Pacific Gas & Electric Co. v. Public Utilities Commission
Pacific Gas & Electric Co. v. Public Utilities Commission
Opinion of the Court
Opinion
Public Utilities Code section 453, subdivision (d), provides: “No public utility shall include with any bill for services or commodities
Factual and Procedural Background
Pacific Gas and Electric Company (PG&E) includes in its monthly billings a newsletter, the contents of which “range from energy-saving tips to stories about wildlife conservation, and from billing information to recipes.” (Pacific Gas & Elec. Co. v. Public Util. Comm’n (1986) 475 U.S. 1, 8 [106 S.Ct. 903, 907, 89 L.Ed.2d 1].) The newsletters sent in June, July and August of 1987, then entitled PG&E Progress, included information regarding federal regulations that PG&E was seeking to have changed. PG&E does not dispute that some of the subject matter discussed in the newsletters in June, July, and August of 1987 fell within the purview of section 453, subdivision (d).
On December 15, 1987, real parties in interest, Independent Energy Producers Association, California Manufacturers Association, and Toward Utility Rate Normalization (collectively, complainants), filed a complaint with the Public Utilities Commission (PUC) against PG&E alleging that the utility violated section 453, subdivision (d), by using the June, July, and August 1987 billing envelopes for its political advocacy.
At proceedings held before PUC on September 17, 1990, the parties agreed that an evidentiary hearing was unnecessary and stipulated to the following facts: “1. The Parties agree that there is no incremental postage cost associated with inserting PG&E Progress in billing envelopes. Postage costs for mailing PG&E customers bills, which are borne by ratepayers, would be the same, whether or not Progress is included in the billing envelope. HQ 2. The Parties agree that ratepayers are not charged any of the labor or overhead cost associated with the insertion of Progress into PG&E’s billing envelopes, pursuant to CPUC Decision (D.) 83-12-047. HD 3. The Parties agree, for purposes of this litigation only, that ratepayers receive direct financial benefits from articles appearing in Progress, including the three editions of Progress at issue in this proceeding. Ratepayers are able to save money by taking advantage of the rate, energy conservation, and safety information provided in Progress. HQ 4. The Parties agree that D.86-12-095, pertaining to PG&E’s 1987 General Rate Case (GRC), found that articles in Progress provide the same type of information which must otherwise be provided by PG&E’s customer service representatives when they respond to customers inquiries by phone or in person. As a result, Progress contributes to reduced customer accounts expense which, in turn, results in lower rates, all else held constant. The Parties further agree that the above-mentioned conclusions reached in D.86-12-095 shall be controlling for purposes of this proceeding.”
On May 13, 1999, PUC issued decision No. 99-05-032, ordering PG&E to refund to its customers $920,000, representing 40 percent of the cost of postage for the billings in June, July, and August 1987, based upon its finding that PG&E violated section 453, subdivision (d), by including “with bills for services to its customers literature designed or intended to promote or defeat any change in federal legislation or regulations.”
Discussion
In its May 13, 1999 decision, PUC made the following findings of fact: (1) The stipulation of facts was adopted; (2) The June, July, and August 1987 issues of the PG&E Progress contained articles seeking to promote a change in current federal regulations in regard to purchasing power from private power producers; (3) The cost of mailing the three issues was approximately $2.3 million; and (4) PG&E, a public utility, violated section 453, subdivision (d)(4), in that PG&E did include with bills for services to its customers literature designed or intended to promote or defeat any change in federal legislation or regulations. PUC also made the following conclusions of law: (1) PG&E violated section 453, subdivision (d)(4); and (2) PG&E should be required to refund to its customers 40 percent of the cost of postage ($920,000) for the three issues—June, July, and August 1987, plus interest commencing April 1, 1998, in the manner set forth in the order. Based upon the foregoing findings of fact and conclusions of law, PUC ordered PG&E to refund $920,000 to its customers.
Relying upon Consolidated Edison Co. v. Public Serv. Comm’n (1980) 447 U.S. 530, 532, 544 [100 S.Ct. 2326, 2331, 2337. 65 L.Ed.2d 319] (Con Ed), PG&E contends that PUC’s May 13, 1999 order must be reversed because section 453, subdivision (d), directly infringes upon its freedom of speech as protected by the First and Fourteenth Amendments and cannot be upheld as a reasonable time, place or manner restriction, a permissible subject matter regulation, or a narrowly tailored means of serving a compelling state interest. (447 U.S. at pp. 532, 544 [100 S.Ct. at pp. 2331, 2337].) Relying upon Abood v. Detroit Board of Education (1977) 431 U.S. 209 [97 S.Ct. 1782, 52 L.Ed.2d 261] (Abood), respondents argue that PUC construed
I. Section 453, Subdivision (d), Can Only Be Interpreted as Prohibiting the Inclusion of Political Advocacy in Billing Envelopes.
The goal in interpreting a statute is to determine and effectuate legislative intent. (Woods v. Young (1991) 53 Cal.3d 315, 323 [279 Cal.Rptr. 613, 807 P.2d 455].) To determine that intent, however, we must look first to the words of the statute, giving them their usual and ordinary meaning. (Ibid.; DaFonte v. Up-Right, Inc. (1992) 2 Cal.4th 593, 601 [7 Cal.Rptr.2d 238, 828 P.2d 140].) Courts may look to legislative history to construe a statute only when the statutory language is susceptible of more than one reasonable interpretation. (Souza v. Lauppe (1997) 59 Cal.App.4th 865, 872 [69 Cal.Rptr.2d 494].) “If there is no ambiguity in the language of the statute, ‘then the Legislature is presumed to have meant what it said, and the plain meaning of the language governs.’ [Citation.]” (Lennane v. Franchise Tax Bd. (1994) 9 Cal.4th 263, 268 [36 Cal.Rptr.2d 563, 885 P.2d 976].) Succinctly stated, “[w]here the statute is clear, courts will not ‘interpret away clear language in favor of an ambiguity that does not exist.’ [Citation.]” (Hartford Fire Ins. Co. v. Macri (1992) 4 Cal.4th 318, 326 [14 Cal.Rptr.2d 813, 842 P.2d 112].) Although “[a] statute should be construed whenever possible so as to preserve its constitutionality” (Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1387 [241 Cal.Rptr. 67, 743 P.2d 1323]), when statutory language is “clear and unambiguous there is no need for construction, and courts should not indulge in it.” (Solberg v. Superior Court (1977) 19 Cal.3d 182, 198 [137 Cal.Rptr. 460, 561 P.2d 1148].)
On its face, section 453, subdivision (d), unambiguously prohibits the inclusion of specified political literature “with any bill for services or commodities furnished any customer or subscriber . . . .” (Italics added.) Because the language of the statute is clear and unambiguous, it would be improper for us to refer to extrinsic evidence, such as legislative history, in an attempt to create an ambiguity from which to construe the -statute as prohibiting ratepayer subsidization of the utilities’ political advocacy. (See Hartford Fire Ins. Co. v. Macri, supra, 4 Cal.4th at p. 326; Solberg v.
II. The Statute’s Prohibition Against Inserting Political Literature in Billing Envelopes Is Facially Unconstitutional.
The First Amendment, made applicable to the states through the Fourteenth Amendment, “was fashioned to assure unfettered interchange of ideas for the bringing about of political and social changes desired by the people.” (Roth v. United States (1957) 354 U.S. 476, 484 [77 S.Ct. 1304, 1308, 1 L.Ed.2d 1498].) It is well established that corporations such as PG&E have the right to freedom of speech, since “[t]he inherent worth of the speech in terms of its capacity for informing the public does not depend upon the identity of its source, whether corporation, association, union, or individual.” (First National Bank of Boston v. Bellotti (1978) 435 U.S. 765, 777 [98 S.Ct. 1407, 1416, 55 L.Ed.2d 707].) Moreover, the newsletter inserted by PG&E in its customers’ bills “includes the kind of discussion of ‘matters of public concern’ that the First Amendment both fully protects and implicitly encourages.” (Pacific Gas & Elec. Co. v. Public Util. Comm’n, supra, 475 U.S. at p. 9 [106 S.Ct. at p. 908].) Thus, “[t]here is no doubt that . . . [PG&E] Progress receives the full protection of the First Amendment.” (Id. at p. 8 [106 S.Ct. at p. 907.) Because section 453, subdivision (d), purports to prohibit constitutionally protected speech, we must determine whether the regulation can be upheld as: “(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.” (Con Ed, supra, 447 U.S. at p. 535 [100 S.Ct. at p. 2332].) For the reasons discussed below, the statute’s blanket prohibition against political bill inserts cannot withstand the constitutional scrutiny required by the First Amendment.
A regulation that restricts only the time, place, or manner of speech is constitutional as long as the restriction is reasonable. (Con Ed, supra, 447 U.S. at pp. 535-536 [100 S.Ct. at pp. 2332-2333]; LinmarkAssociates, Inc. v. Willingboro (1977) 431 U.S. 85, 93 [97 S.Ct. 1614, 1608-1619, 52 L.Ed.2d 155].) However, a statute that regulates speech on the basis of its subject matter “ ‘. . . slip[s] from the neutrality of time, place, and circumstance
Nor is the statute justified as a permissible subject-matter regulation. (See Con Ed, supra, 447 U.S. at pp. 537-540 [100 S.Ct. at pp. 2333-2334].) In Con Ed, the United States Supreme Court considered the constitutionality of an order issued by the New York Public Service Commission prohibiting utilities from including in monthly bill envelopes inserts discussing controversial issues of public policy. (Id. at p. 532 [100 S.Ct. at pp. 2330-2331].) The New York Public Service Commission argued that the subject-matter regulation in that case was permissible because it was viewpoint-neutral and was justified by the special interests of a government in overseeing the use of its property. (Id. at pp. 537-540 [100 S.Ct. at pp. 2333-2334].) In rejecting these arguments, the high court held that “[t]he First Amendment’s hostility to content-based regulation extends not only to restrictions on particular viewpoints, but also to prohibition of public discussion of an entire topic.” (Id. at p. 537 [100 S.Ct. at p. 2333].) It further held that the utilities’ billing envelopes did not constitute government property, the protection of which could justify a refusal to allow partisan political advocacy. (Id. at p. 540 [100 S.Ct. at pp. 2334-2335].) As with the remarkably similar regulation at issue in Con Ed, section 453, subdivision (d), attempts to restrict public utilities’ discussion of entire topics and cannot be justified as a permissible subject-matter regulation. (See Con Ed, supra, at pp. 537-540 [100 S.Ct. at pp. 2333-2335].)
Finally, section 453, subdivision (d), cannot be justified as a narrowly tailored means of serving a compelling state interest. (See Con Ed, supra, 447 U.S. at pp. 540-544 [100 S.Ct. at pp. 2334-2337].) Respondents argue that section 453, subdivision (d)’s ban on the insertion of political literature in billing envelopes serves the state’s compelling interest in preventing ratepayers from being forced to subsidize PG&E’s political speech in violation of Abood, supra, 431 U.S. at page 210 [97 S.Ct. at pages 1786-1787]. In
Regulations related to the subject matter of speech are subject to strict scrutiny and will pass constitutional muster only if they “serve a compelling state interest in a manner which imposes the least possible burden on expression.” (U.S. Sound & Serv., Inc. v. Township of Brick (3d Cir. 1997) 126 F.3d 555, 558.) Because, as discussed above, section 453, subdivision (d), is related to the content of the prohibited speech, in order for the statute to survive constitutional scrutiny, it must represent the least restrictive means of serving the state’s interest. (126 F.3d at p. 558; Reno v. American Civil Liberties Union (1997) 521 U.S. 844, 874 [117 S.Ct. 2329, 2345-2346, 138 L.Ed.2d 874].) It does not. If the Legislature’s intention in enacting section 453, subdivision (d), was to follow Abood, supra, 431 U.S. 209, by preventing forced contribution to the support of public utilities’ political advocacy in violation of the ratepayers’ First Amendment rights, then the Legislature could easily have utilized more precise language to achieve that goal without completely banning the inclusion of political literature in billing envelopes. Instead, the sweeping language implemented by the Legislature unconstitutionally fails “to avoid unnecessary abridgement” of public utilities’ protected speech. (Buckley v. Valeo (1976) 424 U.S. 1, 25 [96 S.Ct. 612, 638, 46 L.Ed.2d 659].) Thus, the regulation cannot be justified as a narrowly tailored means of serving a compelling state interest.
Because section 453, subdivision (d), can only be inteipreted as prohibiting the inclusion of protected speech in billing envelopes, and the prohibition cannot be justified as a reasonable time, place or manner restriction, a
III. PUC’s Order Enforcing the Facially Unconstitutional Statute Must Be Set Aside.
Respondents’ argument that PUC’s May 13, 1999 order was necessary to prevent forced ratepayer subsidization of PG&E’s political speech in violation of Abood, supra, 431 U.S. 209, is misleading and meritless. “[A]n administrative order cannot be upheld unless the grounds upon which the agency acted in exercising its powers were those upon which its action can be sustained.” (Securities Comm’n v. Chenery Corp. (1943) 318 U.S. 80, 95 [63 S.Ct. 454, 462, 87 L.Ed. 626].) The complaint in this case alleged that PG&E violated section 453, subdivision (d). Complainants argued for PUC’s jurisdiction based upon violation of the statute and sought to have PUC enforce the statute against PG&E. In its decision, PUC did not find that the inclusion of the subject literature in the customers’ bills resulted in ratepayers’ contribution to the support of PG&E’s political advocacy in violation of Abood. On the contrary, in response to PG&E’s argument that none of the costs associated with the printing and insertion of the literature into the billing envelopes were recovered from ratepayers, in violation of title 16 of the United States Code section 2623(b)(5), the commission stated in its decision: “Because of the view we take of the violation of Pub. Util. Code § 453(d), we do not reach this issue.” Instead, PUC’s May 13, 1999 order was based directly upon its finding that PG&E violated section 453, subdivision (d), “in that PG&E did include with bills for services to its customers literature designed or intended to promote or defeat any change in federal legislation or regulations.” Since “an agency’s order must be upheld, if at all, ‘on the same basis articulated in the order by the agency itself’ ” (FPC v. Texaco Inc. (1974) 417 U.S. 380, 397 [94 S.Ct. 2315, 2326, 41 L.Ed.2d 141], quoting Burlington Truck Lines v. U.S. (1962) 371 U.S. 156, 168-169 [83 S.Ct. 239, 246, 9 L.Ed.2d 207] and Securities
Disposition
Decision Nos. 99-12-022 and 99-05-032 are set aside.
McGuiness, P. J., and Parrilli, J., concurred.
All further statutory references are to the Public Utilities Code.
When addressing their arguments on appeal, we will refer to complainants and PUC collectively as respondents.
The fifth, sixth and seventh stipulated facts are not relevant to the issue on appeal.
In addition to claiming that section 453, subdivision (d), is unconstitutional, PG&E also claims in its petition that: (1) the finding of a violation of the statute is not supported by substantial evidence; (2) the ordered refund constituted impermissible retroactive ratemaking; (3) PUC’s decision is barred by prior decisions under the doctrines of res judicata and collateral estoppel; and (4) the ordered refund exceeded the scope of PUC’s authority to penalize public utilities. Because our decision on the constitutional issue is dispositive, we do not address the other issues raised on appeal.
PUC is proscribed from declaring a statute unconstitutional and, thus, did not make any findings or reach any conclusions in this regard. (Cal. Const., art. HI, § 3.5.)
Under the posture of this case, we do not have occasion to address whether PG&E’s insertion of the newsletters in the unused portion of the billing envelopes actually required ratepayers to contribute to the support of ideological causes in violation of their First Amendment rights.
Reference
- Full Case Name
- PACIFIC GAS AND ELECTRIC COMPANY v. PUBLIC UTILITIES COMMISSION, Respondent INDEPENDENT ENERGY PRODUCERS ASSOCIATION, Real Parties in Interest
- Cited By
- 10 cases
- Status
- Published