The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-07-18
IVA UPHELD
ON ALL POINTS
BY HIGH COURT
Judge Grubb of Alabama Is
0verruIed: Rehearing
Is Ordered.
VICTORY FOR NEW DEAL
Power Project Not Compel
ina With Private Firms,
Is Decision.
ByTniiedPres

BV THifed Press
NEW ORLEANS July 13.-Presi-
dent Roosevelt's plan to develop IN
the Tennessee Valley a "yardstick"
for power prices was protected to-
day by high court ruling that it is
constitutional in every disputed
point.
Three judges OF the Fifth United
States Circuit Court of Appeals
Nathan P. Bryan. Rufus E. Foster
and Samuel f. Sibley-concurred in
sn opinion handed down late yester-
oay which gave the New Deal an
unqualified legal victory.
They overruled District Judge
William I. GrUoD Of Birmingham,
who SAID the government had no
right 10 sell electricity. and re-
manded the case to the lower court
for rehearlng. Attorneys for the
Tennessee Valley Authority indi-
Gated the case eventually will be
tested in the Supreme Court, but
expressed confidence the appellate
courts ruling would be upheld.
Infringement Is Denied.
The court answered two principal
objections to the New Deal setup-
government competition with pri-
vate business and infringement on
states rights ruling that IVA was
guilty on neither count.
iva was the first OF the New
Deals alphabetical agencies. 1t was
created by an act of Congress on
May 18, 1888, and authorized to
take over the wartime white ele-
phant," Wilson Dam and the nitrate
plants at Muscle Shoals, Ala.
The plants were used during war
time to make explosives. In peace
time their facilities we're wasted
New Dams Are Built
Under the act. IVA not only &C
uuircd Wilson Dam, but built other
dams-the Norris. Wheeler and
PiCkwick-on the Tennessee River.
The object. OstenSibly, was to i'm
prove navigation and flood con-
troll. The surplus hydroelectric
power, not needed in peace-time.
was to be sold to municipalities in
the South
Mr. Roosevelt hopes to establish
a "yardstick" with the government
power program, by which the fair
ness of electric rates all over the
country could be measured.
The idea was that IVA was SELL
ing only the surplus" power from
its gigantic plants. The test case
that put the fate of IVA up to the
courts was mainly a dispute over
definition of surplus power" IVA
Contended 1t was duty-bOund to
utilize its surplus in the public
interest
Utility Signs, Then Balks
The suit arose when IVA tried
to obtain a market for its electricity
IN north Alabama. II contracted to
buy from the Alabama power COM
pauy some 100000 worth of trans
mission lines and municipal diStrl-
button systems in the Muscle Shoals
area. Fourteen towns were in
VOWED. The company signed the
contracts but charged later it had
only yielded to threats of deStruc-
tive government competition.
A small group of power company
preferred stockholders filed suit and
Judge Grubb gave them an injunc-
ton. annulling the contracts. He
also enjoined the towns from Dor
rowing PWA money TO build their
own distribution systems. or from
buying current from the IVA.
judge Grub ruled that produc-
tion Of power was not incidental to
the major detectives of navigation,
flood control and national defense.
The Court of Appeals held Judge
Grub entirely in error.