447 U.S. 557, 100 S. Ct. 2343, 65 L. Ed. 2d 341 (1980)
In December 1973, the Public Service Commission ordered electric utilities in New York State to cease all advertising that promoted the use of electricity because the interconnected utility system lacked sufficient fuel stocks for the 1973-1974 winter.1 The order rested on the Commission's finding that the system did not have sufficient fuel stocks or sources of supply to meet customer demands.2
Three years later, when the fuel shortage had eased, the Commission requested comments from the public on its proposal to continue the ban on promotional advertising.3 Central Hudson Gas & Electric Corp. opposed the ban on First Amendment grounds.4 After reviewing the public comments, the Commission extended the prohibition in a Policy Statement issued on February 25, 1977.5
The Policy Statement divided advertising expenses into promotional and institutional categories.6 It permitted informational advertising designed to encourage shifts of consumption from peak demand times to periods of low electricity demand.7 The Commission banned promotional advertising because additional electricity would be more expensive to produce and promotional advertising would give misleading signals to the public.8 Central Hudson challenged the order in state court.9 The order was upheld through the New York Court of Appeals.10 The Supreme Court noted probable jurisdiction and reversed.11
Whether a regulation of the Public Service Commission of the state of New York violates the First and Fourteenth Amendments because it completely bans promotional advertising by an electrical utility?12
In commercial speech cases, a four-part analysis has developed.13 At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading.14 Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.
Yes. The Public Service Commission ordered electric utilities in New York State to cease all advertising that promoted the use of electricity in December 1973.15 The Commission extended the prohibition in a Policy Statement issued on February 25, 1977 after the fuel shortage eased.16 Central Hudson Gas & Electric Corp. challenged the order in state court.17
The order was upheld by the trial court, the intermediate appellate level, and the New York Court of Appeals.18 The Supreme Court noted probable jurisdiction.19 The expression at issue concerns lawful activity and is not misleading.20 The governmental interests in energy conservation and fair efficient rates are substantial.21
The ban directly advances the interest in conservation because there is an immediate connection between advertising and demand for electricity.22 The complete suppression of speech is more extensive than necessary to further the state's interest in energy conservation because the order reaches all promotional advertising regardless of the impact on overall energy use.23 No showing has been made that a more limited restriction would not serve adequately the state's interests.24
The regulation violates the First and Fourteenth Amendments.25
Related opinions on this issue
Joined by Stewart, J., Joined In Part
Justice Brennan found it impossible to determine on the present record whether the Commission's ban on all promotional advertising is intended to encompass more than commercial speech.26 He was inclined to think that the order prohibits more than mere proposals to engage in certain kinds of commercial transactions.27 He therefore agreed that the ban violates the First and Fourteenth Amendments.28
Even on the assumption that the order reaches only commercial speech, he agreed that no differences between commercial speech and other protected speech justify suppression of commercial speech.29 Such suppression would influence public conduct through manipulation of the availability of information.
Joined by Brennan, J.
Justice Blackmun agreed that the ban is inconsistent with the First and Fourteenth Amendments.30 He concurred only in the judgment because he believed the four-part test is not consistent with prior cases.31 He believed the test does not provide adequate protection for truthful nonmisleading noncoercive commercial speech.32
He disagreed that suppression of speech may be a permissible means to achieve energy conservation.33 He stated that the justification for the regulation is nothing more than the expressed fear that the audience may find the utility's message persuasive.3435 He seriously doubted whether suppression of information concerning the availability and price of a legally offered product is ever a permissible way for the State to dampen demand for the product.36
Joined by Brennan, J.
Justice Stevens concurred in the result because he did not consider this to be a commercial speech case.37 He concluded that the breadth of the ban exceeds the boundaries of the commercial speech concept.38 The ban prohibits all advocacy of the immediate or future use of electricity.39
It curtails expression by an informed and interested group of persons of their point of view on questions relating to the production and consumption of electrical energy.40 The justification for the regulation is nothing more than the expressed fear that the audience may find the utility's message persuasive. Without coercion deception or misinformation truthful communication may persuade some citizens to consume more electricity than they otherwise would.41
Justice Rehnquist dissented and would have affirmed the judgment of the New York Court of Appeals.42 He disagreed with the conclusion that the speech of a state-created monopoly subject to a comprehensive regulatory scheme is entitled to protection under the First Amendment.43 He thought the Court erred in failing to recognize that the state law is most accurately viewed as an economic regulation.44
He believed the speech involved occupies a significantly more subordinate position in the hierarchy of First Amendment values.45 He concluded that New York's ban on promotional advertising in light of the substantial state interest at stake is a constitutionally permissible exercise of its power to adopt regulations designed to promote the interests of its citizens.46
Whether the expression at issue is protected by the First Amendment?47
Yes. The Commission's order restricts only commercial speech that is expression related solely to the economic interests of the speaker and its audience.50 Central Hudson Gas & Electric Corp. opposed the ban on First Amendment grounds after the Commission extended the prohibition in its Policy Statement.51 The Commission does not claim that the expression at issue either is inaccurate or relates to unlawful activity.52
Monopoly over the supply of a product provides no protection from competition with substitutes for that product.53 Electric utilities compete with suppliers of fuel oil and natural gas in several markets.54
The expression at issue is protected by the First Amendment.55
Whether the asserted governmental interest is substantial?56
The State must assert a substantial interest to be achieved by restrictions on commercial speech.57
Yes. The Commission offers two state interests as justifications for the ban on promotional advertising.58 The first concerns energy conservation because any increase in demand for electricity means greater consumption of energy.59 The second is that promotional advertising will aggravate inequities caused by the failure to base the utilities rates on marginal cost.60 Additional electricity would be more expensive to produce than existing output.61 Rates in New York were not then based on marginal cost.62
The asserted governmental interests are substantial.63
Whether the regulation directly advances the governmental interest asserted?64
The limitation on expression must be designed carefully to achieve the State's goal and the restriction must directly advance the state interest involved.65
Yes. The State's interest in energy conservation is directly advanced by the Commission order at issue here because there is an immediate connection between advertising and demand for electricity.66 Central Hudson would not contest the advertising ban unless it believed that promotion would increase its sales.67 The link between the advertising prohibition and appellant's rate structure is at most tenuous.68 The impact of promotional advertising on the equity of appellant's rates is highly speculative.69
The regulation directly advances the governmental interest in energy conservation.70
Whether the regulation is more extensive than is necessary to serve that interest?71
If the governmental interest could be served as well by a more limited restriction on commercial speech the excessive restrictions cannot survive and the regulatory technique may extend only as far as the interest it serves.72
Yes. The Commission's order reaches all promotional advertising regardless of the impact of the touted service on overall energy use.73 The energy conservation rationale cannot justify suppressing information about electric devices or services that would cause no net increase in total energy use.74 No showing has been made that a more limited restriction on the content of promotional advertising would not serve adequately the State's interests.75
The Commission could attempt to restrict the format and content of Central Hudson's advertising for example by requiring that the advertisements include information about the relative efficiency and expense of the offered service.76
The regulation is more extensive than is necessary to serve the state's interest in energy conservation.77