POWER: Legal Competition

The Supreme Court gave TVA a big inch in 1936, when it upheld TVA’s right to sell the power generated by its flood-control activities at Wilson Dam (Muscle Shoals). Last week the Court handed down a 5-to-2 decision* that gave TVA a mile. Fourteen private power companies had appealed from a Federal court decision, which affirmed the constitutionality of TVA’s entire power program and held that any loss they suffered from TVA competition was damnum absque injuria (loss without a legal comeback). In moderate Justice Roberts’ decision, the Supreme Court dismissed the appeal of the companies because “neither their charters nor their local franchises involve the grant of a monopoly or render competition illegal.” Thus without directly affirming the constitutionality of TVA, the decision appeared to leave utility lawyers without any visible means of attacking it.

* Justices Butler and McReynolds dissented. Justice Reed did not participate in the case because he had appeared for TVA as Solicitor General. Justice Frankfurter was sworn in only a few minutes before the decision was read.