Grubb on Surplus

In the opinion of Federal Judge William Irwin Grubb of Alabama, the Government has no right to engage in the power business except to dispose of a surplus incidental to the exercise of some other Constitutional function. So said the wiry little septuagenarian jurist last autumn during the legal preliminaries of an injunction suit to restrain the Tennessee Valley Authority from buying private Alabama power properties (TIME, Dec. 10).

Last week in Birmingham Judge Grubb granted the injunction, holding that TVA's power plans far exceeded any reasonable surplus that might be generated in connection with flood control, navigation or national defense. He expressly avoided passing on the constitutionality of the Tennessee Valley Act itself but he did find its chief activity most certainly illegal. Excerpts from his oral opinion:

"As I read the case, if there is a bona fide surplus, there is an implied right to sell the surplus. I get the idea from the proof . . . that the [TVA] directors have not arranged to dispose of any surplus of that kind but have treated all power as surplus either to show by example how cheap power can be made by the Government or in connection with its experiments for other purposes in the Valley.

"It seems that the evidence shows it is not a surplus that can be attributed to any [Constitutional] power, therefore its doing so is ultra vires and illegal."

A TVA attorney remarked that he thought the Government had the right to utilize all the resources of a river, including the disposition of power created thereby. "That would be a benevolent dictatorship," shot back Judge Grubb, who simultaneously enjoined 14 Alabama communities from using PWA funds for municipal power systems on the ground that one arm of the Government (PWA) was, in effect, aiding & abetting another arm (TVA) in an illegal act.

Senator Norris, godfather of the New Deal's whole power program, gloomily declared: "The effect of the injunction is practically to nullify the whole TVA Act." And PWA's chief counsel promptly announced that he would join TVA in speeding an appeal to the Supreme Court.

Three months ago private power men would have hailed the Grubb opinion as a major victory. Last week, preparing for Congressional hearings on the Administration's bill to eliminate utility holding companies, they were almost too glum to notice it. Meanwhile, utility shares collapsed to a new historic low.

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