Tennessee Valley Authority Act

Explanation and Analysis of the Document

The Tennessee Valley Authority Act, consisting of thirty sections, is a legal document that painstakingly outlines the creation of a new corporation, what it is to do, how it is to do it, and what it cannot do. This document represents one of the most ambitious and long-lasting experiments to come from Roosevelt's New Deal.

The first paragraph of Section 1 of the act opens with the act's definition, purpose, and goals. The document clearly outlines the desire to improve the navigability and control the flooding of the Tennessee River, reforest and replenish the land of the valley, develop the region both agriculturally and industrially, and create a corporation for the operation of government properties for national defense and other purposes. The second paragraph names the corporation the Tennessee Valley Authority and states that the corporation should be run by an appointed board of directors. This first section sets the lofty tone and goals of the act, while the rest of the document outlines how these specific tasks are to be accomplished.

The board of directors is the subject of the second section, which consists of eight parts. The first four parts describe the rules for forming the board. The TVA board is to consist of three members appointed by the president with the advice and consent of the Senate. The president also chooses a chairman from the three board members. Once the board is selected, they make all other appointments. The board members hold nine-year, renewable terms. If a board member leaves before the end of a term, then the new board member will finish the previous term; as long as there are two board members, the TVA can operate as normal while a search for a third is completed. The rest of the section describes the benefits and limitations placed on directors. To be a TVA director, one must be a United States citizen. The salary for the position is $10,000 a year, but board members are allowed to live on TVA property and will be reimbursed for any work-related business. Further, while in office, no board member is allowed to participate in any other work or have any financial or business interest in anything that is a competitor of the TVA. For instance, they cannot be involved with any fertilizer company or company that makes ingredients of fertilizer.

With the board in place, the act turns to the matter of employees in Section 3. Importantly, the TVA can appoint and hire without regard to civil service laws, meaning that they can quickly hire local people. The board is responsible for all aspects of hiring, including setting the pay rate, defining the duties, and developing a promotion system. The only restriction is that no one's salary can be more than the board members' salaries. Employee salaries are to be “not less than the prevailing rate of wages for work of a similar nature,” and if a dispute arises about the prevailing rate, the board is to refer the issue to the secretary of labor. The jobs and pay from TVA work infused a much-needed economic boost to the extremely depressed area.

Section 4 deals with a number of issues arising when any new body is formed—adopting a corporate seal, creating and changing bylaws, making contracts, and appointing treasurers—but the core of this section involves property. In this section the board is given the power to acquire real estate to construct whatever it needs to carry out its charges. Ideally, the TVA would purchase the property from the owners, but in Section 4 the TVA is given the right to exercise eminent domain. The right of eminent domain means that the government, here the TVA, can condemn and seize any property deemed necessary to complete its task.

The largest section of the act, Section 5, deals with the production of nitrates. The first five parts focus on fertilizer to improve the land in the Tennessee Valley. Here the act calls for the TVA to arrange for the large-scale use of new fertilizers, develop county experiment stations and demonstration farms, develop methods for making fertilizer better and cheaper, and sell or donate the fertilizer. In the event of war or national emergencies, however, the facilities would switch from using nitrates to make fertilizer to using nitrates to make explosives. Further, in part 1 of this section, the TVA is specifically charged with producing, distributing, and selling electrical power. However, nothing produced is to be sold outside the United States except to allies during wartime.

The next four sections are brief and cover a variety of operating procedures. For instance, Section 6 states that any appointment, hiring, or promotion must be based on merit and not on political test or qualification. Section 7 entrusts all current and future properties of the TVA to the board. Section 8 orders that the TVA must have a main office in the vicinity of Muscle Shoals and that the corporation is resident of northern Alabama. Since the Tennessee Valley crosses state lines, this means that in the event of a civil suit the TVA would be held to the laws of northern Alabama. According to Section 9, the board is required to file a detailed financial statement that includes the cost of power at each station and the number, names, salaries, and duties of employees making more than $1,500 a year.

The next four sections deal with the sale of electrical power. In Section 10 the board is authorized to sell surplus power to states, counties, municipalities, corporations, partnerships, and individuals. To do this, the board can enter contracts for not more than twenty years and must place priority on providing power to local citizens. Any contracts with private companies to resell power for profit can be terminated in five years with written notice. Further, the board is authorized to construct transmission lines to reach farmers and small towns without power. Section 11 restates a lot of Section 10 by placing an emphasis on providing power to farms and rural areas, but it adds that industry is a secondary consumer that should be used to ensure use and revenue to provide power to the people at the lowest possible rates. Section 12 deals exclusively with transmission lines. This section authorizes the TVA to construct, lease, purchase, or contract construction of transmission lines and to interconnect these lines with already established systems. In addition, the TVA is allowed to lease their lines, thereby generating revenue, as long as it does not interfere with TVA business. This section also allows for organizations that supply power to its residents to connect to the TVA's power lines as long as they adequately maintain the lines and sell the power without regard to the consumers' social class. Section 13 declares that a portion of the sales from certain power plants goes to either Alabama or Tennessee. For instance, 5 percent of gross proceeds from the Cove Creek Dam are paid to the state of Tennessee. These sections dramatically illustrate the importance placed on getting affordable electricity to the rural farmers and towns of the Tennessee Valley.

The dams themselves are the topic of the next three sections. First, Section 14 provides a process for determining the cost and value of the dams. Section 15 allows the TVA to sell fifty million dollars worth of bonds to construct future dams, steam plants, and other facilities. Section 16, acknowledging that the original dams and plants were completed, provides for the completion of the plants and dams near Muscle Shoals; Section 17 calls for the secretary of war or the secretary of the interior to construct a new dam located on the Clinch River in Tennessee. In order to empower the office that will build this new dam, Section 18 authorizes the use of eminent domain to secure a site as well as to enter contracts to relocate railroads, bridges, mills, ferries, and so forth. Section 19 gives the TVA access to the U.S. Patent Office for researching methods for the most efficient and economical way to produce fertilizer and hydroelectric power.

Since a primary function of the TVA is to generate nitrates for explosives in the event of war or national emergency, Section 20 authorizes the government to take possession of any TVA property to make munitions. This section, however, also allows those who had contracts for fertilizer or power to receive damages. With all that the TVA is authorized to do, Section 21 reminds it that all of the laws regarding larceny, embezzlement, and improper handling of government money apply to it. Further, defrauding the TVA will result in a fine of not more than $10,000 or imprisonment of not more than five years or both.

Sections 22 and 23 are the boldest of the sections of the Tennessee Valley Authority Act because within these two sections the TVA is charged with improving the lives of the people of the Tennessee River valley. For instance, section 22 of the act authorizes the president to order surveys and make plans to manage the extent, sequence, and nature of TVA development to ensure the area is developed for the best physical, economic, and social outcomes. As the work outlined in Section 22 develops, Section 23 authorizes the president to recommend legislation to Congress to ensure flood control, navigation of the Tennessee River, generation of power, proper use of land, reforestation, and boldly, “the economic and social well-being of the people living in said river basin.”

The acquisition and disposition of property is a theme throughout the Tennessee Valley Authority Act, and in Section 24 the president is authorized to secure rights and buy titles as well as to lease facilities and land not currently being used by the TVA. The president is not authorized, however, to sell the land, since it may be needed later. Up to this point, eminent domain has only been mentioned, but in Section 25 the topic is covered in detail. The right of eminent domain means that the government can condemn and take possession of personal property for its own use; Section 25 carefully outlines the procedure for this process. The TVA will start proceedings in United States district court. The value of the property will then be determined by three court-appointed commissioners. These commissioners will evaluate the property and interview witnesses to compile a report for the court. Once the report is filed, within twenty days either the TVA or the property owners can file exceptions, which would be heard by three federal judges who will then file their own valuation of the property. Then the TVA and property owners would have thirty days to appeal the judges' valuation to the circuit court of appeals, which would determine their own valuation of the property. When the valuation is not challenged or all challenges are exhausted, the property owners would receive the valuation of the property, and ownership would pass to the U.S. government. The section goes on to state that in the event the property owner is a minor, insane, incompetent, or dead their legal representative or guardian will act for them.

The finally five sections of the act are very brief and tie up loose ends. For instance, Section 26 states that any profit the TVA generates goes to the U.S. Treasury. Section 27 allocates the money for carrying out the provisions of the act, and Section 28 states that if anything is contradictory in the act, those parts are repealed. In Section 29 the right to alter, amend, or repeal the act is reserved. Finally, Section 30 declares that the sections of the act are separable, which means that if one part of the act is found to be unconstitutional, then only that part of the act would be thrown out, and the rest of the act would remain valid.