Cahill v. Public Service Commission, 76 N.Y.2d 102 (1990)
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A state public service commission policy that allows utilities to pass on the cost of charitable contributions to ratepayers violates the First Amendment rights of those ratepayers who object to supporting organizations whose views they oppose.
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Summary
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New York’s Public Service Commission (PSC) policy allowed utilities to recover the cost of charitable contributions from ratepayers. A ratepayer, Cahill, and the Attorney General challenged this policy, arguing it violated the First Amendment by forcing ratepayers to support organizations with which they disagreed. The New York Court of Appeals affirmed the lower court’s decision, holding that the policy unconstitutionally compelled ratepayers to subsidize the utilities’ chosen charities, infringing on their First Amendment rights. The Court found that the connection between these contributions and the provision of utility services was too tenuous to justify this infringement.
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Facts
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Prior to 1970, the PSC did not permit utilities to recover charitable donations from ratepayers; these costs were borne by shareholders. In 1970, the PSC changed its policy, allowing utilities to include charitable contributions as operating expenses and recover them through rate increases. New York Telephone (NYTel) and Rochester Gas & Electric (RG&E) sought to recover costs from contributions to various organizations, including those with political and religious affiliations. Cahill, a NYTel customer, objected to being forced to subsidize organizations whose activities and beliefs were contrary to his own.
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Procedural History
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Cahill filed an Article 78 proceeding against the PSC and the utilities. The Attorney General filed a similar proceeding on behalf of all ratepayers. The proceedings were consolidated. The lower courts ruled in favor of Cahill, finding the PSC policy unconstitutional. The Court of Appeals had previously affirmed that the PSC policy constituted state action. This appeal addressed the merits of the First Amendment claim, with only NYTel and RG&E appealing.
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Issue(s)
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1. Whether the PSC policy of allowing utilities to pass on charitable contribution costs to ratepayers constitutes a violation of the ratepayers’ First Amendment rights to freedom of speech and association.
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2. Whether, if a First Amendment intrusion exists, it is justified by a compelling state interest, or whether a less stringent