Central Hudson Gas & Electric Corp. v. Public Service Commn. of New York
447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980)
Rule of Law:
A governmental regulation of commercial speech concerning lawful and non-misleading activity is constitutional only if the asserted governmental interest is substantial, the regulation directly advances that interest, and the regulation is no more extensive than necessary to serve that interest.
Facts:
- In 1973, due to a fuel shortage, the Public Service Commission of New York (the Commission) ordered electric utilities to cease all advertising that promoted the use of electricity.
- Three years later, after the fuel shortage had eased, the Commission proposed to continue the ban on promotional advertising.
- Central Hudson Gas & Electric Corp. (Central Hudson), an electric utility, opposed the continuation of the ban, asserting its First Amendment rights.
- The Commission extended the ban, arguing it furthered the national policy of energy conservation and helped ensure fair and efficient rates for consumers.
- The Commission's order permitted 'informational' advertising designed to shift consumption to off-peak hours but completely banned 'promotional' advertising intended to stimulate overall sales.
- Central Hudson claimed that the ban prevented it from advertising energy-efficient products and services, such as the heat pump, which could be beneficial to consumers and conservation efforts.
Procedural Posture:
- Central Hudson Gas & Electric Corp. challenged the Commission's order in a New York state trial court.
- The trial court upheld the Commission's order.
- Central Hudson appealed to the Appellate Division of the New York Supreme Court, an intermediate appellate court, which affirmed the trial court's decision.
- Central Hudson then appealed to the New York Court of Appeals, the state's highest court, which also affirmed.
- The U.S. Supreme Court noted probable jurisdiction to review the decision of the New York Court of Appeals.
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Issue:
Does a state regulation that completely bans an electric utility from promotional advertising violate the First and Fourteenth Amendments' protections for commercial speech?
Opinions:
Majority - Justice Powell
The ban is unconstitutional because it is more extensive than necessary to serve the state's substantial interest in energy conservation. The Court established a four-part test for assessing the constitutionality of restrictions on commercial speech: (1) whether the speech concerns lawful activity and is not misleading; (2) whether the asserted governmental interest is substantial; (3) whether the regulation directly advances the governmental interest; and (4) whether the regulation is no more extensive than necessary to serve that interest. In this case, the advertising is protected speech (Part 1), and the state's interest in energy conservation is substantial (Part 2). The ban directly advances this interest (Part 3). However, the regulation fails Part 4 because it is a complete ban that suppresses speech about electric services that might be more energy-efficient than alternatives and would not impair the state's conservation interest. The Commission failed to demonstrate that a more limited regulation, such as requiring advertisements to include information on efficiency, would be ineffective.
Concurring - Justice Blackmun
The ban is unconstitutional, but the majority's four-part test provides inadequate protection for truthful, non-misleading commercial speech. Suppressing truthful information about a lawful product merely to manipulate private economic decisions strikes at the heart of the First Amendment. When the state's goal is to discourage the use of a product, it must do so through direct regulation of the product itself, not by 'keeping the public in ignorance.' The government has no power to restrict expression simply because of the effect its message might have on the public, absent a clear and present danger.
Concurring - Justice Stevens
The ban is unconstitutional because it is overbroad and suppresses more than just 'commercial speech,' thereby infringing upon expression entitled to maximum First Amendment protection. The regulation prohibits all advocacy for the use of electricity, which could include discussions of public issues, such as promoting electric heat for environmental reasons. The state's justification—fear that the utility's message will be persuasive—is an insufficient reason to suppress truthful, non-coercive communication, especially when the perceived harm is not serious enough to warrant direct regulation of the underlying activity.
Dissenting - Justice Rehnquist
The state's ban on promotional advertising does not violate the First and Fourteenth Amendments because states have broad discretion to impose economic regulations on state-created monopolies. Commercial speech has a 'subordinate position' in the hierarchy of First Amendment values. The Court's four-part test improperly elevates the protection of commercial speech to a level nearly indistinguishable from noncommercial speech, returning to a discredited Lochner-era practice of second-guessing legislative economic judgments. The state of New York reasonably determined that this ban was necessary for energy conservation, and the Court should defer to that judgment rather than striking down the regulation based on speculation about less restrictive alternatives.
Analysis:
This case is significant for establishing the modern, four-part intermediate scrutiny test for regulations of commercial speech, known as the 'Central Hudson test.' It solidified the principle that while commercial speech is constitutionally protected, it receives less protection than political or artistic expression. The decision constrains the government's ability to enact blanket bans on truthful advertising, forcing regulators to demonstrate that their restrictions are narrowly tailored to a substantial state interest. The 'no more extensive than necessary' prong has been the most influential and frequently litigated part of the test, shaping how governments can regulate advertising for products like tobacco, alcohol, and pharmaceuticals.
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