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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0160%3A44

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1986
- **Citation:** 475 U.S. 1

## Text

No. 84-1044 (2) Office Supreme Court, US. |
FILED
IN THE
1985
SUPREME COURT JUL 20 '9
OF THE UNITED STATES | y. cus STEVAS.
October Term, 1984 asm =

PACIFIC GAS AND ELECTRIC COMPANY,

Appellant,
vs.

PUBLIC UTILITIES COMMISSION OF THE
STATE OF CALIFORNIA, et al.,

Appellees.

ON APPEAL FROM
THE SUPREME COURT OF CALIFORNIA

BRIEF OF THE STATES OF CALIFORNIA,
CONNECTICUT, INDIANA, LOUISIANA,
MONTANA, NEBRASKA, NEVADA, NEW
MEXICO, NORTH CAROLINA, NORTH

DAKOTA, OHIO, RHODE ISLAND, TEXAS

AND WEST VIRGINIA AS AMICI CURIAE

IN SUPPORT OF APPELLEES

State of California
JOHN K. VAN DE KAMP
Attorney General
HERSCHEL T. ELKINS
Senior Assistant Attorney General
*MICHAEL R. BOTWIN
Deputy Attorney General

3580 Wilshire Boulevard
Los Angeles, California 90010
(213) 736-2160

*Counsel of Record

(List of Counsel for Amici continued inside front cover)

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ieieticnigiarntimemieantintiemmemene 22, 24

Nebbia v. New York (1934)
291 U.S. 502, 78 L.Ed. 940, 54 S.Ct. SOS ........ 18

Ohralik v. Ohio State Bar Assn. (1978)
436 US. 447, 56 L.Ed.2d 444, 98 S.Ct.
1912, reh. den. 439 U.S. 883, 58 L.Ed.2d
Fo i 20

Parker v. Brown (1943)
317 U.S. 341, 87 L.Ed. 315, 63 S.Ct. 307 .......... 7

Perry Educ. Assn. v. Perry Local Educators’ Assn.
(1983)
460 US. 37, 74 L.Ed.2d 794, 103 S.Ct.
FIT sccicncsintisntisanenneeecnitnisiniansiineniinibiasievestiendinunenianetes 12, 20

Pruneyard Shopping Center v. Robins (1980)
447 US. 74, 64 L.Ed.2d 741, 100 S.Ct.
TIED. iccbidiscchadicaniatantemishincchinimetnerinbarsiendenmntcemenetss 18, 23

Red Lion Broadcasting Co. v. F.C.C. (1969)
395 U.S. 367, 23 L.Ed.2d 371, 89 S.Ct.

SFOS sciccetersibieretnttinntilitntinen 13, 20, 21, 22, 24
Sale v. Railroad Commission (1940)
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Seattle Times Co. v. Rhinehart (1984)
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Be GRU eieretentecesicdetenntpreessescsveesecenscceesseee 12, 20

United States v. Topco Associates (1972)
405 US. 596, 31 L.Ed.2d 515, 92 S.Ct.

yea RARE dhlita «3 aA NED ES a OOOO 6
US. v. Albertini (decided June 24, 1985)
ey ey De GED crrerecceemnerrrereeeenens 12

US. v. Underwriters Assn. (1944)
322 U.S. 533, 88 L.Ed. 1440, 64 S.Ct.
TI diciasicienieiiecaiaeeinianesniineeteaiateinaibaundeduetnnsnneaninistsinentaccsin 6

U.S. Postal Service v. Greenburgh Civic Assns.
(1981)
453 US. 114, 69 L.Ed.2d 517, 101 S.Ct.
BETTE cocecerereszscecenccenvanssesneensuscusssennscssessumsesasesousees 12, 20

Va. Pharmacy Bd. v. Va. Consumer Council (1976)
425 U.S. 748, 48 L.Ed.2d 346, 96 S.Ct.
BIRT . ccremmstctnttentemamtnenietememmaneimen 12, 24

West Virginia-Citizen Action Group et al. v. Public
Service Comm'n (Case No. 16512, decided

May 30, 1985)

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Wooley v. Maynard (1977)

430 US. 705, 51 L.Ed.2d 752, 97 S.Ct.

BGITD cssevesunensinnsedsantntnentnnenscennesesssnsnsennscnstoncenssecence 22, 23

Young v. American Mini Theatres (1976)
427 US. SO, 49 L.Ed.2d 310, 96 S.Ct.
2440, reh. den. 429 U.S. 873, SO L.Ed.2d
Seek Gee Be teiitiitientictene 20

Zauderer v. Office of Disciplinary Counsel (decided
May 28, 1985)
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Statutes

20 California Administrative Code

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California Public Utilities Code

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Constitutions
California Constitution
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en

No. 84-1044

IN THE
SUPREME COURT

OF THE UNITED STATES
October Term, 1984

PACIFIC GAS AND ELECTRIC COMPANY,
Appellant,
vs.

PUBLIC UTILITIES COMMISSION OF THE
STATE OF CALIFORNIA, et al.,
Appellees.

BRIEF OF THE STATES OF CALIFORNIA,
CONNECTICUT, INDIANA, LOUISIANA,
MONTANA, NEBRASKA, NEVADA, NEW
MEXICO, NORTH CAROLINA, NORTH

DAKOTA, OHIO, RHODE ISLAND, TEXAS

AND WEST VIRGINIA AS AMICI CURIAE

IN SUPPORT OF APPELLEES

INTEREST OF AMICI

Amici are the States of California, Connecticut, Indiana,
Louisiana, Montana, Nebraska, Nevada, New Mexico,
North Carolina, North Dakota, Ohio, Rhode Island, Texas
and West Virginia. Public utilities, operating as
monopolies, exist in our jurisdictions. They cannot exist

without State sanction, and having given such sanction, we
have the responsibility to closely supervise and regulate
these utilities to protect the public from monopolistic
abuses. Each State must be free to exercise this power in a
reasonable manner for the benefit of its citizens.

Appellant's brief challenges the ability of the State to
issue reasonable orders it deems appropriate to enhance
public awareness of and participation in the State's
regulatory proceedings concerning public utilities by
allowing ratepayer associations access to public utility
billing envelopes. Such public participation can greatly
assist the State in fulfilling its duties to assure efficient
utility services at reasonable rates. We consequently appear
aS amici to protect our traditional police powers over public
utilities.

SUMMARY OF ARGUMENT

American policy strongly disfavors monopolies. Public
utilities can only operate as monopolies with State
permission. Because of the inherent dangers that monopo-
lies pose, public utilities are subject to strict State control.
Pursuant to its traditional police powers, the State can issue
orders authorizing ratepayer associations to insert their
literature in the billing envelopes. Such orders can be
properly made regardless of whether the “empty space” in
the billing envelopes belongs to the public utility or to the
ratepayers.

Requiring envelope sharing does not violate the public
utility’s right of free speech or free association under the
First and Fourteenth Amendments. The challenged order
neither compels nor prohibits PG&E’s speech. PG&E
remains free to enclose its literature in each monthly billing

envelope without restriction. Rigid disclosure requirements
prevent the public from confusing ratepayers’ literature for
that of appellant.

The challenged order promotes the values of free speech
by extending a voice to ratepayers. By encouraging
ratepayers’ speech, the public becomes better informed and
more active in the regulatory process. Consequently, the
State receives a broader spectrum of views, information,
and proposals from its citizens. Thus, the State is able to
regulate public utilities in a wiser and more equitable
manner.

ARGUMENT
I,

THE STATE HAS THE POWER TO REA-
SONABLY REGULATE THE USE OF
BILLING ENVELOPES PURSUANT TO ITS
POLICE POWERS OVER PUBLIC UT-
ILITIES

A. Introduction

This case challenges the State's right and ability to
regulate public utilities. Public utilities are state-created and
regulated monopolies. Like most regulatory agencies, the
California Public Utilities Commission (hereinafter
“P.U.C.” or the “Commission” has a mandated duty to set
“just and reasonable rates.” Cal. Pub. Util. Code § 451 (cf.
16 U.S.C.A. §§ 2601 and 2611(3) re: federal requirements
concerning electric utilities). It also has the duty to assure
“adequate, efficient, just and reasonable service” to the
public. Cal. Pub. Util. Code § 451.

Effectuating these policies requires public awareness of
and public participation in Commission activities. For
example, state law requires that utilities notify customers of
requested rate increases and provide them with an
opportunity to contest the proposed increases. Cal. Pub.
Util. Code § 454. Federal law pertaining to electric utilities
contains similar provisions. 16 U.S.C.A. §§ 2621 and
2625(f).

The P.U.C., after public notice and hearing, gave a
consumer advocacy organization, Toward Utility Rate
Normalization (hereinafter ““TURN”), the right to include
inserts in the “empty space” of the billing envelopes of
Pacific Gas and Electric Company (hereinafter “PG&E”)
four times per year. The P.U.C.’s order provides a
mechanism whereby knowledgeable ratepayer associations
have the opportunity to solicit membership and funds, to
disseminate important information, and to participate
effectively in the regulatory process. This order was well
within the P.U.C.’s constitutional authority to establish
rates and rules, and take testimony. (Cal. Const. art. 12,
§ 6). The “empty space” was determined by prior decision
to be the property of the ratepayers and not that of the
public utility. (P.U.C. Decision No. 93887.) This order is
now final. See P.U.C.’s Motion to Dismiss, p. 8.

PG&E contends that the Commission’s order granting
TURN access to the billing envelopes is constitutionally
infirm as it violates PG&E's rights to freedom of speech
and freedom of association under the First and Fourteenth
Amendments.

Amici contend that the central issue in this case does not
turn on who owns the billing envelope, who pays the
postage, or peculiarities of postal rates, but upon more
fundamental issues concerning the State’s ability to regulate

public utilities. The order is a reasonable exercise of the
Commission’s regulatory powers. It fosters public knowl-
edge, debate and participation in P.U.C. matters. Moreover,
the order encourages our citizenry to petition their
government on the cost of vital services and minimizes the
potential harm of undue influence by state-created
monopolies in subjecting them to more adversarial
proceedings before the P.U.C. Ultimately, the goal is to
enhance the Commission’s ability to set equitable rates and
assure reasonable service to the public.

B. Inasmuch as National Policy Strongly
Disfavors Monopolies, The P.U.C.’s Order Is
a Reasonable Exercise of the State’s Police
Powers in Regulating State-Created
Monopolies

The dangers of monopolies are well known in American
history. The Sherman Act —

“was enacted in the era.of ‘trusts’ and of
‘combinations’ of businesses and of capital
organized and directed to control of the market
by suppression of competition in the marketing of
goods and services, the monopolistic tendency of
which had become matter of public concern. The
end sought was the prevention of restraints to free
competition in business and commercial transac-
tions which tended to restrict production, raise
prices or otherwise control the market to the
detriment of purchasers or consumers of goods
and services, all of which had come to be regarded
as a special form of public injury.” Apex Hosiery
Co. v. Leader (1940) 310 U.S. 469, 492-93, 84
L.Ed. 1311, 310 S.Ct. 982.

Section 1 of the Sherman Act (15 U.S.C.A § 1) was
drafted in the broadest possible terms. “Language more
comprehensive is difficult to conceive.” U.S. v. Under-
writers Assn. (1944) 322 U.S. 533, 553, 88 L.Ed. 1440, 64
S.Ct. 1162; Goldfarb y. Virginia State Bar (1975) 421 US.
773, 787, 44 L.Ed.2d 572, 95 S.Ct. 2004, reh. den. 423 US.
886, 46 L.Ed.2d 118, 96 S.Ct. 162. This court has observed
that —

“Antitrust laws in general, and the Sherman Act
in particular, are the Magna Carta of free
enterprise. They are as important to the
preservation of economic freedom and our free-
enterprise system as the Bill of Rights is to the
protection of our fundamental personal
freedoms.” United States v. Topco Associates
(1972) 405 U.S. 596, 610, 31 L.Ed.2d 515, 92 S.Ct.
1126; Community Communications vy. Boulder
(1982) 455 U.S. 40, 56, 70 L.Ed. 2d 810, 102 S.Ct.
835.

Public utilities are not exempt from antitrust laws. 16
U.S.C.A. §§ 2602(1) and 2603. Their right to exist and
function as monopolies is premised upon State authoriza-
tion and then, only when actively supervised by the State.
Cantor v. Detroit Edison Co. (1976) 428 U.S. 579, 596-597,
49 L.Ed.2d 1141, 96 S.Ct. 3110; California Liquor Dealers
v. Midcal Aluminum (1980) 445 U.S. 97, 63 L.Ed.2d 233,
100 S.Ct. 937.

An implied exemption to the Sherman Act was created
by this Court in the area of State economic regulation.
There is “nothing in the language of the Sherman Act or in
its history which suggests that its purpose was to restrain a
state or its officers or agents from activities directed by its

legislature.” Parker v. Brown (1943) 317 U.S. 341, 350-51,
87 L.Ed. 315, 63 S.Ct. 307.

State regulation of public utilities falls well within the
“implied exemption” rule. This Court has observed that —
“...[Plublic utility regulation typically assumes
that the private firm is a natural monopoly and
that public controls are necessary to protect the

consumer from exploitation.” Cantor v. Detroit
Edison Co., supra at 595-596.

In his dissenting opinion in Consolidated Edison v. Public
Serv. Comm’n (1980) 447 U.S. 530, 65 L.Ed.2d 319, 100
S.Ct. 2326, Justice Blackmun noted the unique nature of a
public utility as a state-created monopoly and commented
as follows:

“This exceptional grant of power to private
enterprises justifies extensive oversight on the part
of the State to protect the ratepayers from
exploitation of the monopoly power through
excessive rates and other forms of overreaching.
For this reason, the State regulates the rates that
utilities may charge.” Id. at 550.

In Cantor v. Detroit Edison Co., supra, this Court made a
similar observation:

“Unquestionably there are examples of eco-
nomic regulation in which the very purpose of the
government control is to avoid the consequences
of unrestrained competition ...[A]ll economic
regulation does not necessarily suppress competi-
tion. On the contrary, public utility regulation
typically assumes that the private firm is a natural
monopoly and that public controls are necessary
to protect the consumer from exploitation.” Jd. at

595-596; Sale v. Railroad Commission (1940) 15
Cal.2d 612, 617, 104 P.2d 38.

The P.U.C.’s order promotes effective regulation of
utilities. The Commission reasonably found that a
knowledgeable and active public represented by experi-
enced ratepayer organizations will provide ideas, sugges-
tions, information and proposals that will lead to better
informed decision-making by the Commission. Clearly, the
order enhances public scrutiny of public utility proposals.

Rate setting is a complex and difficult process and is
beyond the ability of most citizens to present meaningful
comment. While state law provides for the payment of
attorneys’ fees, expert fees and other costs to consumers
under certain circumstances (20 Cal.Admin. Code §§ 76.01
et seq. cf. 16 U.S.C.A. § 1632), compensation for these
expenses are not guaranteed. Nor does the possibility of
such compensation necessarily encourage grassroots parti-
cipation in P.U.C. matters. Requiring public utilities to
“envelope share” with ratepayer organizations is the most
effective means of affording the general customer
population a meaningful mechanism to become involved in
P.U.C. matters.

The value of the contributions made by ratepayer
organizations in P.U.C. proceedings is substantial. The
P.U.C. expressly found that “{plarticipation by representa-
tives of consumer groups tends to enhance the record in our
proceedings and complements the efforts of the Commis-
sion staff” and that “‘TURN’s proposal will help assure the
fullest possible participation in our proceedings.” (See
P.U.C.’s Motion to Dismiss, A-36, Findings 29 and 30.)

Both utility shareholders and utility customers have
strong economic reasons for having their views prevail.
Shareholders want high rates in order to achieve higher

dividends. Conversely, customers want to minimize the
amount of their utility bills. The P.U.C. is interested in
making wise, informed decisions so that rates will be ‘“‘just
and reasonable” to customers and so that shareholders may
enjoy a reasonable rate of return on their investment. In
order to foster these goals, the P.U.C. exercised its broad
police powers over public utilities and established a
mechanism to give PG&E’s 3.6 million electric customers
and 2.9 million gas customers an effective voice before the
Commission.

In the area of public utility regulation, the competition in
the “marketplace of ideas” comes from the public utility’s
customers rather than from competing businesses. The
P.U.C.’s order encourages such competition which is the
cornerstone of our economic system. Through weighing
competitive ideas, information and proposals, the Commis-
sion can more ably discharge its duties in regulating public
utilities.

C. The State Has an Important Interest in
Promoting Public Awareness and Public
Participation in P.U.C, Matters

Both Consolidated Edison v. Public Serv. Comm'n, supra,
and Central Hudson Gas y. Public Service Comm’n (1980)
447 US. 557, 65 L.Ed.2d 341, 100 S.Ct. 2343, concerned the
public utility’s right of free speech. Now this Court must
decide if the State can foster the speech of its citizens by
requiring public utilities to enclose literature from ratepayer
associations in billing envelopes. In the case of PG&E,
customers in 48 of the State’s 58 counties, 3.6 million
electric customers, 2.9 million gas customers, and 3.7
million households are involved. (See Appellant’s Brief, pp.
3-4.)

—_—

The State’s ability to provide a forum for speech to
millions of its citizens is critical to its police powers over
public utilities. Recently, this issue was decided favorably to
the State by the West Virginia Supreme Court. West
Virginia-Citizen Action Group et al. v. Public Service
Comm’n (Case No. 16512, decided May 30, 1985) —
W. Va. —_., — S.E.2d —. In that case, the Appalachian
Power Company, a public utility, enclosed a pamphlet in
each billing envelope which described acid rain as a
“perceived but unproved problem” and urged each
customer to contact certain elected officials to defeat
pending federal legislation. Several non-profit organizations
which had an interest in the acid rain problem requested
permission first from the public utility and subsequently
from the Public Service Commission to enclose literature
presenting the opposing side of the issues in the billing
envelopes. The public utility denied the request outright,
while the commission denied the request on jurisdictional
grounds.

In reversing the order of the Public Service Commission,
the West Virginia Supreme Court stressed the importance
of “fairness” and providing a “public forum” so that
complete information involving controversial issues may
reach the consuming public. The Supreme Court stated the
following:

“Accordingly, we hold that where a public utility
communicates, through its billing process, with its
customers upon matters concerning the costs
customers must bear if certain legislation con-
cerning utilities is enacted into law, the Public
Service Commission of West Virginia has
jurisdiction under its authority to (1) safeguard
the interests of the public, and (2) regulate the

oe ee teeth

—

‘practices, services and rates of public utilities,’ to
establish methods by which the utility’s customers
may receive contrasting or opposing viewpoints
concerning such costs.” (Slip Opinion, p. 21.)

Similarly, the P.U.C.’s order is well within its regulatory
powers over public utilities. The Legislature has plenary
powers over public utilities. Cal. Const. art. 12,§ 5. Many
of these powers have been delegated to the Commission
including the power to establish its own procedures (Cal.
Const. art. 12, § 2), the power to “fix rates, establish rules,
examine records, issue subpenas, administer oaths, take
testimony, punish for contempt, and prescribe a uniform
system of accounts” for all public utilities under its
jurisdiction (Cal. Const. art. 12, § 6), and the power to “do
all things, whether specifically designated in this part or in
addition thereto, which are necessary and convenient in the
exercise of such power and jurisdiction” (Cal. Pub. Util.
Code § 701). The P.U.C.’s order is a reasonable exercise of
its authority to fix rates, establish rules and take testimony.
It fosters the Commission’s information-gathering ability by
stimulating public awareness and participation in Commis-
sion matters, thereby creating a “check and balance”
approach to Commission proceedings through broader-
ranging speech.

State law requires that the retail rates charged by public
utilities to their customers be “‘just and reasonable” and that
the public has a right to participate in the rate setting
process. (E.g. Cal. Pub. Util. Code §§ 451 and 454; c/.16
US.C.A. §§ 2601, 2611, 2621, 2631, 2632.) In furtherance
of these legislative goals, the Commission’s order provides a
forum from which the ratepayers’ voice can be heard
thereby encouraging a full, public discussion of issues
pertaining to rates and services while promoting more

—

active, informed public participation in the Commission’s
proceedings. Consequently, the order is a reasonable
exercise of the State’s supervisory powers over its public
utilities because it establishes a procedure to assure that the
Commission discharges its duty in setting equitable rates
and assuring reasonable services in a wise and prudent
manner. As discussed in Argument II, infra, the order does
not infringe on the utility’s freedom of speech or freedom of
association.

Even though the ratepayers do not have a constitutional
right to include their notices in public utility billing
envelopes nor to receive information via such envelopes (c/.
U.S. Postal Service v. Greenburgh Civic Assns. (1981) 453
U.S. 114, 69 L.Ed.2d 517, 101 S.Ct. 2676; Seattle Times Co.
vy. Rhinehart (1984) — U.S. —, — L.Ed.2d —, 104 S.Ct.
2199; Perry Educ. Assn. v. Per.y Local Educators’ Assn.
(1983) 460 U.S. 37, 74 L.Ed.2d 794, 103 S.Ct. 948), U.S. v.
Albertini (decided June 24, 1985) — U.S. —, 53 U.S.L.W.
4844), the State does have an interest and a right to require
such notices when it determines that this is a reasonable
means to promote speech and greater participation by the
public in the rate-setting process. The value of both political
and commercial speech is unquestioned. This court has
recognized —

‘(T]hat people will perceive their own best
interests if only they are well enough informed,
and that the best means to that end is to open the
channels of communication rather than to close
them.” Va. Pharmacy Bd. v. Va. Consumer Council
(1976) 425 U.S. 748, 770, 48 L.Ed.2d 346, 96 S.Ct.
1817.

The goal of the First Amendment is to achieve “the
widest possible dissemination of information from diverse

ne ee ee

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=,

and antagonistic sources ...” (F.C.C. v. Nat. Cit. Comm.
For Broadcasting (1978) 436 U.S. 775, 795; 56 L.Ed.2d 697,
98 S.Ct. 2096, quoting from Associated Press v. United
States (1945) 326 US. 1, 20, 89 L.Ed. 2013, 65 S.Ct. 1416)
and “to preserve an uninhibited market place of ideas in
which truth will ultimately prevail, rather than to
countenance monopolization of that market, whether it be
by the Government itself or a private licensee.” Red Lion
Broadcasting Co. v. F.C.C. (1969) 395 U.S. 367, 390, 23
L.Ed.2d 371, 89 S.Ct. 1794, also quoting from Associated
Press v. United States, supra at 20.

“{S]peech concerning public affairs is more than self-
expression; it is the essence of self-government.” Garrison y.
Louisiana (1964) 379 U.S. 64, 74-75, 13 L.Ed.2d 125, 85
S.Ct. 209; Red Lion Broadcasting Co. v. F.C.C., supra at 390;
CBS, Inc. v. F.C.C. (1981) 453 U.S. 367, 396, 69 L.Ed.2d
706, 101 S.Ct. 2813. The State has a compelling interest in
assuring public access to information and meaningful public
participation in the P.U.C.’s regulatory process over
monopolistic public utilities. Cléarly, the services public
utilities provide such as gas, electricity and water serve
basic human needs. Each public utility customer has an
interest in and is affected by utility rates. To the
economically disadvantaged, the cost of such services is
vital. The P.U.C. acted reasonably and responsibly in giving
utility customers a voice that can be heard through billing
envelope access.

Unless this court upholds the P.U.C.’s order, public
utilities may be able to limit effective participation by
customers at Commission hearings, thereby restricting the
free flow of essential information from ratepayers to the
P.U.C. No public benefit can come from such a situation.
The States must be free to enact effective regulations

on.

assuring a public voice in the establishment of the cost of
those services vital to everyone.

THE P.U.C.’S ORDER DOES NOT VIOLATE
PG&E’S RIGHTS OF FREE SPEECH AND
FREE ASSOCIATION BUT RATHER PRO-
MOTES TRADITIONAL FREE SPEECH
VALUES

A. Introduction

At issue in this case is not whether PG&E’s speech is
restricted, but whether other voices can be heard. The
Commission’s order does not regulate the content of
PG&E's speech nor does it prevent PG&E from inserting its
publication, Progress, in each billing envelope at its own
expense. As the Commission stated —

“Nothing in the decision prohibits PG&E from
disseminating Progress in the billing envelope,
even in the months in which access is granted to
TURN, so long as it pays the additional postage
costs, if any; and if the envelope space is lacking,
PG&E is free to expand the size of its envelope.”
P.U.C.’s Motion to Dismiss, p. 15.

Simply put, the order gives billing envelope access to

TURN, a ratepayer association with a track record of

proven value to the P.U.C. !

' The P.U.C. expressly found that “TURN has demonstrated in its
testimony and in past perticipation in proceedings before this
Commission an ability to represent the interests of a substantial segment
of the PG&E residential ratepayer population.” P.U.C.’s Motion to
Dismiss, p. A-19.

A

— =

This Court has recently held that public utilities have the
right of free speech under the First and Fourteenth
Amendments and may exercise that right through the
utilities’ billing envelopes. Central Hudson Gas v. Public
Service Comm'n, supra; Consolidated Edison v. Public Serv.
Comm’n, supra. These rulings were based on the high value
this country places on public debate and public awareness.
“Freedom of speech is ‘indispensable to the discovery and
spread of political truth,’ [citation] and ‘the best test of truth
is the power of the thought to get itself accepted in the
competition of the market. ...’" Consolidated Edison vy.
Public Serv. Comm’n, supra at 534. In Central Hudson Gas
v. Public Service Comm'n, upra at 562, this Court stressed
that people “ ‘will perceive their own best interests if only
they are well enough informed, and ... the best means to
that end is to open the channels of communication, rather
than to close them. ...’” Our historic commitment to the
freedom of speech is based on the premise that the “ ‘use of
such freedom will ultimately produce a more capable
citizenry and more perfect polity....’" Consolidated
Edison v. Public Serv. Comm’n, supra at 534.

In this case, a public utility seeks to suppress speech while
the State has fashioned a means to encourage it. The same
factors which compelled this court to extend the freedom of
speech to public utilities should now prompt it to uphold the
P.U.C.’s order extending effective speech to the utility’s
customers.

——

B. The State Has a Substantial Interest in
Extending Effective Speech to Public Utility
Ratepayers

P.U.C.’s rationale for providing public access to billing
envelopes through representative ratepayer associations
includes the following: (1) the empty space in the envelope
belongs to the ratepayers; (2) the utilities have been
permitted to use the extra space, without charge, to
communicate with ratepayers; (3) the extra space should be
used for the benefit of ratepayers; (4) TURN represents the
interest of a substantial number of ratepayers and will be
unable to do so in future proceedings because of fiscal
constraints; (5) allowing TURN to occasionally use the
extra space assures more complete ratepayer understanding
and participation in energy issues involving their utility; and
(6) the P.U.C. benefits by the effective participation of
consumer organizations in its proceedings. See generally
P.U.C.’s Motion to Dismiss, pp. A-19 to A-24, A-33 to A-36.

The Commission summarized its reasons as follows:

“Our goal ... is to change the present system to
one which uses the extra space more efficiently
for the ratepayers’ benefit. It is reasonable to
assume that the ratepayers will benefit more from
exposure to a variety of views than they will from
that of PG&E.” P.U.C.’s Motion to Dismiss, p.
A-22.

PG&E argues that by giving consumers envelope access,
the Commission has limited PG&E’s speech. For the
reasons set forth below, PG&E’s speech has not been
limited. If, arguendo, there is some limitation, nonetheless,
the right to exercise free speech must be balanced against
societal interests. E.g. Hynes v. Mayor of Oradell (1976)

— =

425 US. 610, 48 L.Ed.2d 243, 96 S.Ct. 1755
(noncommercial speech); Friedman vy. Rogers (1979) 440
US. 1, 59 L.Ed.2d 100, 99 S.Ct. 887, reh. den. 441 U.S. 917,
60 L.Ed.2d 389, 99 S.Ct. 2018 (commercial speech). The
P.U.C.’s order regulating speech must meet one of three
standards: “(i) a reasonable time, place, or manner
restriction, (ii) a permissible subject-matter regulation, or
(iii) a narrowly tailored means of serving a compelling state
interest.” (Emphasis added). Consolidated Edison v. Public
Serv. Comm’n, supra at 535.

Amici believe that when this court balances the State’s
interest in promoting speech against appellant’s interest in
suppressing speech under each of the three enumerated
standards, the scales will careen down on the side of the
State in each instance.

C. The P.U.C.’s Order Does Not Regulate the
Time, Place and Manner of PG&E’s Speech

“A restriction that regulates-only the time, place, or
manner of speech may be imposed so long as it is
reasonable” and is content-neutral. Consolidated Edison v.
Public Serv. Comm'n, supra at 536. PG&E seemingly
contends that the Commission’s order does not meet this
standard because the “time, place, or manner” test applies
only when the speaker (who is supposedly interfering with
PG&E’s speech) has a pre-existing right in the speaker’s
platform whereas the Commission’s order requires forced
entry into PG&E’s billing envelopes. Appellant draws the
analogy to governmental limitations on the use of public
sidewalks. App. Brief, pp. 20-22. Appellant’s argument
must fail for three reasons.

= =

First of all, the Commission’s order does not attempt to
regulate the time, place or manner of PG&E’s speech. As
previously discussed, PG&E is free to enclose Progress in
each month’s billing envelope, even in the months when
TURN ’'s literature is enclosed.

Secondly, the P.U.C. clearly held that the “empty space”
was the property of the ratepayers, and not Appellant’s.
This order is now final. See P.U.C.’s Motion to Dismiss, pp.
8 and A-33.

Thirdly, even if the Commission had found that the
empty space belonged to PG&E, proprietary rights in
, civate property are subject to State regulation. Pruneyard
Shopping Center v. Robins (1980) 447 US. 74, 64 L.Ed.2d
741, 100 S.Ct. 2035 is a case in point. At issue in Pruneyard
was whether members of the public had a right under state
law to circulate petitions and distribute pamphlets of a
political nature in a privately owned shopping center
against the owner's wishes. Holding that they did, this
Court observed that “neither property rights nor contract

rights are absolute. ... Equally fundamental with the
private right is that of the public to regulate it in the
common interest... .” Jd. at 84-85, quoting from Nebbia v.

New York, (1934) 291 U.S. 502, 523, 78 L.Ed. 940, 54 S.Ct.

2 The P.U.C.’s order was not based solely upon that premise. In its
order, the P.U.C. emphasized that “our jurisdiction over the extra space
does not depend solely or entirely on a determination of the ownership
of the extra space or the exact nature of a property right in such space.”
P.U.C.’s Motion to Dismiss, p. A-6.

Amici do not believe that ownership of the empty space controls the
propriety of the Commission’s order. Rather, we maintain that the
P.U.C.’s order is a valid exercise of the State’s police powers over public
utilities even absent the ratepayers’ proprietary interest in the empty
space.

— =

505. This is even more evident when the State is regulating a
utility which provides vital services a consumer cannot
otherwise obtain.

D. The P.U.C.’s Order Is a Permissible Subject-
Matter Regulation

The P.U.C.’s order does not regulate the content of
speech. Rather, it controls the vehicle by which speech can
be delivered to the public. As discussed in Argument I,
infra, the State has plenary powers over public utilities,
broad powers of which were delegated to the P.U.C. This
power has been summarized by the P.U.C. (which has
always exercised control over billing envelopes) as follows:

“The extra space in the billing envelope is a by-
product of an activity essential to the operation of
the regulated utility — billing. Since billing is an
essential and proper function of a regulated
utility, this Commission has allowed the utility to
recover its reasonable expenses — postage, mate-
rials, labor, overhead — from ratepayers. The
existence of the extra space is a direct conse-
quence of the act of billing for utility services and
the way in which postal costs are assessed.

“Because the billing space is so inextricably
related to activities subject to routine regulation,
we have repeatedly exercised our authority under
the State Constitution and Public Utilities Code
section 701 to permit and require the space to be
used for the benefit of ratepayers.” P.U.C.’s
Motion to Dismiss, pp. A-6 to A-7.

Billing envelopes have routinely been used to inform
customers of proposed rate hikes and public hearings

—-— =

without challenge. Public utilities have also been required
to enclose important information concerning conservation
programs, federal tax law and other public service-oriented
information. P.U.C.’s Motion to Dismiss, p. A-7. PG&E
does not even challenge that portion of the P.U.C.’s order
which gives the Commission first priority “to the billing and
legally-mandated notices to customers.” P.U.C.’s Motion to
Dismiss, p. A-22. Rather, its challenge is limited to the
propriety of TURN’s use of the empty space.

The government’s control over speech has always been
recognized where a regulation was a reasonable exercise of
its police powers. E.g., Red Lion Broadcasting Co. v. F.C.C,,
supra (broadcasters may be required to air opposing views);
U.S. Postal Service v. Greenburgh Civic Assns. (1981) 453
US. 114, 69 L.Ed.2d 517, 101 S.Ct. 2676 (public access to
mail boxes may be properly outlawed); Perry Education
Assn. vy. Perry Local Educators’ Assn., supra (public access
to school mail boxes may be restricted); Seattle Times Co. v.
Rhinehart, supra (public access to discovery documents may
be restricted); Ohralik v. Ohio State Bar Assn. (1978) 436
U.S. 447, 56 L.Ed.2d 444, 98 S.Ct. 1912, reh. den. 439 US.
883, 58 L.Ed.2d 198, 99 S.Ct. 226 (attorneys’ means of
soliciting clients may be restricted); Friedman v. Rogers,
supra (use of trade names by optometrists may be
prohibited); Young v. American Mini Theatres (1976) 427
U.S. 50, 49 L.Ed.2d 310, 96 S.Ct. 2440, reh. den. 429 USS.
873, 50 L.Ed.2d 155, 97 S.Ct. 2440, (location of adult
theaters may be regulated); F.C.C. v. Nat. Cit. Comm. For
Broadcasting (1978) 436 U.S. 775, 56 L.Ed.2d 697, 98 S.Ct.
2096 (co-ownership of newspapers and broadcast stations
may be regulated); Cornelius v. NAACP Legal Defense and
Educational Fund, Inc., (decided July 2, 1985) —_ US. —,
53 U.S.L.W. 5116 (government can properly exclude legal

Ss

defense and political advocacy organizations from partici-
pation in the Combined Federal Campaign.)

By requiring public access to billing envelopes, the P.U.C.
acted reasonably in exercising its regulatory powers over
appellant. The Commission uses the billing envelope for its
own legal notices “‘precisely because the billing envelope is
such an effective method of communicating with rate-
payers.” P.U.C.’s Motion to Dismiss, p. A-7. For probably
the same reason, PG&E uses the billing envelope to
disseminate Progress. Creating a doctrine of fairness
which provides a shared soapbox as the catapult of free
speech pursuant to the State’s regulatory powers over public
utilities is not unreasonable. Cf. Red Lion Broadcasting Co.
v. F.C.C., supra.

E. The P.U.C.’s Order Is Narrowly Drawn to
Serve a Compelling State Interest

Appellant gives a plethora of reasons why its speech
alone should be protected. PG&E claims that the P.U.C.’s
order impairs its right to communicate with its customers,
mandates the carrying of others’ messages, and is not
content-neutral. Amici contends the Commission’s order
democratically enhances its regulatory proceedings by
providing free speech to utility customers without impairing
the speech of others,

Nothing in the order prohibits PG&E’s right to speak to
its customers directly through each billing envelope or by
any other lawful means. The only restriction is the firmness
of appellant’s hold on its own purse strings. PG&E may
include its literature in each month’s billing envelopes as
long as it pays the additional postage. Since the empty space
is ratepayers’ property, Appellant’s literature will continue

—_—

to be mailed at ratepayers’ expense during the other
months. The order neither precludes nor compels speech by
PG&E or by others. It only provides a forum for speech.
See Red Lion Broadcasting Co. v. F.C.C., supra at 375.

Appellant expresses concern that “the commission takes
on the awesome and completely unmanageable task of
picking and choosing from the multitude of competing
interests, including political groups, who may wish to
communicate through PG&E’s envelope.” App. Br. p. 25,
n. 19. This concern is speculative at best and ignores the
facts of this case. The record reveals that out of millions of
customers served by Appellant, TURN was the only
applicant who requested use of the empty space. P.U.C.’s
Motion to Dismiss, p. A-35

Clearly, this lack of other requests emphasizes the
importance of opening the billing envelope to the speech of
others. The Commission expressly reserved the right to
review additional meritorious proposals should any arise in
the future. P.U.C.’s Motion to Dismiss, p. A-37. If the
P.U.C. abuses its authority concerning future proposals,
such orders will obviously be subject to appropriate judicial
review.

F. The P.U.C.’s Order Does Not Violate
PG@&E’s Freedom of Association and Right
to Remain Silent

Appellant and its amici supporters contend that the
Commission’s order violates PG&E’s right of free
association and right to remain silent, relying on Wooley v.
Maynard (1977) 430 U.S. 705, 51 L.Ed.2d 752, 97 S.Ct.
1428 and Miami Herald Publishing Co. v. Tornillo (1974)
418 US. 241, 41 L.Ed.2d 730, 94 S.Ct. 2831 for the

lin

proposition that state-mandated speech is constitutionally
infirm. Their reliance on these cases is misplaced.

In Wooley, this court upheld an injunction prohibiting
New Hampshire from arresting and prosecuting motorists
who cover up the State’s motto “Live Free or Die” on
vehicle license plates. This Court found that there was
insufficient State interest to compel such ideological speech.
Wooley did not prohibit the State from displaying its motto
on license plates, but merely gave motorists the right to
disassociate themselves from it if they wished to do so.

Unlike Wooley, the Commission’s order clearly states
that “all of TURN’s bill insert material should clearly
identify TURN as its source and state that its contents have
neither been reviewed nor endorsed by PG&E or this
Commission.” P.U.C.’s Motion to Dismiss, p. A-23. Such
disclosures have been recognized as an effective means of
preventing public confusion. See Bates v. State Bar of
Arizona (1977) 433 U.S. 350, 384, 53 L.Ed.2d 810, 97 S.Ct.
2691, reh. den. 434 US. 881, 54 L.Ed. 164, 98 S.Ct. 242;
Central Hudson Gas v. Public Service Comm’n, supra at
565, 570-71; Pruneyard Shopping Center v. Robins, supra at
88; Zauderer v. Office of Disciplinary Counsel (decided
May 28, 1985) __ U.S. —, 53 U.S.L.W. 4587, 4594.

Appellant’s concern that the public will confuse TURN’s
literature for that of its own is purely speculative. The
public is not likely to confuse TURN’s literature as being
that of PG&E any more than it is likely to regard the
Commission’s notices as coming from appellant. Certainly,
the P.U.C. is not impotent to address the problem of public
confusion should it ever arise. As the Commission noted, it
“expect[s] PG&E and TURN to work together in good faith
to overcome problems. If insurmountable problems arise,
we may have to issue further clarifying orders.” P.U.C.’s

—* a

Motion to Dismiss, pp. A-23 to A-24. Surely, the State has
the ability to assure that “information flow(s] cleanly as well
as freely.” Va. Pharmacy Bd. v. Va. Consumer Council,
supra. The mandated disclosures will assure a clean and
free flow of information.

In Tornillo, this Court ruled that a Florida statute which
required newspapers to publish replies of political
candidates they criticized to be an _ unconstitutional
infringement on the newspapers’ right to determine what to
print and omit. This court observed that if a right-of-access
statute was upheld, “editors might well conclude that the
safe course is to avoid controversy” (Jd. at 257) thereby
stifling rather than promoting free speech.

The instant case is substantially different from that of
Tornillo. As Justice White stated in his concurring opinion,
“(a] newspaper or magazine is not a public utility subject to
‘reasonable’ governmental regulation in matters affecting
the exercise of journalistic judgment as to what shall be
printed.” Jd. at 259. While the number of newspapers may
be in attrition, no monopoly exists on news. Other
uuewspapers, publications, radio and television broadcasts
expose Americans to a rainbow of viewpoints. Civil
remedies are available for candidates who feel they have
been libeled, the pursuit of which may in turn constitute
news. Unlike public utilities, newspapers are not creatures
of government and do not depend on governmental
permission for their right to exist. Cf. Red Lion
Broadcasting Co. v. F.C.C. supra. Nor are newspapers
exempt from antitrust laws. Associated Press v. United
States, supra; F.C.C. v. Nat. Cit. Comm. For Broadcasting,
supra. The Commission’s order does not compel PG&E to
speak against its wishes.

=

Amici Wisconsin State Telephone Association and
Wisconsin Bell, Inc. complain in their joint brief that while
“utilities were formerly free to speak to their customers
through the billing envelope without concern that their
statements would be immediately attacked through the
same medium ...”, the “utilities must respond or suffer
the clear implication that the accusations are true.
(Footnote omitted)” The Appendix to their joint brief
shows examples of the ratepayers’ speech. This is exactly
the type of public debate the Commission is trying to
promote. The Commission will be in a far superior position
to properly regulate when responding to a variety of views
rather than just one.

CONCLUSION

Public utilities operating as monopolies exist by the grace
of the State. Without State sanction, public utilities would
not be permitted to exist in monopolistic form. Because of
the potential harm to the public -which is inherent in any
monopoly, the State has the responsibility to carefully
regulate that which it created in order to safeguard the
legitimate interests of its citizens.

Our American heritage has taught us the value of free
speech, the safety valve exposing us as citizens and
regulators to competing ideas with the trust that truth will
prevail and wise decisions will consequently ensue. With
these principles in mind, the P.U.C., having previously
found that such input was beneficial to the Commission in
exercising its regulatory functions, issued its challenged
order, the purpose of which was to provide greater public
participation in its proceedings.

==26——

It is self-evident to Amici that the State has a compelling
and overriding interest in being able to solicit the comments
of its citizens in discharging its official duties. Of
appellant's millions of customers, only one voice asked to be
heard. Without that voice, there is silence.

The billing envelope is the sidewalk of public debate in
public utility regulation, and the platform from which both
the Commission and PG&E speak to the public. Opening
the billing envelope to competing messages fosters, not
frustrates, free speech. We ask this court to affirm the
P.U.C.’s order.

Respectfully submitted,

JOHN K. VAN DE KAMP
California Attorney General
HERSCHEL T. ELKINS

Senior Assistant Attorney General
MICHAEL R. BOTWIN

Deputy Attorney General

By

MICHAEL R. BOTWIN
Attorneys for Amici States

PROOF OF SERVICE BY MAIL

I am a citizen of the United States and a resident of the City
and County of Los Angeles; I am over the age of eighteen
years and not a party to the within action; my business
address is: 3550 Wilshire Boulevard, Suite 216, Los Angeles,

California. On this date July 18,
I served the within BRIEF OF AMICI CURIAE IN

SUPPORT OF APPELLEES in re: "Pacific Gas
and Electric Company vs. Public Utilities
Commission of the State cf California” in
the United States Supreme Court, October
Term, 1984, No. 84-1044;

on the persons interested in said action by placing —_3_ true
copies thereof enclosed in sealed envelopes with first class
postage prepaid, in the United States post office mail box at
Los Angeles, California, addressed as follows:

FREDERIC D. WOOCHER, JOHN R. PHILLIPS,
CENTER FOR LAW IN THE PUBLIC INTEREST,
3rd Floor, 10951 West Pico Boulevard, Los
Angeles, CA 90064;

JEROME B. FALK, JR., STEVEN L. MAYER, HOWARD,
RICE, NEMEROVSKI, CANADY, ROBERTSON & FALK,
7th Floor, Three Embarcadero Center, San
Francisco, CA 941ll;.

JANICE E. KERR, 5066 State Building, 350
McAllister Street, San Francisco, CA 94102;

MALCOLM H. FURBUSH, PACIFIC GAS AND ELECTRIC
COMPANY, P. O. Box 7442, 77 Beale Street,
San Francisco, CA 94120;

All parties required to be served have been served

I certify (or declare) under penalty of perjury that the

foregoing is true and correct.
Executed on July 18, 1985

at Los Angeles, California.
Kid Jy Kuz Len Lake

7

Lawyer's Brief Service, Inc. / Logal Publishers / (213) 383-4457

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0160%3A44. Public record. Not legal advice.