Tennessee Electric Power Co. v. Tennessee Valley Authority

• Decision Date: 24 January 1938
• Docket Number: No. 228.,228.
• Citation: 21 F. Supp. 947
• Parties: TENNESSEE ELECTRIC POWER CO. et al. v. TENNESSEE VALLEY AUTHORITY et al.
• Court: U.S. District Court — Eastern District of Tennessee

21 F. Supp. 947

TENNESSEE ELECTRIC POWER CO. et al. v. TENNESSEE VALLEY AUTHORITY et al.

No. 228.

District Court, E. D. Tennessee, N. D.

January 24, 1938.

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Charles Trabue and Trabue, Hume & Armistead, all of Nashville, Tenn., Charles M. Seymour and Frantz, McConnell & Seymour, all of Knoxville, Tenn., and Raymond T. Jackson, W. H. Bemis, S. D. L. Jackson, Jr., and Baker, Hostetler, Sidlo & Patterson, all of Cleveland, Ohio, for complainants.

James Lawrence Fly, Gen. Counsel, Tennessee Valley Authority, of Knoxville, Tenn., John Lord O'Brian, of Buffalo, N. Y., and William C. Fitts, of Knoxville, Tenn., for defendants.

Before ALLEN, Circuit Judge, and GORE and MARTIN, District Judges.¹

ALLEN, Circuit Judge.

Complainants have filed a bill in equity praying for relief against the operation of the Tennessee Valley Authority Act of 1933, as amended 48 Stat. 58, 49 Stat. 1075, 16 U.S.C. § 831 et seq, 16 U.S.C.A. § 831 et seq. The bill joins as defendants the Tennessee Valley Authority, the agency created by the Congress to carry out the provisions of these statutes, and Arthur E. Morgan, David E. Lilienthal, and Harcourt A. Morgan, who are the chief executive officers of the Authority and constitute its board of directors.

The complainants are nineteen companies generating, transmitting and distributing power within Tennessee, Alabama, Mississippi, North Carolina, South Carolina, Kentucky, Virginia, West Virginia, and Georgia, one of which, the Georgia Power Company, has been enjoined from participating in this action by the United States District Court for the Northern District of Georgia. Georgia Power Co. v. Tennessee Valley Authority, 17 F.Supp. 769. This decree has been affirmed by the Court of Appeals for the Fifth Circuit. 89 F.2d 218. For this reason we give no consideration to alleged competition of the Authority with the Georgia Power Company.

The complainants are in general owned by holding companies, as set forth in the findings of fact. They are all taxpayers, citizens of and authorized to do business within the states in which they operate, and none of them claims to operate under any exclusive franchise.

The bill cannot be summarized within the appropriate limits for a trial court's opinion. In addition to its seventy pages of pleading and sixty-five pages of exhibits, it contains within the bill itself much that is argumentative, repetitious and immaterial to the legal questions presented. It charges coercion, fraud and conspiracy on the part of the defendants officially and individually. It charges that Secretary Harold L. Ickes, Public Works Administrator, has joined with the Authority in certain coercion and conspiracy against the legal rights of these complainants. The argumentative matter and conclusions which we deem immaterial are so interwoven with allegations bearing upon the legal questions presented that it is impossible to extricate them. The same statement is true of the prayer. Paragraphs h, i, l, o, p and q of the prayer are considered by the court to have no relation to this case under Ashwander v. Tennessee Valley Authority, 297 U.S. 288, at page 324, 56 S.Ct. 466, 472, 80 L.Ed. 688, which held that such matter presents no justiciable controversy. It suffices, therefore, to say that in its essential and material features the bill seeks a decree holding that the Tennessee Valley Authority Act of 1933, as amended, and the acts done by the board of directors thereunder officially and individually, violate the Constitution of the United States. It seeks an injunction restraining the defendants, their agents and employees, from carrying out the provisions of the statute with reference to the sale of electric power, from purchasing, constructing or otherwise acquiring electric generating plants, transmission lines or distribution lines, or from selling electric energy, except such energy as may be produced at Wilson Dam, "to the extent the production and sale of power at Wilson Dam has been held legal." For practical purposes this bill seeks to enjoin the further construction of TVA dams now in process of construction in the Tennessee Valley, the construction of new dams in such valley for which specific appropriation has been made by Congress, and the operation for generation and sale of electric power of all TVA dams built and to be built.

The answer denies the material allegations of the bill. Only one of the affirmative defenses requires special mention. The defendants claim that certain of the complainants are estopped to deny the constitutionality of the TVA statutes because of extensive purchases of power from the Authority. These purchases were made under the contract of January 4, 1934, by which certain complainants contracted with the Authority to transfer to the Authority their plants, lines, equipment, customers and franchises within certain counties within Mississippi and Alabama for a valuable consideration and upon the condition that the Authority would not operate within those states outside of the counties specified. The properties have been transferred and the contract to date has been fully performed. The court has ruled in favor of the complainants on this contention, and has held that the record presents no essential difference from the situation covered by the ruling as to estoppel in the Ashwander Case, supra, 297 U.S. 288, at page 323, 56 S.Ct. 466, 472, 80 L.Ed. 688, and therefore this question will not be discussed.

After a trial which consumed about seven weeks, in which approximately 1,100 exhibits were offered, the material issues in the case as briefed, argued and outlined in the actual testimony are defined as follows:

(1) Whether the Authority is engaged in acts constituting in law malice, coercion, and duress, to the injury of complainants.

(2) Whether the Authority and the individual defendants have conspired with Secretary Ickes and the Public Works Administration to induce municipalities and co-operative associations through loan grant agreements from the Public Works Administration to set up their own distribution systems and to coerce them into executing contracts for purchase of TVA power by threat of denial or cancellation of such PWA loan grants.

(3) Whether the acts of the defendants are authorized by the TVA statutes.

(4) Whether the act itself is unconstitutional and void, and the acts done under it are illegal because the Congress is not empowered either under the interstate commerce clause, article 1, § 8, or under the national defense powers, article 1, section 8, of the United States Constitution, to enact the TVA statutes.

(5) Whether the generation of electricity at the TVA dams is unlawful because it is inconsistent with the regulation of interstate commerce, with flood control, with the improvement of navigation on a navigable river, and with purposes of national defense.

(6) Whether the method of disposition of electric energy authorized by the TVA statutes is appropriate and constitutional under the power to dispose of property belonging to the United States conferred upon the Congress by section 3 of article 4 of the Constitution.

Each of the dams constructed, in process of construction, and proposed for the TVA system, while varying somewhat in use, as hereafter set forth, is a unit of an integrated multiple-purpose project, the system being designed for co-ordinated use of the full benefits of the river along the line of navigation, flood control, national defense and power development. Wherever water falls, power is created, and one of the express purposes of the TVA statutes is that hydroelectric power so created shall be sold to assist in liquidating the cost of the project. This is in line with the general development of the conservation movement from 1908 to the present, as it relates to streams. See National Waterways Commission Report, Senate Document 469, 62d Congress, Second Session, Appendix I, pages 27, 52, 61, 82, 85, 87; Statement of Chairman of Federal Power Commission, House Document 395, 73d Congress, Second Session, page 54; Report of National Resources Board, pages 263, 264. Similar provisions as to river projects have been embodied in previous legislation. In 1912 a statute was enacted authorizing the Secretary of War to provide, in navigation dams, in order to make possible the economical future development of water power, such foundations, sluices, and other works as may be considered desirable for the development of such power. Act July 25, 1912, § 12, 37 Stat. 233, 33 U.S.C.A. § 609. The Boulder Canyon Project Act of 1928, 45 Stat. 1057, 43 U.S.C.A. § 617 et seq., provided for a multiple-purpose project for irrigation, flood control, improvement of navigation and generation of power. As fully appears from the opinion in Arizona v. California, 283 U.S. 423, 51 S.Ct. 522, 75 L.Ed. 1154, navigation on the Colorado River was negligible in comparison with navigation on the Tennessee River under the record in this case. Though navigation on the Colorado River had ceased, the project of reclaiming its navigability was held by the Supreme Court to establish the constitutionality of the multiple-purpose project, including the generation and sale of power.

TVA Project.

Pursuant to the TVA statute as amended and to subsequent related enactments, the Authority has constructed and is planning to construct seven high dams on the main channel of the Tennessee River, and certain dams on its tributaries. The Tennessee River is formed by the confluence of the Holston and French Broad Rivers in the east-central part of Tennessee. It flows southwesterly across the eastern part of Tennessee into Alabama, westerly across the northern part of Alabama, northerly between Alabama and Mississippi, and across the western part of Tennessee and Kentucky, and empties into the Ohio River near Paducah, Kentucky. Its length is 652 miles, and its drainage basin is 40,600 square miles. It has...