Evening star., 1935-10-06
.P.W.A. POWER LOAN
WILL OPEN.
HERE TOMORROW
U. S. Effort to Establish
"YardStick" Rates In.
voIved in Case.
GOVERNMENT is DUE,
TO TRY SURPRISE MOVE
Right to Lend Money to Cities to
Construct Own Plants
Is at Stake.

Works Administration may make loans
and grants to municipalities for con-
Struction Of electric power systems
which would compete with private
power companies will be threshed
out tomorrow in the United States
Court Of Appeals for the District.
On the answer hangs the fate of
one phase of the Federal Governments
efforts to establish "yardstick" rates
to force down private power charges.
Ten cases affecting more than a
dozen Southern cities are pending
in the courts here. All are more II
less similar and ruling in the case
which will be argued in the appellate
court will have a direct bearing on
the others. The test case is the ap-
peal of the Oklahoma Utilities Co.
from the refusal of District Supreme
Court Justice Daniel W. ODonoghue
to restrain P. w. A. Administrator
Ickes from allowing the town of
Hominy, Okla. sI50,o00 loan and
grant with which to build a general
ing plant and electrical distribution
system.
Surprise Move" Expected.
When the case is called the utili-
ties company will be faced with a sur
prise move by the Government aimed
to block a suspected loophole in its
defense against the injunction pro-
ceedingS.
Henry T Hunt, general counsel for
the Public Works Administration, will
ask leave to supplement the record
with new facts which have arisen since
the action was begun. If his motion is
granted, he will tell the court that the
loan agreement between the P. w.
A. and Hominy was Cancelled by mu-
tual consent September 80. In place
of the 100000 Secretary Ickes had
agreed to lend the town, will be sub
stituted the purchase of that amount
of Hominy municipal bonds.
This was done to avoid the effect
of recent decision in the United
States Circuit Court for the eighth
judicial circuit. which held a similar
agreement was an Illegal delegation
Of legislative authority by the town
receiving the loan to the p. w. A..
administration. The decision involved
the Missouri Power Co., and the city
Of Kennth, Mo.
The $4,000 outright grant by the
p. w. A. to Hominy still stands.
The Oklahoma Utilities Co. is ex-
pected to advance four major argu-
ments in support Of its injunction
plea. Representing the company will
be the local law firm of Covington,
Burling, Rubblee. Acheson g. Shorb,
and the Baltimore firm of Miles g.
O'Brien.
First the attorneys will argue that
the loan is in violation of the due
process clause of the Constitution since
the private utility would be unable to
compete with a Government financed
power system.
Secondly. they will contend that the
Federal Government is without au-
thority under its general taxing power,
or in the interest of the general well
fare, to make such loans.
The third point made in the appel
lant's brief is that the loan is an un-
constitutional delegation of legislative
authority and, lastly. 1t is contended
the loan is not authorized under the
national industrial recovery act.
The Governments brief. on the other
hand, sets out the contentious that
the suit should fail because Hominy,
which is most concerned, was not made
party to the action; that the national
industrial recovery act contains suffi-
cient restrictive provisions to meet the
charge of unconstitutional delegation
Of legislative authority; that the courts
cannot question presidential discretion
in the granting of loans, and that
Oklahoma courts already have decided
against the company.
An interesting angle of the contro-
versy was revealed in the company's
brief when the court was informed
the power concern wanted to move out
of Honiny last year and was kept from
doing SO only by a threat that the
militia would be called in.
A 20-year franchise had expired in
June of 1884. In April, 1885, the COM
pany was granted a one-year occu-
pational license and Is operating un-
der this at present.