Ashwander v. Tennessee Valley Authority

Today Ashwander is remembered primarily for Justice Brandeis's "Ashwander rules," which provide guidelines for avoiding overly broad constitutional interpretation.

The Tennessee Valley Authority, a program to promote rural electrification, was created in 1933 as part of President Franklin Roosevelt's "first" New Deal. The Ashwander case came about when minority shareholders of the Alabama Power Company objected to the company's proposal to purchase some of the surplus energy generated by one of the TVA's dams. Claiming that the TVA lacked the authority to sell its energy, the shareholders also challenged the constitutionality of the statute that created the federal agency. In the name of one of their members, George Ashwander, a group of shareholders filed suit against the TVA in federal district court.

After the district court annulled the contract between the TVA and the power company, the TVA appealed to the United States Fifth Circuit Court of Appeals, which then reversed the ruling of the lower court. Ashwander petitioned the U.S. Supreme Court for review.

Ashwander marked one of the only times that the Supreme Court upheld the legitimacy of New Deal agencies prior to Roosevelt's 1937 court-packing plan. (The plan ultimately failed to receive congressional approval, but four conservative justices who opposed Roosevelt's progressive economic and social agenda soon left the Court anyway). Surprisingly, the Court dismissed the shareholder's suit, by implication upholding the statute that created the TVA by a vote of 8-1. Chief Justice Hughes, writing for the Court, added that the Constitution grants the federal government the right to sell property (in this case, energy) that properly belongs to it. Justice Brandeis, in a concurring opinion, added that the Court should never have heard the case in the first place, as it was chiefly a shareholders' internal dispute that did not actually involve any constitutional questions.