U.S. Supreme Court ASHWANDER v. TENNESSEE VALLEY AUTHORITY, 297 U.S. 288 (1936)

297 U.S. 288

ASHWANDER et al. v. TENNESSEE VALLEY AUTHORITY et al. (two cases). *

Nos. 403, 404. Argued and Submitted Dec. 19, 20, 1935. Decided Feb. 17, 1936.

* Rehearing denied 297 U.S. 728, 56 S.Ct. 588. Mandate of Supreme Court conformed to 14 F.Supp. 11.[ Ashwander v. Tennessee Valley Authority 297 U.S. 288 (1936) ]

[Page 297 U.S. 288, 318]

under that contract is available at Wilson Dam without the necessity for any interconnection with any other dam or power plant. The Circuit Court of Appeals accordingly considered the constitutional authority for the construction of Wilson Dam and for the disposition of the electric energy there created. In the view that the Wilson Dam had been constructed in the exercise of the war and commerce powers of the Congress and that the electric energy there available was the property of the United States and subject to its disposition, the Circuit Court of Appeals decided that the decree of the District Court was erroneous and should be reversed. The court also held that plaintiffs should take nothing by their cross-appeal. 78 F.(2d) 578. On plaintiffs' application we granted writs of certiorari. 296 U.S. 562, 56 S.Ct. 145.

First. The Right of Plaintiffs to Bring this Suit. Plaintiffs sue in the right of the Alabama Power Company. They sought unsuccessfully to have that right asserted by the Power Company itself, and, upon showing their demand and its refusal, they complied with the applicable rule. [Footnote 3] While their stock holdings are small, they have a real interest, and there is no question that the suit was brought in good faith. [Footnote 4] If otherwise entitled, they should not be denied the relief which would be accorded to one who owned more shares.

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stock may be the only persons having a proprietary interest in the corporation who are in a position to protect its interests against what is asserted to be an illegal disposition of its property. [Footnote 5] A court of equity should not shut its door against them.

[Page 297 U.S. 288, 327]

means than water power as in his judgment is the best and cheapest, necessary or convenient for the generation of electrical or other power and for the production of nitrates or other products needed for munitions of war and useful in the manufacture of fertilizers and other useful products.' The President was authorized to lease or acquire by condemnation or otherwise such lands as might be necessary, and there was further provision that 'the products of such plants shall be used by the President for military and naval purposes to the extent that he may deem necessary, and any surplus which he shall determine is not required shall be sold and disposed of by him under such regulations as he may prescribe.' Id.

We may take judicial notice of the international situation at the time the act of 1916 was passed, and it cannot be successfully disputed that the Wilson Dam and its auxiliary plants, including the hydroelectric power plant, are, and were intended to be, adapted to the purposes of national defense. [Footnote 9] While the District Court found that there is no intention to use the nitrate plants or the hydroelectric units installed at Wilson Dam for the production

[Page 297 U.S. 288, 329]

navigation around Muscle Shoals was made by the Secretary of War, John C. Calhoun, in his report transmitted to the Congress by President Monroe in 1824,10 and, from 1852, the Congress has repeatedly authorized projects to develop navigation on that and other portions of the river, both by open channel improvements and by canalization. [Footnote 11] The Wilson Dam project, adopted in 1918, gave a nine-foot slack water development, for fifteen miles above Florence, over the Muscle Shoals rapids, and, as the District Court found, 'flooded out the them existing canal and locks which were inadequate.' The District Court also found that a 'high dam of this type was the only feasible means of eliminating this most serious obstruction to navigation.' By the act of 1930, after a protracted study by the Corps of Engineers of the United States Army, the Congress adopted a project for a permanent improvement of the main stream 'for a navigable depth of nine feet.' [Footnote 12]

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adopted and steadily pursued, of segregating mineral lands from other public lands and providing for leases, pointed to the recognition both of the full power of disposal and of the necessity of suitably adapting the methods of disposal to different sorts of property. The policy received particular emphasis following the discovery of gold in California in 1848. 13 For example, an act of 1866, dealing with grants to Nevada, declared that 'in all cases lands valuable for mines of gold, silver, quicksilver, or copper shall be reserved from sale.' [Footnote 14] And Congress from the outset adopted a similar practice in reserving salt springs. Morton v. Nebraska, 21 Wall. 660, 667; Montello Salt Company v. Utah, , 31 S.Ct. 706, Ann.Cas.1912D, 633. It was in the light of this historic policy that the Court held that the school grant to Utah by the Enabling Act of 189415 was not intended to embrace land known to be valuable for coal. United States v. Sweet, 245 U.S. 563, 572, 38 S.Ct. 193. See, also, as to the reservation and leases of oil lands, Pan American Petroleum & Transport Co. v. United States, 273 U.S. 456, 487, 47 S.Ct. 416.

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Mr. Justice BRANDEIS (concurring). 'Considerations of propriety, as well as long-established practice, demand that we refrain from passing upon the constitutionality of an act of Congress unless obliged to do so in the proper performance of our judicial function, when the question is raised by a party whose interests entitle him to raise it.' Blair v. United States, 250 U.S. 273, 279, 39 S. Ct. 468, 470.

I do not disagree with the conclusion on the constitutional question announced by the CHIEF JUSTICE; but, in my opinion, the judgment of the Circuit Court of Appeals should be affirmed without passing upon it. The government has insisted throughout the litigation that the plaintiffs have no standing to challenge the validity of the legislation. This objection to the maintenance of the suit is not overcome by presenting the claim in the form of a bill in equity and complying with formal prerequisites required by Equity Rule 27 (28 U.S.C.A. following section 723). The obstacle is not procedural. It inheres in the substantive law, in well- settled rules of equity, and in the practice in cases involving the constitutionality of legislation. Upon the findings made by the District Court, it should have dismissed the bill.

From these it appears: The Alabama Power Company, a corporation of that state with transmission lines located there, has outstanding large issues of bonds, preferred stock, and common stock. Its officers agreed, with the approval of the board of directors, to sell to the Tennessee Valley Authority a part of these lines and incidental property. The management thought that the transaction was in the interest of the company. It acted in the exercise of its business judgment with the utmost good faith. [Footnote 1]

[Page 297 U.S. 288, 344]

understandingly on this subject than a stockholder residing in New York. The great body of the stockholders residing in Oakland or other places in California, may take this view of it and be content to abide by the action of their directors. If this be so, is a bitter litigation with the City to be conducted by one stockholder for the Corporation and all other stockholders, because the amount of his dividends is diminished '

In Corbus v. Alaska Treadwell Gold Mining Co., 187 U.S. 455, 463, 23 S.Ct. 157, 160, a suit by the common stockholder to enjoin payment of an Alaska license tax alleged to be illegal, the Court said: 'The directors represent all the stockholders, and are presumed to act honestly and according to their best judgment for the interests of all. Their judgment as to any matter lawfully confided to their discretion may not lightly be challenged by any stockholder or at his instance submitted for review to a court of equity. The directors may sometimes properly waive a legal right vested in the corporation in the belief that its best interests will be promoted by not insisting on such right. They may regard the expense of enforcing the right or the furtherance of the general business of the corporation in determining whether to waive or insist upon the right. And a court of equity may not be called upon at the appeal of any single stockholder to compel the directors or the corporation to enforce every right which it may possess, irrespective of other considerations. It is not a trifling thing for a stockholder to attempt to coerce the directors of a corporation to an act which their judgment does not approve, or to substitute his judgment for theirs.' [Footnote 2]

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Liverpool, N.Y. & Phila. Steamship Co. v. Emigration Commissioners, 113 U.S. 33, 39, 5 S.Ct. 352, 355;5 Abrams v. Van Schaick, , 55 S.Ct. 135; Wilshire Oil Co. v. United States, 295 U.S. 100, 55 S.Ct. 673. 'It is not the habit of the court to decide questions of a constitutional nature unless absolutely necessary to a decision of the case.' Burton v. United States, 196 U.S. 283, 295, 25 S. Ct. 243, 245.

3. The Court will not 'formulate a rule of constitutional law broader than is required by the precise facts to which it is to be applied.' Liverpool, N.Y. & Phila. Steamship Co. v. Emigration Commissioners, supra. Compare Hammond v. Schappi Bus Line, Inc., , 169-172, 48 S.Ct. 66.

4. The Court will not pass upon a constitutional question although properly presented by the record, if there is also present some other ground upon which the case may be disposed of. This rule has found most varied application. Thus, if a case can be decided on either of two grounds, one involving a constitutional question, the other a question of statutory construction or general law, the Court will decide only the latter. Siler v. Louisville & Nashville R. Co., 213 U.S. 175, 191, 29 S.Ct. 451; Light v. United States, 220 U.S. 523, 538, 31 S.Ct. 485. Appeals from the highest court of a state challenging its decision of a question under the Federal Constitution are frequently dismissed because the judgment can be sustained on an independent state ground. Berea College v. Kentucky, 211 U.S. 45, 53, 29 S.Ct. 33.

5. The Court will not pass upon the validity of a statute upon complaint of one who fails to show that he is injured by its operation. [Footnote 6] Tyler v. Judges, etc., 179 U.

[Page 297 U.S. 288, 348]

S. 405, 21 S.Ct. 206; Hendrick v. Maryland, 235 U.S. 610, 621, 35 S.Ct. 140. Among the many applications of this rule, none is more striking than the denial of the right of challenge to one who lacks a personal or property right. Thus, the challenge by a public official interested only in the performance of his official duty will not be entertained. Columbus & Greenville Ry. Co. v. Miller, 283 U.S. 96, 99, 100 S., 51 S.Ct. 392. In Fairchild v. Hughes, , 42 S.Ct. 274, the Court affirmed the dismissal of a suit brought by a citizen who sought to have the Nineteenth Amendment declared unconstitutional. In Massachusetts v. Mellon, 262 U.S. 447, 43 S.Ct. 597, the challenge of the federal Maternity Act was not entertained although made by the commonwealth on behalf of all its citizens.

6. The Court will not pass upon the constitutionality of a statute at the instance of one who has availed himself of its benefits. [Footnote 7] Great Falls Mfg. Co. v. Attorney General, 124 U.S. 581, 8 S.Ct. 631; Wall v. Parrot Silver & Copper Co., 244 U.S. 407, 411, 412 S., 37 S.Ct. 609; St. Louis Malleable Casting Co. v. Prendergast Construction Co., , 43 S.Ct. 178.

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generation, transmission and commercial distribution of electricity within state domain, having no reasonable relation to a lawful governmental use.' 'The contract of January 4, 1934, expressly provided for the transfer of all or substantially all of the lines and properties of the Alabama Power Company for the service of the ceded area, included transmission lines, rural distribution systems and certain urban distribution systems, and contemplated the eventual transfer of fourteen urban distribution systems. This contract, expressly contemplating service of the ceded area by the Tennessee Valley Authority with electricity to be generated or purchased by the Tennessee Valley Authority for that purpose, was in furtherance of illegal proprietary operations by the Tennessee Valley Authority in violation of the Federal Constitution and void. The contract was accordingly ultra vires and void as to the Alabama Power Company.'

Having made exhaustive findings of fact and law, the trial court entered a decree annulling the January 4th contract and enjoining the Alabama Power Company from performing it. The Circuit Court of Appeals reversed, upon the theory that the Authority was making proper arrangements for sale of surplus power from the Wilson dam. The injunction was continued.

I think the trial court reached the correct conclusion and that its decree should be approved. If under the thin mask of disposing of property the United States can enter the business of generating, ransmitting and selling power as, when, and wherever some board may specify, with the definite design to accomplish ends wholly beyond the sphere marked out for them by the Constitution, and easy way has been found for breaking down the limitations heretofore supposed to guarantee protection against aggression. Footnotes

Footnote 1 The Tennessee Valley Authority is a body corporate created by the Act of Congress of May 18, 1933, amended by the Act of Congress of August 31, 1935. 48 Stat. 58; 49 Stat. 1075 (16 U.S.C.A. 831 et seq.).

Footnote 2 The Commonwealth & Southern Corporation, organized under the laws of Delaware, and the owner of the common stock of the Alabama Power Company, was a party to the contract, which also contained agreements with other subsidiaries of the Commonwealth & Southern Corporation, viz: Tennessee Electric Power Company, Georgia Power Company, and Mississippi Power Company. The agreements with these companies are not involved in this suit.

Footnote 3 Equity Rule 27 (28 U.S.C.A. following section 723).

Footnote 4 The District Court found that 'approximately 1900 preferred stockholders of the Alabama Company, holding over 40,000 shares of the preferred stock thereof, have associated themselves with a preferred stockholders' protective committee and authorized their names to be joined with the plaintiffs of record in this case as parties plaintiff.'

Footnote 5 See note 2.

Footnote 6 41 Stat. 1063.

Footnote 7 48 Stat. 955 (28 U.S.C.A. 400). 56 S.CT.-30 1/2

Footnote 8 39 Stat. 166, 215 (50 U.S.C.A. 79).

Footnote 9 Among the findings of the District Court on this point are the following:'38. The Muscle Shoals plants, including the Sheffield steam plant and the 8 hydro-electric units installed at Wilson Dam, were authorized for war purposes by section 124 of the National Defense Act of 1916 in anticipation of participation in the great war. The original conception was for the use of Nitrate Plant No. 1 employing the Haber process and Plant No. 2 employing the cyanamid process for the fixation or manufacture of nitrogen and its subsequent conversion into ammonium nitrate for explosives. Plant No. 1 was completed but was never practicable, due to the lack of knowledge of the Haber process. Plant No. 2 successfully developed calcium cyanamid from a manufacturing standpoint but due to the availability of ammonium nitrate as a result of commercial development of by-product or synthetic processes, the commercial or peace-time manufacture of calcium cyanamid at Nitrate Plant No. 2 is considered uneconomical and undesirable and is not proposed or suggested by either the War Department or the TVA. The Court further finds, however, that the plant with the aid of electric power furnished by Wilson Dam and the Sheffield steam plant can be operated to produce annually 110,000 tons of ammonium nitrate by the cyanamid process and that the present plans of the War Department count upon that plant to supply that amount annually in the event of a major war. ...'40. The existence of these facilities which make available large quantities of nitrogenous war materials by use of either the nitrogen fixing process or the oxidation of synthetic ammonia is a valuable national defense asset.'

Footnote 10 Sen.Doc.No.1, 18th Cong., 2d Sess.; H.R.Doc.No.119, 69th Cong., 1st Sess., 11, 12.

Footnote 11 See Rivers and Harbors Acts of August 30, 1852, c. 104, 10 Stat. 56, 60; July 25, 1868, c. 233, 15 Stat. 171, 174; March 3, 1871, c. 118, 16 Stat. 538, 542; June 10, 1872, c. 416, 17 Stat. 370, 372; September 19, 1890, c. 907, 26 Stat. 426, 445, 446; August 18, 1894, c. 299, 28 Stat. 338, 354; April 26, 1904, c. 1605, 33 Stat. 309; March 2, 1907; c. 2509, 34 Stat. 1073, 1093; June 25, 1910, c. 382, 36 Stat. 630, 652; July 25, 1912, c. 253, 37 Stat. 201, 215; July 27, 1916, c. 260, 39 Stat. 391, 399; March 3, 1925, c. 467, 43 Stat. 1186, 1188; July 3, 1930, c. 847, 46 Stat. 918, 927, 928. See, also H.R.Docs.No.319, 67th Cong., 2d Sess.; No. 463, 69th Cong., 1st Sess.; No. 185, 70th Cong., 1st Sess.; No. 328, 71st Cong., 2d Sess.

Footnote 12 Act of July 3, 1930, c. 847, 46 Stat. 918, 927, 928.

Footnote 13 See citations of numerous statutes in United St tes v. Sweet, 245 U.S. 563, 568, 569 S., 38 S.Ct. 193.

Footnote 14 Act of July 4, 1866, c. 166, 5, 14 Stat. 85, 86.

Footnote 15 Act of July 16, 1894, c. 138, 28 Stat. 107.

Footnote 16 See, as to royalties under leases 'to promote the mining of coal, phosphate, oil, oil shale, gas, and sodium on the public domain,' the Act of February 25, 1920, c. 85, 41 Stat. 437. Also, as to leases of public lands containing potassium deposits, the Act of October 2, 1917, c. 62, 40 Stat. 297.

Footnote 17 35 Stat. c. 264, 815, 820, 821.

[Footnote 1] The management explained that it was in the best interest of the company to accept the offer of the Authority for the purchase of the transmission lines in a limited area coupled with an agreement on the part of the Authority not to sell outside of that area during the life of the contra t. It protected the company against possible entrance of the Authority into the territory in which were located nine-tenths of the company's customers, including the largest; and it assured the company that so long as the latter retained its urban distribution systems within the territory served by the transmission lines, those systems would be serviced by power from Wilson Dam. Upon delivery of the transmission lines, the Authority agreed to pay the company $1,150,000.

[Footnote 2] See, also, Samuel v. Holladay, 21 Fed. Cas. pages 306, 311, 312, No. 12,288.

[Footnote 3] E.g., Miller, J., in Ex parte Garland, 4 Wall. 333, 382; Hepburn v. Griswold, 8 Wall. 603, 610; Adkins v. Children's Hospital, 261 U.S. 525, 544, 43 S.Ct. 394, 24 A.L. R. 1238; Holmes, J., in Blodgett v. Holden, 275 U.S. 142, 147, 148 S., 276 U.S. 594, 48 S.Ct. 105.

[Footnote 4] E.g., Hayburn's Case, 2 Dall. 409; United States v. Ferreira, 13 How. 40; Gordon v. United States, 2 Wall. 561; Id., 117 U.S. 697, append.; Muskrat v. United States, , 31 S.Ct. 250; Willing v. Chicago Auditorium Ass'n, 277 U.S. 274, 48 S.Ct. 507.

[Footnote 5] E.g., Ex parte Randolph, 20 Fed.Cas. pages 242, 254, No. 11,558; Charles River Bridge v. Warren Bridge, 11 Pet. 420, 553; Trade-Mark Cases, 100 U.S. 82, 96; Arizona v. California, 283 U.S. 423, 462-464, 51 S.Ct. 522.

[Footnote 6] E.g., Hatch v. Reardon, 204 U.S. 152, 160, 161 S., 27 S.Ct. 188, 9 Ann.Cas. 736; Corporation Commission v. Lowe, 281 U.S. 431, 438, 50 S.Ct. 397; Heald v. District of Columbia, 259 U.S. 114, 123, 42 S.Ct. 434; Sprout v. South Bend, 277 U.S. 163, 167, 48 S.Ct. 502, 62 A.L.R. 45; Concordia Fire Insurance Co. v. Illinois, 292 U.S. 535, 547, 54 S.Ct. 830.

[Footnote 7] Compare Electric Co. v. Dow, , 17 S.Ct. 645; Pierce v. Somerset Ry., 171 U.S. 641, 648, 19 S.Ct. 64; Leonard v. Vicksburg, etc., R. Co., 198 U.S. 416, 422, 25 S.Ct. 750.

[Footnote 8] E.g., United States v. Delaware & Hudson Co., 213 U.S. 366, 407, 408 S., 29 S.Ct. 527; United States v. Jin Fuey Moy, 241 U.S. 394, 401, 36 S.Ct. 658, Ann.Cas.1917D, 854; Baender v. Barnett, , 41 S.Ct. 271; Texas v. Eastern Texas R. Co., 258 U.S. 204, 217, 42 S.Ct. 281; Panama R. Co. v. Johnson, 264 U.S. 375, 390, 44 S.Ct. 391; Linder v. United States, 268 U.S. 5, 17, 18 S., 45 S.Ct. 446, 39 A.L.R. 229; Missouri Pacific R. Co. v. Boone, 270 U.S. 466, 471, 472 S., 46 S.Ct. 341; Richmond Screw Anchor Co. v. United States, 275 U.S. 331, 346, 48 S.Ct. 194; Blodgett v. Holden, , 148, 276 U.S. 594, 48 S.Ct. 105; Lucas v. Alexander, 279 U.S. 573, 577, 49 S.Ct. 426, 61 A.L.R. 906; Interstate Commerce Commission v. Oregon-Washington R. & N. Co., 288 U.S. 14, 40, 53 S.Ct. 266.

[Footnote 9] Others are Memphis City v. Dean, 8 Wall. 64, 73; Smyth v. Ames, , 515-518, 18 S.Ct. 418; Corbus v. Alaska Treadwell Gold Mining Co., 187 U.S. 455, 23 S.Ct. 157; Ex parte Young, 209 U.S. 123, 143, 28 S.Ct. 441, 13 L.R.A. ( N.S.) 932, 14 Ann.Cas. 764; Delaware & Hudson Co. v. Albany & Susquehanna R. Co., , 29 S.Ct. 540; Wathen v. Jackson Oil & Refining Co., 235 U.S. 635, 35 S.Ct. 225.

[Footnote 10] The resolution of the directors (Dodge v. Woolsey, 18 How. 331, at page 340) was this: 'Resolved, that we fully concur in the views expressed in said letter as to the illegality of the tax therein named, and believe it to be in no way binding upon the bank; but, in consideration of the many obstacles in the way of testing the law in the courts of the State, we cannot consent to take the action which we are called upon to take, but must leave the said Kleman to pursue such measures as he may deem best in the premises.' Referring to Dodge v. Woolsey, the Court pointed out in Hawes v. Oakland, 104 U.S. 450, 459: 'As the law then stood there was no means by which the bank, being a citizen of the same State with Dodge, the tax-collector, could bring into a court of the United States the right which it asserted under the Constitution, to be relieved of the tax in question, except by writ of error to a State court from the Supreme Court of the United States.'

[Footnote 11] A notable recent example is Humphrey's Executor v. United States, 295 U.S. 602, page 626 et seq., 55 S.Ct. 869, which limited Myers v. United States, 272 U.S. 52, 47 S.Ct. 21, disapproving important statements in the opinion. For lists of decisions of this Court later overruled, see Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 406-409, 52 S.Ct. 443; Malcolm Sharp, Movement in Supreme Court Adjudication-A Study of Modified and Overruled Decisions, 46 Harv.L.Rev. 361, 593, 795.

[Footnote 12] In 1811, Chief Justice Tilghman of the Supreme Court of Pennsylvania, while asserting the power of the court to hold laws unconstitutional, but declining to exercise it in a particular case, stated the practice as follows: 'For weighty reasons, it has been assumed as a principle in constitutional const uction by the Supreme Court of the United States, by this court, and every other court of reputation in the United States, that an Act of the legislature is not to be declared void, unless the violation of the constitution is so manifest as to leave to room for reasonable doubt.' James B. Thayer, after quoting the passage in The Origin and Scope of the American Doctrine of Constitutional Law, 7 Harv.Law Review 129, 140, called attention (p. 144) to 'a remark of Judge Cooley, to the effect that one who is a member of a legislature may vote against a measure as being, in his judgment, unconstitutional; and, being subsequently placed on the bench, when this measure having been passed by the legislature in spite of his opposition, comes before him judicially, may there find it his duty, although he has in no degree changed his opinion, to declare it constitutional.'

than a quarter million, within transmission distance, such as Birmingham, Memphis, Atlanta, or Louisville.

While it is the Authority's present intention to develop its power program in the above-described territory before considering going outside, the Authority may go outside the area if there are substantial changes in general conditions, facts, or governmental policy, which would necessarily require a change in this policy of regional development, or if the privately owned utilities in the area do not cooperate in the working out of the program.

The Authority entered into a 5-year contract on January 4, 1934, with the Commonwealth & Southern Corporation and its Alabama, Tennessee, Georgia, and Mississippi subsidiaries. The contract covered options to purchase electric properties in certain counties of Alabama, Mississippi, and Tennessee, the sale of distribution systems to municipalities in these counties, restrictions on territorial expansion by the contracting parties, the interchange of power, and other matters.

Alabama properties.-All of the low-tension (44,000 volts or lower) transmission lines, substations, rural lines, and rural distribution systems of the Alabama Power Co. in the counties of Lauderdale, Colbert, Lawrence, Limestone, and Morgan (except the Hulaco area), were included in the contract; also those in the north half of Franklin County, including the town of Red Bay, and the territory in the northern part of Cullman County served by a line of the Alabama Power Co. extending south from Decatur. The price of these properties was set at $1,101,256. The purchase had not been completed at the end of the fiscal year.

The power company agreed to attempt to sell the local distribution systems in the above counties to the respective municipalities, the Authority reserving the right to serve them if sales were not consummated within 3 months of bona fide negotiation and effort. Because of the failure of any (many) of the municipalities in northern Alabama to consummate negotiations for the purchase of the distributi n systems serving them, the Authority entered into negotiations for the direct purchase of these distribution systems, but a purchase contract had not been completed on June 30.

Mississippi properties.-The contract covered all of the properties of the Mississippi Power Co. in the counties of Pontotoc, Lee, Ita-

wamba, Union, Benton, Tippah, Prentiss, Tishomingo, and Alcorn, except a dam site on the Tennessee River in Tishomingo County. The purchase price was $850,000. The purchase was completed and delivery was accepted on June 1, 1934.

The transmission and generation facilities acquired in Mississippi and to be retained as part of the Authority's system include the following:

44,000-volt transmission lines miles 63 44,000-volt substations 6 22,000-volt transmission lines miles 45 22,000-volt substations 4 Tupelo steam stand-by generating plant Kilovolt-amperes 4,374 Corinth steam stand-by generating plant Kilovolt-amperes 2,225 Blue Mountain Diesel generating plant Kilovolt-amperes 150 Myrtle Diesel generating plant Kilovolt-amperes 75

Part of the local distribution facilities acquired in Mississippi were sold prior to the end of the fiscal year and it is expected that all will be sold eventually, as noted hereafter.

Tennessee properties.-The contract covered all of the properties of the Tennessee Electric Power Co. in the counties of Anderson, Campbell, Morgan (except the lines extending into Morgan County from Harriman), and Scott; also those in the west portion of Claiborne County, and the 66,000- volt transmission line from Anderson County to Knoxville. The price of these properties was set at $900,000. The purchase had not been completed at the end of the fiscal year.

Negotiations were carried on diligently for several months with the National Power & Light Co., an affiliate of the Electric Bond & Share Co., in an endeavor to acquire the eastern Tennessee electric properties of the Tennessee Public Service Co., a subsidiary of the National Power & Light Co. The electric distribution system in the city of Knoxville is included in these properties. The negotiations resulted in a contract after the end of the fiscal year.

Construction of rural electric lines in northern Alabama and northeastern Mississippi was commenced in the latter part of 1933 with relief labor, the Authority furnishing supervision and materials.