Court Opinion

ID: 9427998
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:22:32.832953+00
Date Added: 2024-06-11T17:23:11.103650
License: Public Domain

Mr. Justice Blackmun,
with whom Mr. Justice Rehnquist as to Parts I and II joins, dissenting.
My dissent in this case in no way indicates any disapprobation on my part of the precious rights of free speech (so *549carefully cataloged by the Court in its opinion) that are protected by the First and Fourteenth Amendments against repression by the State. My prior writings for the Court in the speech area prove conclusively my sensitivity about these rights and my concern for them. See, e. g., Bigelow v. Virginia, 421 U. S. 809 (1975); Virginia Pharmacy Board v. Virginia Consumer Council, 425 U. S. 748 (1976); Bates v. State Bar of Arizona, 433 U. S. 350 (1977). See also Central Hudson Gas & Elec. Corp. v. Public Service Comm’n, post, p. 573 (opinion concurring in judgment).
But I cannot agree with the Court that the New York Public Service Commission’s ban on the utility bill insert somehow deprives the utility of its First and Fourteenth Amendment rights. Because of Consolidated Edison’s monopoly status and its rate structure, the use of the insert amounts to an exaction from the utility’s customers by way of forced aid for the utility’s speech. And, contrary to the Court’s suggestion, an allocation of the insert’s cost between the utility’s shareholders and the ratepayers would not eliminate this coerced subsidy.
I
A public utility is a state-created monopoly. See, e. g., N. Y. Pub. Serv. Law § 68 (McKinney 1955); Jones, Origins of the Certificate of Public Convenience and Necessity; Developments in the States 1870-1920, 79 Colum. L. Rev. 426, 458-461 (1979); Comment, Utility Rates, Consumers, and the New York State Public Service Commission, 39 Albany L. Rev. 707, 709-714 (1975). Although monopolies generally are against the public policies of the United States and of the State of New York, see, e. g., N. Y. Gen. Bus. Law § 340 (McKinney 1968 and Supp. 1979-1980), Consolidated Edison and other utilities are permitted to operate as monopolies because of a determination by the State that the public interest is better served by protecting them from competition. See 2 A. Kahn, The Economics of Regulation 113-171 (1971).
*550This 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. See N. Y. Pub. Serv. Law § 66 (12) (McKinney Supp. 1979-1980). In addition, New York law gives its Public Service Commission plenary supervisory powers over all property, real and personal, “used or to be used for or in connection with or to facilitate the . . . sale or furnishing of electricity for light, heat or power.” N. Y. Pub. Serv. Law §§ 2 (12) and 66 (1) (McKinney 1955). State law explicitly gives the Commission control over the format of the utility bill and any material included in the envelope with the bill. § 66 (12-a) (McKinney Supp. 1979-1980).
The rates authorized by the Public Service Commission may reflect only the costs of providing necessary services to customers plus a reasonable rate of return to the utility’s shareholders. See, e. g., Comment, 39 Albany L. Rev., at 719-723. The entire bill payment system-meters, meter-reading, bill mailings, and bill inserts — are paid for by the customers under Commission rules permitting recovery of necessary operating expenses. Uniform System of Accounts— Expense Accounts — Customer Account Expenses, 16 N. Y. C. R. R. §§ 901-906 (1974). Under the laws of New York and other States, however, a public utility cannot include in the rate base the costs of political advertising and lobbying. See, e. g., Uniform System of Accounts, Account 426.4, Expenditures for Certain Civic, Political and Related Activities, 16 N. Y. C. R. R., ch. II, subch. F (1976); Southern Bell Tel. & Tel. Co. v. Louisiana, Pub. Serv. Comm’n, 239 La. 175, 207-209, 118 So. 2d 372, 384 (1960); Southwestern Bell Tel. Co., 19 P. U. R. 4th 1, 28-29 (Kan. Corp. Comm’n 1977); Boushey v. Pacific Cas & Elec. Co., 10 P. U. R. 4th 23 (Cal. Pub. Util. Comm’n 1975) (banning controversial bill inserts); Cascade Natural Gas Corp., 8 P. U. R. 4th *55119, 27 (Ore. Pub. Util. Comm’n 1974); Pacific Power & Light Co., 34 P. U. R. 3d 36, 46-47 (Ore. Pub. Util. Comm’n 1960); Southwestern Bell Tel. Co., 77 P. U. R. (n. s.) 33, 42 (Mo. Pub. Serv. Comm’n 1949); In re Investigation into the Advertising and Promotional Practices of Regulated Iowa Pub. Utils., No. U-463 (Iowa State Commerce Comm’n Jan. 29, 1975). These costs cannot be passed on to consumers because ratepayers derive no service-related benefits from political advertisements. The purpose of such advertising and lobbying is to benefit the utility’s shareholders, and its cost must be deducted from profits otherwise available for the shareholders. The Federal Energy Regulatory Commission, formerly the Federal Power Commission, has adopted this rule as well. Alabama Power Co., 24 F. P. C. 278, 286-287 (1960), aff’d sub nom. Southwestern Electric Power Co. v. Federal Power Comm’n, 304 F. 2d 29 (CA5), cert. denied, 371 U. S. 924 (1962); Federal Energy Regulatory Commission, Uniform System of Accounts, Account 426.4, 18 CFR Part 101, p. 383 (1979).
II
The Commission concluded, properly in my view, that use of the billing envelope to distribute management’s pamphlets amounts to a forced subsidy of the utility’s speech by the ratepayers.1 Consolidated Edison would counter this argu*552ment by pointing out that it is willing to allocate to shareholders the additional costs attributable to the inserts. It maintains: “The fact that the utilities may incidentally save money by the use of bill inserts, at no expense to the ratepayers, is not detrimental to the ratepayers or the public.” Brief for Appellant 21.
I do not accept appellant’s argument that preventing a “free ride” for the utility’s message is not a substantial, legitimate state concern. Even though the free ride may cost the ratepayers nothing additional by way of specific dollars, it still qualifies as forced support of the utility’s speech. See, e. g., Boushey v. Pacific Gas & Elec. Co., 10 P. U. R. 4th, at 27; Note, Utility Companies and the First Amendment: Regulating the Use of Political Inserts in Utility Bills, 64 Va. L. Rev. 921, 926 (1978). If the State compelled an individual to help defray the utility’s speech expenses, that compulsion surely would violate that person’s First and Fourteenth Amendment rights. Abood v. Detroit Board of Education, 431 U. S. 209, 233-235 (1977); id., at 256 (Powell, J., concurring in judgment). The fact that providing such aid costs the individual nothing extra does not make the compulsion any less offensive. See Wooley v. Maynard, 430 U. S. 705, 714-715 (1977); Buckley v. Valeo, 424 U. S. 1, 22-23, 36 (1976) (recognizing that permitting a candidate to use real or personal property provides material financial assistance to the candidate); id., at 91, n. 124.2 For example, a state law re*553quiring a person to permit the utility to include its insert in the envelope with that person’s private letters clearly would infringe upon the letterwriter’s First and Fourteenth Amendment rights.
Of course, a private business does not deprive an individual of his constitutional rights unless state action is involved. Although the State has given utilities their monopoly power and thus contributed to a situation in which coerced support of the utility’s speech is possible, the state-action requirement of the Fourteenth Amendment may not be met in this situation. See Jackson v. Metropolitan Edison Co., 419 U. S. 345 (1974).
I do not find it necessary, however, to decide whether state action in the Fourteenth Amendment sense has occurred here. It is not necessary to decide whether the ratepayers’ First and Fourteenth Amendment rights have been infringed in order to determine whether the State has the power to prevent the utility from exacting aid from the ratepayers in dissemination of a message with which they do not all agree. Even if the State is not so entwined in the activities of Consolidated Edison to meet the state-action requirement, the State has made a monopoly possible by preventing others from competing with the utility. Thus the State is legitimately concerned with preventing the utility from taking advantage of this monopoly power to force consumers to subsidize dissemination of its viewpoint on political issues.3
*554In suggesting that the State’s interest in eliminating forced subsidization of the utility’s speech can be achieved by allocating the expenses of the inserts to the utility’s shareholders, the Court has glossed over the difficult allocation issue underlying this controversy. It is not clear to me from the Court’s opinion whether it believes that charging the shareholders with the marginal costs associated with the inserts, that is, the costs of printing and putting them into the envelope, will satisfy the State’s interest, or whether the Court is suggesting some division of the fixed costs of the mailing, that is, the postage, the envelope, the creation and maintenance of the mailing list, and any other overhead expense. See ante, at 543.
The Commission maintains that no allocation short of charging all the fixed costs of mailing the bills to the utility’s shareholders will eliminate the problem of forced subsidization of the utility’s speech. The Commission is obviously correct that the utility will obtain a partial free ride for its message even if the shareholders are charged with part of the mailing costs in addition to the costs directly attributable to the inserts. Consumers would still be forced to aid in the dissemination of the utility’s message by making the utility’s distribution costs less than they otherwise would be.
Charging all the mailing costs to the shareholders is equivalent, as a practical matter, to the Commission’s ban on political inserts. The utility wants to use the inserts only because they are less expensive than a separate mailing.4 Thus, there *555is no way for the State to achieve its important goal — protecting the ratepayers from forced support of ideas with which they disagree — that is less restrictive than a total ban.
Because ratepayers bear the cost of this medium of communication, the utility’s claim to use the bill envelope for its own purposes is not analogous to that of a private letter-writer, or of a nonmonopolistic business, whose customers can turn elsewhere if they object to inserts in their bills that their sales dollars help to finance. Cf. First National Bank of Boston v. Bellotti, 435. U. S. 765, 794, n. 34 (1978). This, therefore, is not a typical prohibition of a speaker’s attempt “merely to utilize its own [property] to promulgate its views.” Ante, at 540. Rather, this is an attempt by the utility to appropriate and make convenient use of property, for which the public is compelled to pay, for the utility’s sole benefit. The Commission’s ban on bill inserts does not restrict the utility from using the shareholders’ resources to finance communication of its viewpoints on any topic. Consolidated Edison is completely free to use the mails and any other medium of communication on the same basis as any other speaker. The order merely prevents the utility from relying on a forced subsidy from the ratepayers. This leads me to conclude that the State’s attempt here to protect the ratepayers from unwillingly financing the utility’s speech and to preserve the billing envelope for the sole benefit of the customers who pay for it does not infringe upon the First and Fourteenth Amendment rights of the utility.
Ill
I might observe, additionally, that I am hopeful that the Court’s decision in this case has not completely tied a State’s *556hands in preventing this type of abuse of monopoly power. The Court’s opinion appears to turn on the particular facts of this case, and slight differences in approach might permit a State to achieve its proper goals.
First, it appears that New York and other States might use their power to define property rights so that the billing envelope is the property of the ratepayers and not of the utility’s shareholders. Cf. PruneYard Shopping Center v. Robins, ante, p. 74. Since it is the ratepayers who pay for the billing packet, I doubt that the Court would find a law establishing their ownership of the packet violative of either the Takings Clause or the First and Fourteenth Amendments. If, under state law, the envelope belongs to the customers, I do not see how restricting the utility from using it could possibly be held to deprive the utility of its rights.
Second, the opinion leaves open the issue of cost allocation. The Commission could charge the utility’s shareholders all the costs of the envelopes and postage and of creating and maintaining the mailing list, and charge the consumers only the cost of printing and inserting the bill and the consumer service insert. See Long Island Lighting Co. v. New York State Public Service Comm’n, No. 77 C 972 (EDNY, Mar. 30, 1979), reproduced in App. to Brief for Long Island Lighting Company as Amicus Curiae 22a. There is no reason that the shareholders should be given a free ride for their pamphlets, rather than the customers be given a free ride for their bills. Such an allocation would eliminate the most offensive aspects of the forced subsidization of the utility’s speech. But see n. 3, supra.
Because I agree with the Appellate Division of the New York Supreme Court, that “[i]n the battle of ideas, the utilities are not entitled to require the consumers to help defray their expenses,” 63 App. Div. 2d 364, 368, 407 N. Y. S 2d 735, 737 (1978), I respectfully dissent.

 Mr. Justice Marshall, in his concurring opinion, states: “The Commission did not rely on the argument that the use of bill inserts required ratepayers to subsidize the dissemination of management’s view in issuing its order, and we therefore are precluded from sustaining the order on that ground.” Ante, at 544.
I cannot agree that the Commission did not rely on the “forced subsidy” justification. In its opinion denying petitions for rehearing, the Commission stated:
“We note also that where the ratepayer’s bill is accompanied by political advertisement, the political material is, absent allocation, getting a free ride; the utility is deriving the economic benefit of postage, envelope, labor and overhead involved in the billing process. And even if an allocation of the expenses could be made, the actual cost of enclosing such material *552in the bill itself does not approach the one-sided benefit to the management of being able to use the unique billing process in presenting its side of the controversy. It is certainly questionable whether ratepayers should be compelled to support views with which they do not agree. See Abood v. Detroit Board of Education, [431 U. S. 209] (1977).” App. to Juris. Statement 67a, n. 1.

 PruneYard Shopping Center v. Robins, ante, p. 74, does not impinge upon this general principle. The decision there was based on the fact that the shopping center voluntarily chose to open its grounds to the public and therefore the State could require that the center permit the exercise of speech rights on the property.

 An example makes this point clear. States authorize the creation of trusts, and the costs of administering a trust are charged to the trust estate. If the trustee, for example a bank, finds it necessary to communicate with the beneficiaries of the trust by letter concerning investments, income distribution, and the like, the expenses of that mailing ordinarily are proper administrative costs to be borne by the trust. In the trust situation, it would seem to be entirely permissible for the State to prohibit the trustee from including in such a mailing its own political insert on a matter unrelated to the trust. Even though adding the bank’s insert may cost the beneficiaries nothing, assuming that the bank pays for the printing and stuffing of the insert, the State has an interest in *554assuring that the trustee does not derive personal benefit from its role as trustee. The trustee has no constitutional right to a free ride for its message. Here, the state interest in preventing a utility from obtaining a free ride is even stronger, since utility customers have no choice but to purchase electricity from Consolidated Edison, while trusts are voluntarily created and the trustee is chosen by the trustor.

 Due to the greater likelihood that a recipient would read an insert with the bill, the utility well might desire to place its insert with the bill even if the total cost of the mailing were charged to the shareholders. See Long Island Lighting Co. v. New York State Public Service Comm’n, *555No. 77 C 972 (EDNY, Mar. 30, 1979), reproduced in App. to Brief for Long Island Lighting Company as Amicus Curiae la. This, however, is just another type of forced aid for the utility’s message that cannot be eliminated except by a total ban on bill inserts.