Pittsburgh Press Company v. Human Relations

Commission, 413 U.S. 376 (1973) 9

Pruneyard Shopping Center v. Robins, |

447 U.S. 74 (1980) 9

Reagan v. Farmer’s Loan & Trust Co., 154 U.S.

362 (1894) 14 |

Smyth v. Ames, 169 U.S. 466 (1898) 14

Wooley v. Maynard, 430 U.S. 705 (1977) 10, 11

SECONDARY AUTHORITIES

Foster Nat. Gas Rep. No. 1515, May 2, 1985 7

Just and Reasonable National Rates for Sales of

Natural Gas (Opinion 699), 51 F.P.C. 2212

(1974) 7

PG&E Progress, Dec. 1984 10 |

Pond, Restraining Regulatory Activism: The Proper

Scope of Public Utility Regulation, 35 ADMIN. :

L. REV. 423 (1983) 14 )

NO. 84-1044

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1984

PACIFIC GAS AND ELECTRIC COMPANY,

Appellant,

V.

PUBLIC UTILITIES COMMISSION OF THE

STATE OF CALIFORNIA,

Appellee.

BRIEF OF AMICUS CURIAE,

THE LEGAL FOUNDATION OF AMERICA

INTEREST OF AMICUS CURIAE

The Legal Foundation of America is a nonprofit corpora-

tion supporting the operations of a public interest law firm as

that term is defined in Internal Revenue regulations. Its goals,

among others, include the preservation of the market system as

a means of resource allocation, the attainment of a better federal-

state balance, and the improvement of the system of criminal

justice. In addition, LFA has appeared in many cases involving

first amendment issues.

LFA is located on the campus of, and shares certain per-

sonnel and activities with, the South Texas College of Law in

Houston. All litigation undertaken by LFA is approved by its

Board of Trustees, which is composed of attorneys, academics

and businesspeople.

PRELIMINARY STATEMENT

It is expected that PG&E’s briefing will thoroughly address

the governing case law, including the proper application of the

first amendment, the requirement of a compelling state interest,

the requirement that regulation conform to the least onerous

alternative, the right not to speak, PG&E’s right to use its own

property, and other issues. Amicus curiae generally agrees with

these arguments. However, because amicus curiae wishes to

avoid unnecessary duplication, this brief concentrates upon other

issues, including policy arguments.

SUMMARY OF ARGUMENT

I.

Content-Based Regulation of Expression. The PUC’s ap-

proach necessarily regulates speech on the basis of its content.

Its decision that TURN’s message is “appropriate” and is an

“efficient” use of the envelope could only have been reached on

the basis of its content. Further, if the Commission is to attain

its stated goal of exposing ratepayers to a variety of views, it will

be immersed in choosing on the basis of message content be-

tween numerous competing groups interested in nuclear power,

cogeneration, alternative fuels, rate design, problems of the

elderly, small business electric rates, problems of the poor, and

other concerns as valid as those favored by TURN. In the pro-

cess, the Commission will serve as an editor or gatekeeper

of speech, inconsistently with this Court’s decisions, and it will

discourage speech by PG&E resulting from the use of its own

envelope. Speech by utilities is itself valuable, and utilities

have contributed significantly to debate about energy and con-

servation issues. Ironically, the PUC’s action ensures that speech

from utilities nationwide will be more bland, less responsive to

controversy, and less useful than ever before.

II.

Monopoly and Regulatory Arguments Insufficient. The

“wasted” space or extra space rationale does not support the

Commission’s decision. By exactly the same reasoning, the PUC

could grant TURN the right to use empty PG&E offices, unused

secretarial time, and advertisements on the sides of PG&E panel

trucks. Furthermore, it is meaningless to support the decision

by “property” rationales, because PG&E is here denied the use

of its own property, and the result is that an asserted property

interest held by millions of ratepayers as tenants in common

is simply given to the use of one entity with which many rate-

payers will vehemently disagree. Finally, while PG&E’s natural

monopoly in gas and electricity justifies regulation of its delivery

of those commodities, PG&E does not have a monopoly, or

anything approaching a monopoly, upon the media of communi-

cation. This monopoly rationale comes dangerously close to

an endorsement of the regulation of metropolitan newspapers,

which many have described as monopolistic. Actually, TURN

can reach anyone interested in its message by telephone, mail,

or cther media, and customers have television, radio, cable,

print and other media available to them in abundance. What

TURN really seeks is a captive audience that must open the

envelope, so that it can have a competitive advantage over other

charities in fundraising. This interest is not a legally cognizable

one, and the decisions of this Court countermand the asserted

monopoly rationale.

I. THE COMMISSION’S APPROACH REGU-

LATES SPEECH ON THE BASIS OF ITS

CONTENT.

The Commission has here determined that granting TURN

the use of PG&E’s billing envelope would be an appropriate

and efficient use of the extra space.” 1 In making this decision,

the Commission must have evaluated the speech at issue on the

1 Appendix at A-16.

basis of its content. It could not have decided that TURN’s

message was “appropriate” or that it would be an efficient“

use of the space without evaluating the content of the message

or its effect on the intended audience. 14

The Commission has also indicated that it seeks to expose

ratepayers to a variety of views,” 2 and it has indicated that it

will consider further applicants. Again, it will necessarily decide

among applicants on the basis of the content of their messages.

A. The Commission’s Approach Necessarily Requires it to

Choose Among a Wide Variety of Competing Groups

with Conflicting Points of View.

PG&E’s ratepayers are not a monolith, and they obviously

include many whose views are not represented by TURN. For

example, there undoubtedly are many who vehemently object

to nuclear generation of electricity. Many of these anti-nuclear

ratepayers would desire to close the Diablo Canyon nuclear

generating station, even though it is already constructed and

its closure would increase rates. These individuals’ views would

conflict sharply with those of groups seeking rates as cheap

as possible, presumably including groups such as TURN. There-

fore, to accommodate these differing viewpoints, the Commis-

sicn should logically extend to the Sierra Club, the Friends of

la Indeed, the Commission quite clearly seeks to advance one side

of the issue. It has favored a group that will argue for reduction

of current rates for certain ratepayers, at the expense of the compet-

ing concerns enumerated here.

2 Appendix at A-17.

3 Some such opposition is based upon environmental or safety

grounds; there is controversy concerning whether nuclear genera-

tion will cost less or cost more. Whichever view TURN takes of

this issue will thus conflict with the positions of substantial numbers

of ratepayers and will affect the rates they pay. See Pacific Gas &

Elec. Co. v. California Energy Conservation & Devel. Comm’n,

461 U.S. 190 (1983).

the Earth, or the Natural Resources Defense Council the same

privilege it has extended to TURN in this case.

If, however, the Commission were to permit anti-nuclear

groups to disseminate literature through PG&E’s billing envelope,

it must logically permit use of the envelope by citizens’ groups

supporting nuclear generation. The Atomic Energy Forum

thus might apply for and be granted the use of PG&E’s envelope.

Nor does the logic of the PUC’s position allow it to stop there.

The Commission would just as logically need to open the en-

velope to a wide variety of other groups with competir~ con-

cerns, among whom it would be required to choose on tae basis

of message content.

For example, many groups believe that more use of co-

generation will lower rates. Others, however, believe that co-

generation primarily benefits those who are able to set up their

own cogeneration facilities while increasing rates for other

ratepayers. * Accordingly, the Commission’s logic means that

it should force PG&E to carry literature from groups on various

sides of the cogeneration controversy, particularly if it is to

provide ratepayers with exposure to a variety of views.

Even more groups would have antagonistic views on rate

design. As the Commission has pointed out, TURN sometimes

favors certain groups of consumers at the expense of other

groups of consumers in its rate design arguments. 5 Such con-

flicts are inherent in rate design. Thus elderly ratepayers, per-

haps represented by a group such as the American Association

4 The depth of this controversy, which clearly affects daily rates

paid by TURN’s constituency, can be appreciated by consideration

of this Court’s decision in FERC v. Mississippi, 456 U.S. 742 (1982).

The Court split five to four, after having received dozens of amicus

curiae briefs from entities on all sides of the cogeneration issue.

5 Appendix at A-15.

of Retired Persons, should obtain envelope space to advance

their concerns. Local chambers of commerce or small business

coalitions, which represent business energy users that are disad-

vantaged by “two-tiered” rates preferring certain consumers and

placing the resultant increased costs upon businesses, should be

permitted to respond. 7 Furthermore, since the poor as a class

are not identical to the elderly and could be disadvantaged by

adoption of their agenda, the Welfare Rights Organization should

be permitted to oppose the views of TURN (as well as opposing »

those of the AARP and small businesses). 8

Groups supporting time-of-day or marginal-cost pricing,”

as well as groups supporting or opposing lifeline“ rates 10 and

6 i.etired persons, for example, might benefit more from lifeline

rates than most other groups, including the poor. See infra note 10.

7 These groups would be “pro-consumer” in that higher electric rates

for businesses mean lesser productivity and hence fewer jobs for

consumers. Economically, two-tiered rate design is open to criticism

as a misallocation of resources. TURN could not be expected to

represent this viewpoint and indeed would be likely vigorously to

oppose it.

8 See infra note 10.

9 Marginal-cost pricing consists of higher prices at peak periods, when

generating capacity is used to the point of inefficiency and elec-

tricity costs more than at other times of the day. This rate design

would benefit persons who can shift their energy use, such as some

homeowners. It would disadvantage businesses, persons dependent

on daily air conditioning or heat, and persons seeking jobs.

10 “Lifeline” rate design prices the first units of electricity, up to the

amount necessary for a small household, less than greater amounts.

Large lifeline rates can be criticized as economically inefficient,

because (for example) they would result in subsidy to a wealthy

individual living in a condominium. Such rates might be most

beneficial to elderly ratepayers. Persons below the poverty line,

however, could be given significantly greater assistance by a means-

tested program. Many groups of middle-income consumers, busi-

nesses, their customers, and persons seeking jobs, might be dis-

advantaged by certain lifeline rate designs. Again, TURN opposes

the interest of many ratepayers no matter which position it takes.

6-

i — et

supporting or opposing automatic cost-of-service adjustments, 11

would all have still other agendas, each of which would benefit

certain classes of consumers at the expense of others. Indeed,

citizens having different views of appropriate use of boiler fuels

may have an even greater impact on rates than TURN could

hope for; for example, it has been estimated that certain regu-

latory reforms in the use of natural gas could prevent up to

$44 billion in unnecessary capital inver‘ment 12 Citizens agreeing

with this view might well regard TURN as detracting from the

real issue and sidetracking reforms that would reduce rates.

Finally, some cousumers would be likely to have the view that

TURN’s efforts to lower current rates will mortgage the future

for slight benefit in the present, and will disproportionately

raise future rates.

All of these viewpoints conflict with and have as legitimate

a claim to be included as TURN’s view. Nor is it fanciful to

suppose that such groups will assert their interests in response

to the invitation; such diverse organizations as the NAACP" and

the Friends of the Earth 14 have argued before federal energy

agencies. In choosing among such groups, the PUC would in-

11 Cf. Warren, Regulated Industries’ Automatic Cost of Service Adjust-

ment Clauses: Do They Increase or Decrease Cost to the Con-

sumer? 55 NOTRE DAME LAW. 333, 345 (1980).

12 See Foster Nat. Gas Rep. No. 1515, May 2, 1985, at 1 (report-

ing on efforts to repeal the Powerplant and Industrial Fuel Use

Act, accompanied by worst-case estimates of its costing $44 biilion

and resulting in loss of 1.5 million jobs).

13 NAACP v. FPC, 425 U.S. 662 (1976) (effort to cause FC to regu-

late so as to prevent employment discrimination by its regulatees).

i4 Just and Reasonable National Rates for Sales of Natural Gas (Opin-

ion 699), 51 EPC. 2212, 2288-95 (1974) (effort to use National

Environmental Policy Act to force FPC to prepare environmental

impact statement for natural gas ceilings rejected as a “complete

exercise in futility” that would “so burden this proceeding as to

make it impossible to establish just and reasonable rates as required

by the Natural Gas Act”’).

evitably be making the decision to promote or prevent their

speech on the basis of its content. 15 Furthermore, if the PUC

were to require inclusion of all competing points of view, there

would be inadequate room. Thus if groups other than TURN

were to respond to the Commission’s invitation for applications,

and if the Commission were itself to respond favorably, January

and February’s envelope might be dedicated to pro- and anti-

nuclear groups, March and April might be occupied by pro- and

anti-cogeneration groups, May might be given to small businesses,

June to the AARP, and so on. Indeed, since the potential

number of differing points of view is infinite, most would be

excluded.

The exclusion would obviously extend to messages that

PG&E might otherwise have chosen to distribute. In fact, every

message sent by TURN will represent an instance in which the

PUC has favored the content chosen by TURN over that chosen

by PG&E. The logical extension of the PUC’s policy is to require

carriage of various publie interest groups’ competing messages

during all twelve months of the year, so that PG&E is completely

excluded from the use of its own property. There is no reason

the Commission cannot accomplish this result if it can do what

it has done in the case at bar.

B. The Commission’s Approach Places It in the Position of

Performing a Function of Editors

The Commission’s assumption “that the ratepayers will

benefit more from exposure to a variety of views ic strikingly

similar to the argument considered by this Court in Miami Herald

Publishing Company v. Tornillo, 418 U.S. 241 (1974), that

“government has an obligation to insure that a wide variety of

15 Indeed, the worst possible case would materialize if the variety of

applications here hypothesized failed to result. Now that the

Commission has favored TURN, the segment of ratepayers that

TURN itself favors remains unchecked by any opposing consumer

segment whose interests are harmed by TURN’s positions.

8.

views reach the public.” This Court rejected that argument in

Tornillo, noting that

[h]Jowever much validity may be found in these

arguments, at each point the implementation of

a remedy such as an enforceable right of access

necessarily calls for some mechanism, either govern-

mental or consensual. If it is governmental coer-

cion, this at once brings about a confrontation

with the express provisions of the First Amendment.

The essence of the problem, both in Tornillo and in the case at

bar, is that government is prohibited from intruding in the “func-

tion of editors.” Jd. at 254-59. See also Consolidated Edison

Company v. Public Service Commission, 447 U.S. 530 (1980)

(“Government action that regulates speech on the basis of its

subject matter ‘slip[s] from the neutrality of time, place and

circumstance into a concern about content:); Columbia

Broadcasting System v. Democratic National Committee, 412

U.S. 94 (1973); Pittsburgh Press Company v. Human Relations

Commission, 413 U.S. 376, 391 (1973) (decisions do not

authorize any restriction whatever, whether of content or

layout,” and Court reaffirmls] unequivocally the protec-

tion afforded to editorial judgment’’).

For these reasons, the present case is different from Prune-

yard Shopping Center v. Robins, 447 U.S. 74 (1980). Govern-

ment need not perform any function as “gatekeeper” or editor

to require a shopping center to accommodate leaflets, as in

Pruneyard. Government need not evaluate any leaflet to deter-

mine whether it is an appropriate or “efficient” use of the

shopping center. The PUC’s approach, however, would require

it to decide on a continuous basis, as editor or gatekeeper, which

of various competing uses of PG&E’s envelope was most ap-

propriate or efficient in any given month.

C. The Commission’s Approach Will Reduce Information

Available to Consumers from the Utilities that Serve Them,

Because it Will Both Exclude and Discourage Such Speech.

Information from utilities is valuable to consumers. TO

take but one example, utilities have been in the forefront in

advocating and explaining conservation measures! © Thus the

reason that speech by a utility is protected is not merely that

it is of value to the utility, but that it is of value to recipients.

Cf. Consolidated Edison Company v. Public Service Commission,

supra; Central Hudson Gas & Electric Corporation v. Public

Service Commission, 447 U.S. 557 (1980).

The avenues of communication available to utilities, how-

ever, are limited. Unlike self-styled consumer advocates such as

those at TURN or others of Respondents, their personnel are

unlikely to be featured guests on television programs, and they

are extremely unlikely to be able to obtain charitable contribu-

tions to publish their views, as TURN expects to do. Restric-

tions upon their advertising budgets, which are imposed either

directly by regulation or by the marketplace, together with

regulatory approaches such as that of the PUC in this case, would

reduce the ability of utilities to furnish consumers valuable

information concerning how they are serving the marketplace

or how consumers can best use the resources available to them.

The editorial intrusion in the present case is all the more

likely to discourage such speech because it not only sets up

an artificial public forum, but requires carriage of views directly

attacking the utility by the utility itself.17 Such cases as Wooley

16 See PG&E Progress, Dec. 1984, at 6, reproduced in Appendix at

A-183 (newsletter concerning weatherstripping); Cf. Id. at 3 (win-

dow coverings); Id. at 8 (pilotless, energy-efficient appliances).

PG&E is typical of local gas and electric utilities in this regard.

17 Nor does the disclaimer required by the Commission solve the

problem. No reasonable person would have believed that the car’s

owner was the author of the motto in Wooley, but the lack of

attribution, or lack of necessity of a disclaimer, was not sufficient

to support the state’s requirement that the objectionable message

be carried. Furthermore, the PUC’s choice of TURN as the proper

entity to be favored with governmentally required use of the billing

envelope, reflects the PUC’s express finding that TURN’s message

v. Maynard, 430 U.S. 705 (1977), and Columbia Broadcasting

System v. Democratic National Committee, supra, establish

what has been called the right not to speak. One rationale

for the right not to speak is that, if forced speech is tied to

everyday activities or to the exercise of the speaker’s own

expression, it discourages those activities or speech. CBS v.

DNC, supra. Throughout the United States, entities such as

PG&E will likely be discouraged by the PUC’s action here from

engaging in speech that is vigorously responsive to current

issues, which is the kind of speech that is most likely to be

useful to recipients, because they will reasonably fear that

their expression will be considered controversial and will invite

retaliatory regulation in the form of a requirement that they

carry TURN-type inserts. The PUC’s action thus assures speech

from utilities that will be more bland, timid, and noncontrover-

sial, and hence less useful, than ever before. 18

II. THE PUC’S DECISION CANNOT BE SUP-

PORTED BY MONOPOLY OR REGULA-

TORY ARGUMENTS.

A. The Commissions Wasted Space and “Property”

Rationales Do Not Support Its Decision.

The Commission’s ‘‘wasted space or extra space reason-

ing could be equally applied to a wide variety of PG&E property.

For example, the side panels of PG&E trucks might be viewed as

is “appropriate” and “efficient.” This finding, and the choice of

TURN, is itself an endorsement. Finally, the disclaimer does not

remove the effect of the order in discouraging PG&E’s own expres-

sion. See infra note 18 and accompanying text.

18 The disclaimer required by the Commission does not address this

concern.

In addition, the possibility that PG&E will be excluded from

the use of its own envelope in certain months reduces its speech.

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wasted space. Taxicabs and express trucks sometimes carry

advertising, and the requirement that one-quarter of PG&E’s

panel trucks carry a TURN advertisement (or an advertisement

from one of the many other groups whose views might conflict

with TURN’s) would be as logical as the order in question

here. Similar reasoning supports the conclusion that vacant

utility company offices, such as those not used when employees

are on vacation, should be made available to TURN, and utility

company secretaries who have any spare time during the day

should use that time typing for groups such as TURN. Again,

these conclusions are as logical as the one in the present case.

Nor can the “property” reasoning of the PUC support its

order. In the first place, property interests are characterized

entirely by rights of use and enjoyment, 19 and the PUC’s deci-

sion creates a fictional property in order to deprive PG&E of

the use of the actual property, its envelope. Further, it is mean-

ingless to speak of a property interest in extra space” that

would be theoretically held as a tenancy in common by millions

of people with antithetical interests, the ratepayers. The same

reasoning could be used to convert every item of shareholders’

property to ratepayers property. The assignment of that

alleged property to a single entity such as TURN, which has

interests antagonistic to the uses many persons would make

of it, cannot be justified by any traditional view of property.

B. The Utility in Question Does Not Have a Monopoly on the

Media of Communications, and its Billing Envelope is Not a

Public Forum.

PG&E does not have a monopoly in any sense upon any

medium of communication. Its customers have access to many

television channels, dozens of cable channels, a variety of metro-

politan newspapers, a wide selection of neighborhood news

sources, dozens of radio stations, thousands of periodicals, and

an infinite variety of communications by mail or telephone. By

19 See infra note 20.

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oe

es: |

— — = a

indicating interest in the views of any of a diverse variety of

organizations (presumably including TURN), and sometimes

for the payment of a modest fee, PG&E’s customers can cause

themselves to be recipients of the newsletters of groups ranging

from Accuracy in Media to the ACLU. Furthermore, any or-

ganization can reach PG&E’s customers, through solicitation by

mail, telephone, or other media. Thus the State’s authority to

regulate does not, and cannot, find its justification in any defect

in the communications market.

In Perry Education Association v. Perry Local Educators’

Association, 103 S. Ct. 948 (1983), this Court rejected an argu-

ment strikingly similar to Respondents’ here. A union seeking

to organize teachers sued for the right to use the school’s internal

information distribution system and internal teacher mailboxes.

The Court squarely held that the school’s internal distribution

system was not, by tradition, a public forum; neither was it

dedicated as a limited public forum, as the union argued, or

as TURN argues here. Furthermore, the mere fact that the

school allowed church groups, the YMCA, or the Cub Scouts

to use the internal system did not make it a “limited public fo-

rum.“ Nor did its use by the union’s rival, which was an estab-

lished teacher union. The Court in Perry relied heavily upon the

existence of a wide variety of media of expression, including

the post office, that were available to the petitioner there and

are available to TURN here. Perry squarely refutes the mono-

poly contention in the case at bar, as well as the contention that

PG&E’s use of its own billing envelope makes the envelope a

public forum.

The State’s authority to regulate, here, derives from PG&E’s

natural monopoly in the furnishing of gas or electricity. Regu-

lation is a substitute for economic competition. This regulatory

authority is not unlimited; it must not be exercised so as to

engage in management decisions or interfere with PG&E’s legiti-

mate use of its property or exercise of its business.2°As this

20 Historically, this regulatory authority traces to Munn v. Illinois,

94 U.S. 113 (1877), in which the court said that the grain elevators

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Court has said, While the State may regulate with a view to

enforcing reasonable rates and charges, it is not the owner of

the property of public utility companies, and it is not clothed

with the general power of management incident to ownership.

... Missouri ex rel. Southwestern Bell Telephone Company

v. Public Service Commission, 262 U.S. 276, 289 (1923); See

also Pond, Restraining Regulatory Activism: The Proper Scope

of Public Utility Regulation, 35 ADMIN. L. REV. 423 (1983)

(discussing Consolidated Edison and Central Hudson as well as

other cases in the context of the asserted monopoly justifica-

tion for regulation).

The same argument concerning monopoly made by the PUC

here could actually be better asserted in Perry Education Associa-

tion, supra, or in the case of a major metropolitan newspaper.

While PG&E does not have a monopoly (or anything close to

one) in the relevant media of expression, a metropolitan news-

paper in the United States today is in fact very likely to be

precisely such a monopoly. Yet no court would accept the

argument that such a newspaper, no matter how firmly estab-

lished its monopoly might be, could be required to provide

at issue stand. . . in the very ‘gateway of commerce,’ and take

toll from all who pass.” Id at 132. PG&E stands at the “gateway

of commerce” only with respect to gas and electricity. It does

not stand at the “gateway of commerce” in expression or com-

munications; in fact, it is itself a user and tollpayer at that gate.

This Court has repeatedly rejected efforts to require even

businesses affected with a public interest to allow public use of their

property without compensation. E.g., Reagan v. Farmer’s Loan &

Trust Co., 154 U.S. 362, 410 (1894) (“Is it any less a departure

from the obligations of justice to seek to take, not the title, but

the use, for the public benefit, at less than its market value?”);

Smyth v. Ames, 169 U.S. 466, 546 (1898) (“the corporation may

not be required to use its property for the benefit of the public

without receiving just compensation”); Bowles v. Willingham,

321 U.S. 503, 517 (1944) (rent controls upheld only on condition

that owners not be required to sell any commodity or offer any

accommodation”); NAACP v. FPC, supra; Consolidated Edison

Co. v. Pub. Serv. Co., supra; Central Hudson Gas & Elec. Corp.

v. Pub. Serv. Co., supra.

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——

its pages for the use of a separate entity selected by a government

agency, when the newspaper’s own editors would not choose

to publish the view of that separate entity and indeed would not

even see the pages until they were published. Precisely that

result has been reached by the PUC here. See Miami Herald

Publishing Company v. Tornillo, supra. Such a requirement

would be unconstitutional even in the broadcasting context,

in which there is justification for regulation to prevent frequency

interference. Columbia Broadcasting System v. Democratic

National Committee, supra. It is even less logical to uphold

such a requirement in the case of an entity such as PG&E, that

is not in the communications business and has no claim to any

communications monopoly.

A part of TURN’s argument hinges on the theory that

TURN will obtain more reader attention for its monetary

solicitations if they are sent with the recipient’s electric bill.

Thus TURN expects to gain a fundraising advantage over groups

that must use direct mail, such as the American Cancer Society,

the YMCA, or the Cub Scouts, by using for solicitation pur-

poses an envelope that a captive audience must open and give

attention to. TURN’s effort to obtain such a competitive ad-

vantage in the marketplace of fundraising is not a cognizable

legal interest. It consists, ironically, of an effort to obtain the

involuntary competitive benefits of the billing envelope for the

benefit of TURN, so as to obtain monetary contributions that

would otherwise flow to charitable organizations that PG&E’s

customers might consider more worthy. TURN's argument

in this regard is inconsistent with Perry Education Association,

supra.

CONCLUSION

The decision of the California Public Utilities Commission

is inconsistent with the first amendment and should be reversed.

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Respectfully submitted,

David Crump,

Counsel of Record

Jean Powers

South Texas College of Law

1303 San Jacinto

Houston, Texas 77002

(713) 659-8040

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