Central Hudson Gas & Electric Corp. v. Public Service Commission

Content sourced from Wikipedia, licensed under CC BY-SA 3.0.

Central Hudson Gas & Electric Corp. v. Public Service Commission is a U.S. Supreme Court case from 1980 that set out a four-part test for when the government can limit commercial advertising. The case grew out of a rule from the New York Public Service Commission during the 1973 oil crisis. The commission banned electric utilities from including promotional language in their ads that urged people to use electricity, in hopes of conserving fuel. By 1977, the commission kept the ban and also created a policy that split marketing into promotional material (to boost sales) and informational material (which could include factual information about electricity).

Central Hudson, an electric utility, challenged the ban as a violation of the First and Fourteenth Amendments. The Supreme Court agreed, ruling that the complete ban on promotional advertising violated both amendments. In deciding the case, the Court established a four-step framework to assess commercial speech restrictions:
1) Is the speech protected by the First Amendment? (Is it truthful and not misleading?)
2) Is the government’s interest substantial? (For example, concerns like conserving energy.)
3) Does the regulation directly advance that interest? (Does it meaningfully help achieve conservation?)
4) Is the restriction no more extensive than necessary to serve that interest? (Could there be a narrower rule that would work?)

The decision means governments must allow truthful, non-misleading commercial advertising and may regulate it only in a narrowly tailored way. Central Hudson has since guided many later cases about when commercial speech can be restricted. Some later rulings refined or challenged the standard, such as Posadas v. Puerto Rico (upholding limits on casino ads to residents) and 44 Liquormart v. Rhode Island (striking down a ban on liquor price advertising). The Court has also allowed certain government requirements for disclosures in advertising when the information is purely factual and helps prevent consumer deception, as seen in Zauderer v. Office of Disciplinary Counsel.