Transcript

IN THE SUPREME COURT OF THE UNITED STATES

PACIFIC GAS AND ELECTRIC COMPANY, Appellant v. PUBLIC UTILITIES COMMISSION OF CALIFORNIA, ET AL.

No. 84-1044

October 8, 1985

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 1:51 p.m.

APPEARANCES:

ROBERT L. HARRIS, ESQ., San Francisco, California; on behalf of the Appellant.

MARK FOGELMAN, ESQ., San Francisco, California; on behalf of the Appellees.

PROCEEDINGS

CHIEF JUSTICE BURGER: Mr. Harris, I think you may proceed whenever your are ready now.

ORAL ARGUMENT OF ROBERT L. HARRIS, ESQ. ON BEHALF OF THE APPELLANT

MR. HARRIS: Mr. Chief Justice, and may it please the Court:

This case comes from the State of California which has order Pacific Gas and Electric Company to include in its monthly billing envelope the fund solicitation messages of a third party.

We are required to include the message four times per year for a two-year period.

For the past 60 years, PG&E has used the billing envelope to communicate its message through the PG&E Progress. The envelope has never been open to the public.

The California Supreme Court refused to hear Appellant's petition for writ of review, thus upholding the Commission's decision.

That decision was appealed to this Court, which noted probable jurisdiction.

The issue presented on appeal is whether or not the State of California can, consistent with the First Amendment to the United States Constitution, compel Pacific Gas and Electric Company, a privately owned, public utility, to include in its monthly billing envelope the fund solicitation of a third party, in this case, TURN, Toward Utility Rate Normalization.

Utility speech is protected by the First Amendment. In Consolidated Edison, this Court decided in 1980 that the State of New York could not regulate the political speech that Consolidated Edison put in the billing envelope unless the state showed a compelling state interest for that regulation.

The right not to carry the message of others applies, indeed, to a corporation.

QUESTION: What case holds that?

MR. HARRIS: First National Bank of Boston versus Bellotti, decided in 1978. In that case, this Court was faced with the issue as to whether or not the corporation was entitled to the protection of the First Amendment. As a matter of fact, that was the first time the issue was squarely presented to this Court.

And, Justice Powell writing for the Court, said that the inherent worth of speech is not determined by identity. He said that you look not to the identity of the person who is asserting the right, you look to see if the right that is being asserted is a right that is protected by the First Amendment.

QUESTION: Did that case hold that the kind of Wooley versus Maynard type of First Amendment rights the right not to carry a message you don't agree with applied to corporations?

MR. HARRIS: That case was not faced with that issue.

QUESTION: Do, it didn't hold it?

MR. HARRIS: It did not hold that a person had a right -- that a corporation had a right not to carry somebody else's message.

QUESTION: So, what case of ours do you rely for that proposition?

MR. HARRIS: There is no case that specifically holds that in the case of a corporation, however, we do rely heavily upon at least two cases, Miami Herald versus Tornillo and Wooley versus Maynard.

In the Miami Herald case, the Court held that the State of Florida could not compel the Miami Herald to publish the reply messages of third parties and in that decision Chief Justice Burger, writing for the Court, indicated that although the State of Florida made good arguments in terms of why a wide variety of views are necessary or desired, but the Court says in each instance where there is an enforced right of excess -- access -- necessarily calls for some mechanism, either consentual or governmental.

QUESTION: Do you think there is a difference between a newspaper, which is not a regulated enterprise, and a public utility, which is quite strictly regulated, a difference for these purposes?

MR. HARRIS: For these purposes, I think that the same principle that applies in Tornillo should apply here.

The mere fact of regulation, as this Court indicated in Consolidated Edison, does not preclude a utility from asserting First Amendment rights.

In Tornillo, the difference, of course, is that Tornillo involved a newspaper.

Here we are involved with a situation where you have a utility's billing envelope. But, the principle is the same; that is, as the Court said in Tornillo, newspapers should not be compelled to publish that which reason tells them should not be published.

Here a utility should not be compelled to carry a message in the billing envelope that reason tells it should not be carried.

QUESTION: Yes, but hasn't the Court distinguished between different kinds of media? The Red Lion case, for example, involving the fairness doctrine who was dealing with the broadcast station which is regulated in a sense and yet the broadcasters are required to do certain things.

MR. HARRIS: In the case of Red Lion, there Red Lion did not rest upon the basis that the broadcasters had a monopoly. It rested rather upon the basis that they were using a scarce resource that was not open to the public.

Here, the mail is not a scarce resource. And, as the Court reasoned in Red Lion, and again emphasized in Consolidated Edison, is that a broadcaster can only communicated through those scarce resources.

QUESTION: Mr. Harris, do you concede that the Public Utilities Commission can require PG&E to carry in its billing envelopes notices of public rate hearings or things of that kind?

MR. HARRIS: Justice O'Connor, we have, indeed, carried such notices. We are willing to do that.

QUESTION: Well, I am asking if you concede whether the Public Utilities Commission can properly, under the First Amendment, require the company to do that?

MR. HARRIS: Yes, we do concede that.

QUESTION: And, why is that different in your view?

MR. HARRIS: That is different because in the case of a government notice, here an informational notice, informing utility customers that a hearing is going to be on such and such date or that there is a public health or safety matter pending somewhere concerning the utility, it is quite different from compelling PG&E to carry in its billing envelope the fund raising message of a third party unregulated by the Commission, a third party who is free to --

QUESTION: Does this argument suggest, Mr. Harris, that the PUC order that we have before us, you would not object to it if they permitted TURN to insert only factual matter that dealt with the public utility business?

MR. HARRIS: No, it would not, Justice Brennan.

We would object to it because we would be forced to carry --

QUESTION: I asked you that question because I thought you answered Justice O'Connor that the PUC could require you to insert matter that dealt with rates.

MR. HARRIS: As I understand Justice O'Connor, it was whether or not we could be compelled to carry a state's notice.

As I understand your question, it is whether or not we can be compelled to carry a private person's notice.

QUESTION: That is right.

MR. HARRIS: And, no, we cannot, I don't think, consistent with the First Amendment unless the state shows a compelling state interest for ordering us to do it. We rely on Wooley versus Maynard.

QUESTION: It is the death or die or whatever.

MR. HARRIS: No, it is not the death or die.

We also rely on the general principles of the First Amendment and that is compelling someone to speak when there are other ways available.

QUESTION: Are you going so far as to suggest that a corporation's negative First Amendment right, as you perceive, is co-extensive with the individual?

MR. HARRIS: Yes. I think that this Court intimated that to a certain extent in Harper and Row versus Nation Enterprise by Justice O'Connor where she indicated and cited really that the right to speak also necessarily includes the right not to speak. And then she quotes New York's Chief Judge Poole in terms of how they serve the same ultimate purpose.

The purpose that is being served here is the right not to be compelled to carry someone else's message.

QUESTION: It makes no difference whether it is an individual or a corporation?

MR. HARRIS: I don't think it is any different at all whether it is an individual or a corporation. You cannot look and say in the one instance this is a corporation, therefore, you carry the message without regard to anything else. I think you have to look at the nature of a right involved. Is that right protected by the First Amendment.

Here, the right involved is the right not to carry the message of someone else.

QUESTION: Is there any difference with a utility?

MR. HARRIS: I think there is a difference. I don't think there is any difference whether it is a utility or any other corporation.

QUESTION: Did the state order the utility to publish the rate schedule?

MR. HARRIS: Yes, indeed, Your Honor.

QUESTION: Well, there is a difference.

MR. HARRIS: Yes, there is a difference if it is the message of the state. If it is a message of a third party, then I would disagree.

QUESTION: Why shouldn't it or why doesn't it make a difference, as the Court below held, that the extra space in an envelope doesn't belong to the utility?

MR. HARRIS: It is true that the Commission below held that the extra space does not belong to the individual.

QUESTION: It doesn't belong to the utility.

MR. HARRIS: Doesn't belong to the utility.

QUESTION: Yes.

MR. HARRIS: Sorry.

QUESTION: Yes.

MR. HARRIS: It doesn't matter because what we are talking about is the regulation of what goes into the billing envelope.

QUESTION: Well, I know, but the space doesn't belong to the utility, it belongs to the consumer, it was held below, right? So, the Commission said we are going to fill up that space that belongs to the consumer with -- periodically with something that we think the consumer would be more interested in.

MR. HARRIS: It is true that that is what the Commission held. But, we argue that the First Amendment cannot depend upon a metaphysical definition of space.

QUESTION: How does the First Amendment give the utility the right to use that space?

MR. HARRIS: What we are talking about, Justice White, in addition --

QUESTION: We are talking about who gets a free ride on that space.

MR. HARRIS: If the question is who gets a free ride, the Commission can certainly deal with that question by assessing an economic value to that extra space.

But, here, in order for the consumer group to use that space, they must use an envelope, an envelope that the Commission has not said belongs to the rate payer. And, in using that envelope we are compelled to associate, we are compelled to be the courier of someone else's message and we think that is protected by the First Amendment.

QUESTION: Mr. Harris, a moment ago you referred to the Harper and Row opinion and the suggestion that the right to speak and the right not to speak are somewhat similar. Do you think the right not to be a courier is equivalent to the right not to speak?

MR. HARRIS: I think it is very, very close.

QUESTION: It is clearly not the same, is it?

MR. HARRIS: They are not identical, no.

QUESTION: Does any consumer object to having the consumer space in the envelope used in this manner?

MR. HARRIS: We don't know, Your Honor. That wasn't part of the record below. But, I would suspect that many consumers will object, because there are many consumer groups.

QUESTION: Wouldn't you say the Commission would have the power to order -- to prevent the utility from putting anything in the envelope except the bill?

MR. HARRIS: I don't think so. I think that would clearly reverse Consolidated Edison.

QUESTION: Well, why? The space doesn't belong to the utility. Why should it get a ride out of it?

MR. HARRIS: But, the outcome of this case does not turn upon who owns the extra space.

QUESTION: But, it does on who owns the envelope.

MR. HARRIS: Well, I don't think it necessarily turns on who owns the envelope either.

QUESTION: Well, that is the way you are being a courier.

MR. HARRIS: The envelope has not been held to be the property of the rate payer. The envelope carriers the name of PG&E. The envelope is material that we must sent to the rate payer. Whatever is in that envelope is associated with PG&E.

QUESTION: Of course, PG&E could change that very easily if it wanted to by saying PG&E and then adding TURN to the envelope, I mean, if it disliked the notion that it was misleading people.

MR. HARRIS: Then the association would become even worse because there you have both PG&E and TURN being the sender of the bill. The purpose of the billing envelope is to send a bill.

Even aside from any other document included therein, it is the forced association, the forced compulsion to speak when we prefer not to speak that is at issue here.

QUESTION: Don't you think there is some difference between the loyal, feisty citizen of New Hampshire who didn't believe in live free or die and, therefore, didn't want to carry it on his license plate, kind of an individual thing that always struck me, though I must say I didn't agree with the result in that case, and the corporation. I don't see quite the same personality element there.

MR. HARRIS: It is not the same personality, of course, but it is the right that is involved, the right not to be the courier of someone else's message that I think is at stake here.

In Wooley, live free or die. Here, we carry whatever the message may be that is given to us from TURN into a billing envelope that we have mailed out for over 60 years. People associate what we mail in the PG&E envelope with PG&E.

QUESTION: Can't you, under the Commission's ruling, put a disclaimer on what you circulate, saying this is not produce by PG&E or something like that?

MR. HARRIS: The opportunity to put a disclaimer --

QUESTION: TURN has to under the order.

MR. HARRIS: Under the order, TURN must put a disclaimer. But, a disclaimer would not clear the violation. As I indicated, for over 60 years this has been the PG&E envelope. The forced association causes the injury. The opportunity to disclaim an inaccurate or an inflammatory message will not suffice to undo whatever damage that may have been done by including the message.

The State of California cited PruneYard as its --

QUESTION: Would you kind of enlighten me a little more about the nature of the damage to the corporation. It is not pecuniary interest, is it?

MR. HARRIS: No, it is --

QUESTION: It is kind of an insult.

MR. HARRIS: It is reputation.

QUESTION: Now, what is it? Does it adversely affect the reputation or it is misleading or how does it hurt the corporation?

MR. HARRIS: It affects us in this way. Over the years, we have expended a lot of money building up the image of PG&E, building up our corporate image. To the extent --

QUESTION: Is it part of your image that you don't like people to oppose rate increases?

(Laughter)

MR. HARRIS: No, Your Honor. We have not even carried the message of those who support rate increases. We have not carried the message of anyone other than PG&E, although we have been requested by numerous jurisdictions, including the City and County of San Francisco to carry its messages.

But, as you can probably see, once we become involved in that, then we find ourselves irretrievably entangled in a mess.

This order requires that the PUC place itself in the position of selecting the speakers. In other words, who uses this envelope, whether it is TURN or some other person. They must first come to the Commission, must first indicate to the Commission the subject matter that it intends to talk about. Once it indicates that, then the person must indicate whether or not the viewpoint expressed is one that is in support of PG&E or opposed to PG&E, because, as the decision said, it is the purpose to get a variety of views in addition and opposed to PG&E.

I think the government really will become so entangled, unlike in PruneYard, in picking and choosing speakers, that government will end up being the ultimate arbitrator of what is or what is not said.

QUESTION: Suppose a citizens' committee is organized in favor of public ownership of all utilities. Under this order, could that committee put its material out through the monthly bills?

MR. HARRIS: If the Commission so decrees. It is up to the Commission. Under this order the Commission can allow anyone that it pleases to use the envelope. All they need do is file a complaint and if the Commission believes that the subject matter is proper or the viewpoint expressed is proper, then the Commission will allow -- will compel us to carry that message.

QUESTION: Not flyers for candidates for public office?

MR. HARRIS: No. It would discriminate against them. It did that, as a matter of fact, a year ago. A Committee for One Million, Proposition 36, a Jarvis/Gann initiative, applied to the Commission because they wanted to indicate to rate payers that there was a measure on the ballot that would affect rate payers. But, the Commission, and that is in the Appendix to the Jurisdictional Statement, said that because it did not directly relate to a Commission proceeding that they shall be denied and they were denied.

QUESTION: How about solar energy? I guess you wouldn't mind carrying that, would you?

MR. HARRIS: We have carried Commission notices concerning solar energy before, but we have not been compelled to carry the messages, for example, of a private corporation in the solar industry who wants to promote his particular device, as TURN is trying to promote its --

QUESTION: That is the one I was talking about.

MR. HARRIS: We have not been compelled to do that.

QUESTION: Suppose some group came in with material, information, propaganda, whatever you want to call it, about tariffs, during that tariffs be put on all imports from Japan. Would the Commission have the authority to have that circulated?

MR. HARRIS: Under this order, of course, it would, but I don't think that the Commission would necessarily have the authority to compel us to carry that message as promulgated.

I think it is important to remember that we do not take the position that the Commission can never compel us to carry someone's message. We think that when the Commission endeavors to do that the Commission still has to show an overriding governmental interest for making us carry the message that you indicate.

And, in the instant case, the Commission, we don't think has met its burden of proof of showing that there is a compelling state interest for carrying TURN messages.

The Commission already has California state law which says specifically that intervenor funding can be given to people who intervene in rate cases.

For example, the Commission has awarded more than $160,000 to TURN during the past year, the last two years. Pending now before the Commission is an application for over $800,000 by some other consumer group.

So, the Commission already has at its disposal a very clear mechanism for taking care of a problem that it wants to resolve.

Thus, there is no reason for it to broadly stifle First Amendment right. There is no reason for it to compel PG&E to become the courier of TURN's message. TURN can mail it to the householder.

QUESTION: I am not sure I understand. You say the Commission has ordered the utility to pay TURN $160,000 or give it from public funds?

MR. HARRIS: From public. What it does is it will order the utility to pay it and then the utility recoups it in its next rate case that comes up.

QUESTION: I see. And, is it in the nature of like paying for their attorneys' fees for participating in the procedure?

MR. HARRIS: Attorneys' fees.

QUESTION: I see.

MR. HARRIS: All fees associated with the case.

In PruneYard which, of course, is the case which they rely upon very heavily, there you had a shopping center, a shopping center that was open to the public to come and go as it pleased. Some 25,000 people congregated their daily. There was no requirement that government pick or choose the speakers. The only requirement was that the facility -- in that case the shopping center -- be made available.

But, here, in order for government to carry out its order, it must become ensnarled in picking and choosing speakers, precisely what the Court said in Police Department of Chicago versus Mosley. Government should not be involved in picking and choosing speakers.

When you have other ways to accomplish the governmental purpose, then government ought not to be allowed to then use means that will broadly stifle First Amendment activities.

Here, unlike in PruneYard, government did not permit PruneYard, as Justice Rehnquist pointed out, to open those portions of the shopping center that had never been open to the public. Here, PG&E is required to open its billing envelope that it has never opened to the public.

The question is basically one of does it really make sense, in view of all these other alternatives, to compel PG&E to carry somebody else's message that can easily be disseminated in another manner.

QUESTION: I suppose the Commission could say to PG&E, well, if you are going to use this extra space, you ought to pay for it.

MR. HARRIS: We have no problems with paying for the extra space. We conceded that in the Court below, that if that is the governmental interest involved, recoupment -- the value of that extra space, which it said it was in its decision, then there is no reason why government cannot assess -- Let's say, for example, if it is worth $300,000 and probably charge that, assuming it is reasonable, to PG&E. PG&E would have no constitutional right to --

QUESTION: And that is your argument. Couldn't they recoup from the consumer.

MR. HARRIS: That is right. That is quite correct.

QUESTION: Stockholders.

MR. HARRIS: It would have to be borne by the stockholders.

I will reserve the balance of my time.

CHIEF JUSTICE BURGER: Mr. Fogelman?

ORAL ARGUMENT OF MARK FOGELMAN, ESQ. ON BEHALF OF THE APPELLEE

MR. FOGELMAN: Thank you, Mr. Chief Justice, and may it please the Court:

In order to put this case --

QUESTION: Would you raise your voice some, Mr. Fogelman?

MR. FOGELMAN: Yes, Your Honor.

In order to put this case in its proper perspective, it is important to step back a moment and look at what the Commission did and why it did it.

PG&E is the largest investor-owned gas and electric public utility in the country. It has a lawful and practical monopoly for the delivery gas and electric service with in its service area, which included most of the State of California.

It recovers its reasonable costs and a reasonable rate of return in rates paid by the rate payers.

Its representation in Commission rate cases is very effective. That representation by some of the best expert witnesses, consultants, and lawyers that money can buy is considered an operating expense to the utility and is paid for ultimately by the rate payers.

The public utility --

QUESTION: Well, to some extent, for the stop orders too, isn't there?

MR. FOGELMAN: Not really, Your Honor, because --

QUESTION: Doesn't it produce the revenue? Isn't there some reduction of --

MR. FOGELMAN: Well, it is an operating expense and all of their operating expenses are recovered in rates, I believe.

QUESTION: Well, aren't the operating expenses shared by the rate payers and the stockholders?

MR. FOGELMAN: It is my understanding that 100 percent of operating expenses would be recovered. Of course, costs which are unreasonable or imprudent would be disallowed from the rate base and would be borne by the shareholders.

QUESTION: What are the limits on how this authority of the Commission can be used?

MR. FOGELMAN: The Commission is limited by its state-authorized authority under the State Constitution and it is limited by the United States Constitution.

Insofar as it does not violate the principles of either of those authorities, it is essentially free to regulate public utilities in the public interest.

With respect to ordering a public utility to carry the messages of a third party, it is difficult to pose the precise limits. There are probably many questions which the Commission ultimately will be required to decide in pursuing this program.

QUESTION: Who is going to define those limits?

MR. FOGELMAN: Your Honor, ultimately the Commission will do so.

QUESTION: Suppose someone comes in and says here is a -- in the next election there is going to be a recall of three state Supreme Court Justices on the ballot and we aren't taking any position as to whether they should be recalled or not recalled, but here we want this message put in that you should be sure to vote on this because that is a exercise of your right to control your public servants, including the courts. Would the Commission let that go in?

MR. FOGELMAN: Well, under this program they certainly wouldn't and that is the only --

QUESTION: I didn't get that, under what?

MR. FOGELMAN: Under this program, they certainly would not.

QUESTION: Why not?

MR. FOGELMAN: Because the purpose of this program, the primary purpose, the reason why the state has done what it has done here, is to permit consumer groups to solicit funds to increase their participation in Commission proceedings involving PG&E.

And, insofar as the access furthers that primary purpose, access would be granted. Now, it is possible that the Commission could enlarge the scope of the program.

QUESTION: Well, the predicate for its act was though that -- for the order was that the space belongs to the consumer, and, hence, we will act as proxy for the consumer and send them out something that we think they might be interested in.

MR. FOGELMAN: Well, Your Honor --

QUESTION: Based on that I wouldn't think the utility -- doesn't own the space, I wouldn't think the utility would have standing to object to whatever it was the --

MR. FOGELMAN: Your Honor, there is no question in our mind that the determination of rate payer property is an independent basis for the decision.

QUESTION: Yes.

MR. FOGELMAN: It is res judicata here.

QUESTION: I agree with that. All I am saying is --

MR. FOGELMAN: However, we don't think it makes any difference.

QUESTION: Why is it res judicata here?

MR. FOGELMAN: It is res judicata here because it was decided in an earlier proceeding that the extra space in the envelope is rate payer property. PG&E was a party to that proceeding, did not take it up to a higher court, and in this case, the Commission refused to allow that particular finding to be relitigated.

The California Supreme Court essentially affirmed the finding of res judicata.

QUESTION: Well, it essentially denied review.

MR. FOGELMAN: Well, denial of review is a decision on the merits under California law and all questions of law and fact.

QUESTION: Mr. Fogelman --

MR. FOGELMAN: Yes, Your Honor.

QUESTION: There are no guidelines, right?

MR. FOGELMAN: Under this present program, there are a number of guidelines.

QUESTION: Well --

MR. FOGELMAN: Which can be inferred from the criteria under which --

QUESTION: I don't consider guidelines that can be inferred. I consider guidelines as something you can point to.

MR. FOGELMAN: All right. TURN was permitted in the billing envelope because of four characteristics enunciated in the Commission's decision. The first was an ability to represent a significant segment of the rate payer population.

The second was a present, current involvement in proceedings involving PG&E.

The third was that it was a duly constituted non-profit corporation, and the fourth was that it had a financial hardship if it were not permitted access in participating in PG&E proceedings.

QUESTION: That is it?

MR. FOGELMAN: Those were the characteristics, yes.

QUESTION: Well, then, could you compel them to carry an advertisement from the sun people that want to use that energy?

MR. FOGELMAN: Your Honor, I think it would be fair to assume that since their participation and their intention to solicit funds, specifically for the purpose of participation -- In fact, there is an auditing procedure --

QUESTION: Is there any other governmental agency in California that can control what a corporation may say?

MR. FOGELMAN: Your Honor, there are a number of state agencies that can do that?

QUESTION: Like what?

MR. FOGELMAN: The State Banking Commission regulates banking. There are truth-in-lending type laws, truth-and-lending type disclosure.

QUESTION: Truth in lending.

MR. FOGELMAN: In fact, the state often requires speech to be carried. This Court --

QUESTION: What other corporation is required to carry something that they don't want to carry?

MR. FOGELMAN: There are many disclosure requirements. The SEC proxy statements --

QUESTION: This isn't disclosure. This is propaganda.

MR. FOGELMAN: Well, Your Honor, what it is is fund solicitation messages which this Court in the Schaumberg and the Cornelius case indicated was fully protected speech. It involves the provision of information and advocacy of causes and that is all that TURN is --

QUESTION: Well, freedom in lending doesn't require you to send it to everybody. You are only required to send it to your customers.

MR. FOGELMAN: That is the program.

QUESTION: So, these are not freedom-of-lending customers. These are customers who can't help themselves.

MR. FOGELMAN: Well, these are customers of the utility.

QUESTION: My point is that you see no difference between a utility and an ordinary corporation.

MR. FOGELMAN: Your Honor, I do. I think a public utility is far more heavily regulated than many corporations.

QUESTION: That is why you want to use it here.

MR. FOGELMAN: Well, I think --

QUESTION: If it were not a utility, you wouldn't be interested, would you?

MR. FOGELMAN: Well, the Commission does regulate public utilities.

QUESTION: It is aimed at a utility.

MR. FOGELMAN: Yes.

QUESTION: Mr. Fogelman, a moment ago you made the statement that under California law denial of review by the Supreme Court of California is an affirmance on fact and law. Is that true where the only proceeding below is an agency proceeding and it has never been to court?

MR. FOGELMAN: Yes, the Consumer Lobby against Monopolies case specifically holds that. I think it is page 901, 25 Cal. 3rd.

QUESTION: You said that although the property matter was an independent ground for decision, you don't think it is necessary or important.

MR. FOGELMAN: Well, I think it doesn't make a difference to this decision, because I believe that the Public Utilities Commission, under its broad regulatory powers, has an authority on the objective facts of this case to enter the order that it did, even if the space inside the envelope were deemed utility property.

QUESTION: Yes. Well, let's assume that the bill takes -- There is no spare space in an envelope and the PUC orders the utility to use a larger envelope and to let TURN put its material in it as long as TURN pays for it. That would be the same case, wouldn't it?

MR. FOGELMAN: I think that would be a legitimate situation. I think also if the rate payers paid for this space --

QUESTION: So, then, the Commission really would be -- the company really would be a courier of somebody else's materials.

MR. FOGELMAN: That is right. Basically the billing envelope is a unique medium of communication.

QUESTION: Well, let's suppose that your answer to that question is wrong, that they couldn't make the utility carry TURN's message on those facts. Would that mean that you have to lose this case?

MR. FOGELMAN: No, because if the Court were --

QUESTION: Then you have to get to the property thing.

MR. FOGELMAN: Then you would have to get the the property thing and that is binding on this Court as a res judicata determination.

QUESTION: Well, Mr. Harris, isn't your general regulatory rationale really foreclosed by the Consolidated Edison case?

MR. FOGELMAN: No, it is not, Your Honor, for a couple of reasons.

QUESTION: It seems very similar.

MR. FOGELMAN: Well, the big distinction there is that Consolidated Edison involves a restriction on utility speech.

It is very important, I think, for this Court to look at the purposes of the First Amendment which underlies the difference between affirmative speech and negative speech rights.

Insofar as someone is attempting to speak, and the state says you can't speak, you have a situation where the marketplace of ideas, society's interest in obtaining information, wide-open debate, is limited and that is the Consolidated Edison case.

QUESTION: Well, in some cases, the Court has indicated at least that there is a concomitant right not to speak, has it not?

MR. FOGELMAN: Yes, it has, Your Honor. But, the underlying purposes which serve the right not to speak, the right to refrain from speaking and to refrain from associating the views of another, is very different from the marketplace of ideas notion.

It is, and this is not to be trivialized, it is an important purpose. It is the sanctity and integrity of an individual's belief and thought. It is the interest that was involved in Barnett --

QUESTION: And, you take the position that that does not extend to a corporation?

MR. FOGELMAN: I take the position that it does not extend to a corporation which is an artificial entity. Furthermore, that it certainly doesn't extend to a public utility which is a very heavy regulated artificial entity.

Furthermore, I don't believe that it is co-extensive with the affirmative counterpart which serves entirely different interests.

QUESTION: Does it strike you that the Commission's theory about broader participation or expression of a variety of views is basically a content-based determination? The Commission has to look at what it is that TURN is doing and wants to say as the basis for its order that it be allowed to use the envelope.

MR. FOGELMAN: The order in a broad sense is content-neutral, because the Commission has disavowed any intention of looking at the way that TURN solicits funds.

However, there is a limited purpose --

QUESTION: It certainly has to look at the nature of what TURN is doing and saying in order to decide that it is going to order that its message be carried.

MR. FOGELMAN: Well, to the extent that TURN's speech might hypothetically -- and, again, this has never occurred -- I might say in a similar experience, the UCAN situation, no problem certainly developed over a two-year period, but assuming that TURN were to exceed the purposes of the program and to make -- engage in some sort of use of the extra space, which was not a solicitation of funds, in that situation the Commission would have to look at that. I am not sure precisely what --

QUESTION: At least it is content-based because -- At least it says we prefer to have TURN's material in this extra space than the company's.

MR. FOGELMAN: What it says, Your Honor --

QUESTION: Well, isn't it? Isn't that right? It prefers TURN's to the company's material.

MR. FOGELMAN: No. The company gets in the billing envelope every month of the year and it gets in the extra space at least eight months of the year and possibly all twelve.

QUESTION: That may be so, but when it can't get into the envelope, can't use the extra space, the Commission has said we prefer TURN's material to go in the extra space.

MR. FOGELMAN: Well, there is --

QUESTION: That is four times a year it makes that preference.

MR. FOGELMAN: Four times a year TURN has priority, that is correct. However, --

QUESTION: Well, that is based on content.

MR. FOGELMAN: Well, in a sense. I don't see how the company --

QUESTION: I don't see what else it is.

MR. FOGELMAN: We are concerned with a supposed violation of the company's First Amendment rights.

QUESTION: Did I understand you to answer Justice O'Connor that a corporation has no First Amendment right to refuse to carry the message of somebody else if ordered by the Public Utility Commission?

MR. FOGELMAN: Your Honor, I certainly don't think that the corporation has a right to refrain from speaking which is implicated in this case. I would think that you could possibly postulate a situation in which some area of corporate autonomy would be so threatened by a state compulsion to speak that there would be a violation of the principle.

QUESTION: Of what principle, First Amendment?

MR. FOGELMAN: Of the right to refrain from speaking under the First Amendment.

QUESTION: Yes.

MR. FOGELMAN: On the other hand, I don't think --

QUESTION: What about an incorporated church?

MR. FOGELMAN: Well, that would raise other First Amendment questions.

QUESTION: How about the John Birch Society?

MR. FOGELMAN: The compulsion of the John Birch Society to speak would --

QUESTION: It is a corporation.

MR. FOGELMAN: It is a corporation. And, I guess my answer would have to be that you can postulate situations in which a corporation which concededly has some degree of private autonomy would have that autonomy violated by a compulsion to carry.

QUESTION: Such as the NAACP?

MR. FOGELMAN: You could probably postulate a set of facts involving the NAACP.

QUESTION: So, you couldn't really mean to say that an old case is a corporation and a right under the First Amendment to refuse to carry somebody else's message.

MR. FOGELMAN: I think what I meant, Your Honor, is that in this case there is no violation of any right to --

QUESTION: Let me narrow that down to a little narrower question than Justice Brennan's. Take a regulated, a regulated activity, the three major commercial networks. Could the Federal Communications Commission come down with an order and have it constitutionally enforced providing that no prime minister of any other country or any chief of state of any other country could be on the television program unless it was approved by the State Department?

MR. FOGELMAN: That is quite a difficult hypothetical. It certainly is not this case.

QUESTION: They are both regulated industries.

MR. FOGELMAN: I am not sure, Your Honor, but it is a heavily regulated medium of communication, that is the airwaves.

QUESTION: Well, a broadcast station, not necessarily a network -- a broadcasting station is more regulated than the electric utility in the sense that the Federal Communications Commission can terminate their license and put them off the air every three years, I think it is.

MR. FOGELMAN: That is true. On the other hand --

QUESTION: That is pretty heavy regulation, isn't it?

MR. FOGELMAN: That is heavy regulation. Of course, the state here has granted a monopoly to a public utility and it is only at the pleasure of the state that the utility has that monopoly and it is to protect the public that the state regulates the public utility in the public interest.

QUESTION: Is an example of the sort of corporate First Amendment right that would be sustained the Tornillo case where certainly the Miami Press was a corporation and its First Amendment right to publish obviously allowed it not to have to carry the messages of others.

MR. FOGELMAN: Well, the Tornillo case, in our view, does not turn on the fact that the Miami Hearld was a corporation.

QUESTION: No. The press freedom extends to private individuals or corporations alike. And, I take it what you are saying is the since the PG&E is not in the business of running a newspaper, it isn't governed by that case.

MR. FOGELMAN: Well, no, that is not what we are saying. In some sense, a pamphlet, a document like Progress, would be equivalent to a newspaper.

PG&E's position is that the billing envelope, the medium of delivery of its newspaper, is somehow subject to inviolable editorial discretion and that is not the case.

QUESTION: Would Tornillo come out any differently if the Florida statute had said along with the newspaper you have to put in a little envelope that you delivery the newspaper a retraction. It doesn't have to be in the paper itself.

MR. FOGELMAN: I think it might well have come out differently, particularly if the supplement were clearly identified as being the views of the speaker, and, furthermore, if there were no cost to the newspaper.

One of the critical features of Tornillo on which that case turned was the fact that there was a penalty on the affirmative speech of the newspaper. Because the newspaper spoke about certain subjects, the right-of-reply statute was triggered and space had to be given.

That is not involved here because TURN gets access to the billing envelope under this program no matter what PG&E says.

So, there is no chilling effect which would tend to cause the newspaper not to address a specific point of view.

QUESTION: Mr. Fogelman, a little while ago you said there was absolutely no content regulation here if I understood you correctly. Is it not true that there is a requirement that there be a disclaimer enclosed and isn't that part of the content --

MR. FOGELMAN: Yes, Your Honor. That would be comparable probably to the disclosure requirements that the Court --

QUESTION: It is content regulation?

MR. FOGELMAN: It is content regulation, but it is designed to protect PG&E's First Amendment rights.

QUESTION: Well, I am not going beyond that. It is that much.

MR. FOGELMAN: Actually, Your Honor --

QUESTION: Mr. Fogelman?

MR. FOGELMAN: Yes, Your Honor.

QUESTION: Have you answered his question?

MR. FOGELMAN: Yes, Your Honor.

QUESTION: I was under the impression that the Commission order was limited to neutral messages. Did it use the word "neutral?"

MR. FOGELMAN: The statement was that in a broad sense you might consider this regulation to be content-neutral because --

QUESTION: Did the Commission use that term?

MR. FOGELMAN: No, it did not use that word.

QUESTION: That is your word?

MR. FOGELMAN: That is my word.

QUESTION: Well, the purposes of TURN are not entirely consistent with those of the public utility, I understand. What is the constitutional bylaw stated purposes were these?

MR. FOGELMAN: The purpose of -- I believe TURN's bylaws state that its purpose is to provide representation to the interests of residential rate payers of Public Utility Commission proceedings.

QUESTION: To oppose rate increases?

MR. FOGELMAN: To oppose rate increases.

QUESTION: Let's assume, for example -- You have had a good many hypotheticals posed to you this afternoon, but suppose the entity that came along and asked for permission for space opposed private ownership of utilities. Would that be a neutral message?

MR. FOGELMAN: Your Honor, any message is not a neutral message. Any message that takes a position --

QUESTION: Slightly contrary to the private utility point of view.

MR. FOGELMAN: Right. It is an advocacy message.

QUESTION: Right.

MR. FOGELMAN: But, the point is that in letting a participant in Commission proceedings into the billing envelope to solicit funds to improve its participation, the Commission is letting that entity, whoever it may be, as long as it satisfies certain criteria, speak and advocate its own position as best it can in order to try and raise money.

QUESTION: So, content-neutral is not a requirement?

MR. FOGELMAN: No, I don't think it is precise content-neutrality in the sense that you are using the term would be required to sustain this regulation.

QUESTION: Some Justice asked you, is there any limiting principle -- Assume for example that a cause organization that wanted space urged the customers of PG&E to vote for people like the legislature who would support public ownership of all utilities. Would that be neutral?

MR. FOGELMAN: Well, to the extent -- Would it be neutral?

QUESTION: Obviously not.

MR. FOGELMAN: No, it is not a neutral message. It is an advocacy position, but permitting --

QUESTION: Would it be lawful?

MR. FOGELMAN: I would believe the Commission would have the power, if it faced the question, to permit CAUS into the billing envelope because the Commission is doing this to provide the consumers with a diversity of viewpoints, not merely only the views of PG&E.

It is also doing it to increase the ability of different viewpoints to participate in Commission proceedings.

QUESTION: Why would that be contrary to Miami Herald?

MR. FOGELMAN: It is contrary to Miami Herald for several reasons. First --

QUESTION: Why wouldn't it be contrary to Miami Herald if the Commission permitted the sort of insert that I described advocating public ownership of utilities, absolutely contrary to the basic perception of private utilities? Miami Herald did not want to be a forum for the views contrary to its own.

MR. FOGELMAN: Well, I think -- First of all, that case is not, of course, involved here. But --

QUESTION: You think it is not involved?

MR. FOGELMAN: I think it would not be -- The reason why Miami Herald came out the way it did is basically two reasons. The first was that there was a penalty on what the newspaper said and that is not involved in this case.

The second reason is that there was an intrusion on editorial discretion.

But, I don't think the cases of this Court hold that you can never, never compel a newspaper to carry the speech of third parties. In fact, there is a Lorain Journal case --

QUESTION: Did we not sustain the right of Columbia Broadcasting System to reject certain paid ads because they said it wasn't necessary to get the information out, Democratic Committee against Columbia Broadcasting?

MR. FOGELMAN: Yes, you did. But, you also, in the CBS verus FCC case, permitted candidates for public office to have a limited right of access to get their --

QUESTION: That was under the fairness doctrine.

MR. FOGELMAN: Right, right. And, in a sense, what the Commission has done here -- The previous discussion of Red Lion is to do something similar to a fairness doctrine to provide fair access.

QUESTION: It seems to me you are going a lot further than you have to to win your case here when you start saying that, yes, the Commission, of course, could have stuff advocating the public ownership of utilities. I thought the Commission allowed TURN to come in because TURN is concerned with Commission rate-making proceedings And, I take it there is no proceeding presently before the Commission about whether PG&E should be publicly owned. So, you really don't have to get to that, do you?

MR. FOGELMAN: You are absolutely right, Your Honor.

QUESTION: But, the principles are the same, of course.

MR. FOGELMAN: The principles are the same.

QUESTION: You mentioned the word "neutral." Do you know anything today in the public view that is neutral?

MR. FOGELMAN: Well, I suppose any position you take is likely to have some repercussions.

QUESTION: Well, would your Commission consider the use of an ad during the abolishment of your Commission?

(Laughter)

MR. FOGELMAN: I think --

QUESTION: Or counsel.

MR. FOGELMAN: I think the Commission, Your Honor, is concerned with this program. There are many hypotheticals that can be raised. But, the point is the Commission has taken a very limited step here and basically PG&E --

QUESTION: Why?

MR. FOGELMAN: It has taken a step to try --

QUESTION: Why is the state taking this step?

MR. FOGELMAN: It is taking this step to try to improve consumer participation in its own proceedings so it can get a fuller record and make wiser decisions which is --

QUESTION: You suggest that a tornado is different because there was a cost to a newspaper. It would chill its own speech if it had to print replies.

MR. FOGELMAN: That is right.

QUESTION: Is it perfectly clear that if the utility here had never initiated a program of using this space for its own propaganda, that this order would have ever come about?

MR. FOGELMAN: I think it is fair to say that the Commission only recently discovered the existence of the extra space, this income-generating asset. And, I think at that point it had a problem. What do you do with it that utilizes it in the public interest?

QUESTION: Putting my question just in a little different form, do you think the case would be precisely the same in terms of its constitutional issues if the utility had never made use of the space for a similar purpose?

MR. FOGELMAN: I think it would be quite similar, yes.

QUESTION: Well, could the Commission order that any unused offices in PG&E buildings be turned over to TURN for its office space and that sort of thing?

MR. FOGELMAN: Well, the Commission has an obligation to see that the utility operates in an efficient manner and to the extent that unused offices are not being used, the Commission can make PG&E rent them out presumably. But, that is not this case.

If I may address some critical points here, I think there are five critical aspects of this decision that preclude the notion that there is a violation of the First Amendment.

First, there is no limitation on the continuing availability of Progress in the envelope. PG&E can still say whatever it wants, as much as it wants, in the billing envelope. It only is possibly losing a subsidy of its speech to which it is not constitutionally entitled.

Second, each speaker is to determine its own content and TURN's solicitation messages will not be looked at insofar as they are consistent with the program.

Third, TURN's is required to identify itself as the source of the message and to indicate that neither PG&E nor the Commission have reviewed the message. This effectively means that there will be no confusion and this Court can be sure that if there is confusion the Commission will immediately take steps to rectify that.

QUESTION: To that extent, TURN is not free just to say what it wants to say. So, two and three are somewhat contradictory.

MR. FOGELMAN: I beg your pardon?

QUESTION: I say to that extent TURN is not absolutely free to use the space exactly as it chooses.

MR. FOGELMAN: You are right. The disclosure --

QUESTION: Two and three are inconsistent with one another.

MR. FOGELMAN: That is right. We are making TURN carry that speech.

Fourth, there is no cost to PG&E for the inclusion of TURN's message, not one cent. So, the utility is really not being disabled in any sense or being required to pay any penalty.

QUESTION: Unless it wants to send out its material that it now can't -- that under this order it can't send out. If it is going to have to do that, it will have to pay for it.

MR. FOGELMAN: It will have to pay for it, but it is still in the same billing envelope. The only thing is it may be moved from the subsidized space to the unsubsidized space.

QUESTION: I know, but it would cost them money.

MR. FOGELMAN: And, finally, and this really ties to the program, the grant of access to the ultimate purpose, the money which TURN receives from its solicitation message must be used for participation in Commission proceedings involving PG&E.

Basically, I think an expansive reading of the three cases, the Barnett, Wooley, and Tornillo cases are being asserted before this Court. The Court is being asked to expand negative speech rights to a set of facts that they have never reached in the past. And, I think it is fair to say that the Commission's decision is reasonable regulation. It has been done in other states. California is not alone in this. It is an experimental program, but I submit to the Court that there is no infringement of any First Amendment rights here. And, if there is an infringement, it is so minimal, the intrusion is so minimal and the state interests are sufficiently significant to warrant that intrusion.

QUESTION: Have the other states that have done this taken the action that the California Commission did in declaring the unused or extra space to be rate payers' property?

MR. FOGELMAN: No, Your Honor, they have not.

QUESTION: They just used their general regulatory power?

MR. FOGELMAN: Yes, they have.

CHIEF JUSTICE BURGER: Do you have anything further, Mr. Harris?

ORAL ARGUMENT OF ROBERT L. HARRIS, ESQ. ON BEHALF OF THE APPELLANT -- REBUTTAL

MR. HARRIS: Mr. Chief Justice, and may it please the Court:

I have just a few notes. In regards to the ownership of the extra space, we would disagree, as we did in our reply brief to their motion to dismiss, that that is foreclosed. And, we quoted from the California Supreme Court itself at 25 Cal. 3rd 891, where the Court explained that "when the issue is a question of law rather than a fact, the prior determination of" -- and I am adding in the word Commission -- "is not conclusive either if injustice would result or if the public interest requires that litigation not be foreclosed."

As we indicated earlier, if the California Supreme Court or any other California court decided that this was critical in any other proceeding, it could be relitigated.

QUESTION: You wouldn't ask us though here to second guess a state court on what is the property interest?

MR. HARRIS: No, no. I just wanted to clear up the record in terms of whether or not this is forever foreclosed.

QUESTION: All right.

MR. HARRIS: We certainly don't believe it is. First of all, we believe it is contrary to what this Court said in New York Public Service Commission versus Public Board; that when rate payers pay for service, they do not pay for the property used to deliver that service.

QUESTION: We judge the case on the basis of the property -- that that unused space is the property of the consumer. That is the way the case gets here, isn't it?

MR. HARRIS: No.

QUESTION: Why?

QUESTION: We can't second guess the state court on that.

MR. HARRIS: No. We brought the issue here, Your Honor, on the basis that it infringed upon our First Amendment rights --

QUESTION: Even if the property does belong to the --

MR. HARRIS: Even if that ephemeral concept of extra space, which may be there one month, may not be there the next month, it is the putting of that message in the billing envelope which belongs to PG&E that is at issue.

QUESTION: Can PG&E just put their bills on heavier paper and solve this problem?

(Laughter)

MR. HARRIS: The Commission cautioned us not to do that, Your Honor, and we would try to be fair.

(Laughter)

MR. HARRIS: But, on the other hand, it is quite possible for TURN to use heavy paper for its message and preclude us from putting in Progress.

I think what this case really points out is what this Court said in Cohen versus California; that it is the purpose of the First Amendment to remove government from picking and choosing and from deciding who should speak, when they should speak, etc.

I think it is even more important here, because here the State of California has at its disposal many other ways to resolve this problem and it never has to become involved in picking this group or picking that group.

If the problem that is bothering California that there is some extra space there where, as it said, it is not recouping the economic value of that space, then let it do what it always does in a rate-making proceeding, assess a value.

So, I think that this case clearly comes down in terms of saying that here is a case where government really has gotten itself involved in a situation that it will be impossible to retrieve itself from, picking and choosing speakers.

Thank you very much, Your Honor.

CHIEF JUSTICE BURGER: Thank you, gentlemen.

The case is submitted.

(Whereupon, at 2:53 p.m., the case in the above-entitled matter was submitted.)