Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-08-24
COURT ROWS SEEN
OVER UTILITY BILL
Lawyers Declared Almost
Only Ones to Benefit
From New Law.
BY DAVID LAWRENCE.


About the only people who can re-
joice over the passage Of the utility
holding company bill are the lawyers.
Fat fees and plenty Of litigation will
be forthcoming, no doubt. for the COM
promise agreed upon by the two
houses is plainly unconstitutional.
The proposed statute will fall on the
ground that 1t is an invalid delegation
of power. II Congress does possess
the right to say what are and what
are not unnecessary" holding COM
panies-something that will be dis
puted-then 1t is much more doubtful
whether Congress has properly dele
gated the Job to a Federal commits
sion to do.
Schechter Ruling Cited.
Any layman reading the opinion OF
Chief Justice Hughes in the Schechter
N. r. A. case. and the even more pen
etrating opinion on this point rendered
by Justice Cardozo, will find difficulty
in forecasting that the Supreme Court
could declare valid the new section OF
the utility bill agreed upon as a sub
stitute for the so-called death sem
tence"
The commission, for instance, is
given the duty of requiring by or
der" that each registered holding COM
pany and each subsidiary company
thereof shall take such steps as the
commission shall find necessary to in.
sure that the corporate structure or
continued existence of any company
in the holding company system does
not unduly or unnecessarily compli-
cate the structure or unfairly or in
equitably distribute voting power
among security holders Of such hold
ing company system"
But what legislative standard has
Congress set up to guide the commits
sion as to what Is meant by ''unduly''
or unnecessarily complicating the
corporate structure?" There is none
to be found in the language of the act.
Standard Left in Doubt.
In another part of the proposed
law is paragraph which tells the
commission to require by order that
each holding company or subsidiary
company shall take such action "as
the commission finds necessary to
limit the operations Of the holding
company to a single integrated system
and to such other businesses as are
reasonably incidental or economically
necessary or appropriate to the oper-
alton Of such integrated public utility
system
Who Is to decide what standard is
to be applied when the words eco
nomically necessary are to be
weighed? Will they be standards set
up by those members OF commits
sion who believe in public ownership
or BY those who believe that private
ownership has a right to continued
existence? 1t was to prevent pre-
cisely this type of bureaucracy tnat
the Supreme Court unanimously took
away on May 81 last from Federal
agency the right to make its own
laws and regulations based upon Its
own views and theories and not set
forth explicitly by legislative in5Lruc-
ton from Congress.
Ruling Not Expected Until 80.
The adoption Of the utility bill at
this time. however. prevents the issue
from being made campaign football
in 1886. though no doubt considerable
aftermath OF the power problem will
be heard in the congressional anc
presidential fight. So far as Su'
preme Court decision is concerned, II
is highly unlikely that it can come
before 1889, because the compromise
just agreed upon says the commission
must attempt to dissolve holding COM
panies only "as soon as practicable
after January /. 1888" 1t may. OF
course. be possible TO frame an issue
for submission to the court prior tc
that date, but the Federal courts nave
usually insisted that some actual STEP
| in pursuance of q statute must be
taken and some actual injury shown
before any restraining orders are
granted.
To sum up, the investors are no
affected one way or the other by thu
new bill, except that the threat o.
dissolution may make the field FOL
SPECTATORS somewhat easy, as they
will have a lever with which to breal
down values and buy up securities a
low prices from innocent victims. Al
for the utility companies themselves
they will do their refinancing or builc
their extensions and buy raw materials
only as the people who lend them th'
money become convinced that the new
law would be unconstitutional anyway
So it's battle of the lawyers, anc
thus comes to an end spectacular
fight which might. to use an ole
phrase, be characterized as peace
without victory"