California appeals court strikes down political-ad ban for public utilities

Friday, December 8, 2000

A California law prohibiting public utilities from including political
advertising and literature in their bills to customers violates the First
Amendment, a state appeals court has ruled.

In June, July and August 1987, Pacific Gas and Electric Company sent
newsletters to customers that included information regarding federal
regulations that Pacific Gas opposed.

State law prohibits public utility companies from mailing to
subscribers “any advertising or literature designed or intended to promote
or defeat”:

A measure appearing on the ballot for any local, state or
federal election.

Any candidate for nomination or election to any public

The appointment of any person to any administrative or
executive position in federal, state or local government.

Any change in federal, state or local legislation or

In December 1987, the Independent Energy Producers Association,
California Manufacturers Association and the group Toward Utility Rate
Normalization filed a complaint against Pacific Gas with the state Public
Utilities Commission because of its political advocacy.

The groups argued that the insertion of political literature into
billing envelopes forced subscribers to subsidize Pacific Gas’ political

After an evidentiary hearing in September 1990, the Public Utilities
Commission took no further action in the case until October 1998, when it
requested the filing of more legal papers.

In May 1999, the commission ordered Pacific Gas to refund to its
customers $920,000 based upon its finding that Pacific Gas violated the
political advocacy prohibition.

On Nov. 30, the California Court of Appeals reversed the commission’s
decision, finding that the statute violated the utility’s political free-speech
rights in Pacific Gas and Electric Company v.
Public Utilities Commission

The appeals court found the law was “clearly content-based”
and was not narrowly tailored, writing: “the Legislature could easily have
utilized more precise language” to further its goals “without
completely banning the inclusion of political literature in billing

Calls to attorneys on both sides have not been returned.

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