Evening star., 1935-11-27
NEW FIGHT BEGUN
ON UTILITIES ACT
American Water Works Sec
ond Corporation to Sue
Here in Two Days.
BACKGROUND


Regulation OF utility holding COM
panieS, eventual dissolution OF "un-
necessary" ones, provided in NeD
Deal legislation OF past Congress.
First test brought by Associated
Gas e. Electric Co.; Baltimore Fed
eral Court ruled legislation uncon-
stitRtiondl. Other companies seek
ing injunctionS against operation
OF registration compulSion Deem
Der l.. Attorney General Cummings
ddUised against Government fling
numerous actions against COM
pdnieS, suggested concentration
upon Baltimore case as quickest
means of testing lap.
The second constitutional attack on
the Wheeler Rayburn utilities hold
ing company act here in two days was
begun this afternoon when the Amer
ican Water Works & Electric Co.,
Inc, Of New York asked District Su-
preme Court to enjoin enforcement of
the law and declare all its provisions
void.
The company's petition followed
closely the form of the injunction suit
brought here yesterday by the North
American Co.. the holding concern
which controls Washington's electric
and transportation facilities.
Advancing seven reasons why the
act was unconstitutional, the Amer
ican Water Works g. Electric Co.
stated it will not register with the
Securities and Exchange Commission,
as required, since the damage result
ing to it and its subsidiaries from
registration would be enormous.
Farley Named in Suit.
The commission. Attorney General
Cummings and Postmaster General
Farley were named in the suit as de-
PENDANTS. Admitting it is a holding
company in the meaning of the statute,
the company stated compliance with
the law would force it to divest itself
Of many Of its holdings.
Its investments are in excess of S105.-
100000. the court was told. and 70
per cent of the total represents voting
stock Of other corporations.
Arguments offered against consti-
tutionality of the Wheeler -Rayburn
act were that it could not be sup
ported under the interstate commerce
clause Of the Constitution; that it was
an unlawful delegation of legislative
authority; that it subjected the plain.
tiff to deprivation of its property
without due process of law; provided
for excessive fines; attempts to i'm
pose a Federal system of regulation
on the plaintiff, thereby usurpine
powers of the States, and subjects
the plaintiff to unreasonable search
and seizure.
List of Plaintiffs Mounts.
The action added another name tt
the growing list of utility corporations
that have taken legal steps to con-
test the utility act, including the North
American, Commonwealth g. South
ern, Consolidated Gas of New York
Electric Bond & Share and United
Gas Improvement.
AS a result of these suits, the legal
staff of the Securities Commission was
expanded today to direct the court
fight over constitutionality of the law
Robert H. Jackson, general counsel
for the Internal Revenue Bureau, was
drafted as special trial counsel.
The commission itself moved inde-
pendently yesterday for its own court
test, bringing suit in New York to
force the big Electric Bond 81 Share
Co. and five Of its intermediate hold
ing units to register.
The commission left no doubt that
(see UTILITIES, Page %