by Martin Doyle
All of this news was deeply problematic to private power, which saw the TVA as setting a dangerous precedent. For the next six years, Wendell Willkie would represent the private power interests in their battle against Lilienthal and the TVA. Willkie had been critical of the TVA since it was first proposed in Congress, going so far as to testify against it during the congressional hearings. His holding company, Commonwealth & Southern, had much to lose to TVA; it owned all the common stock in Tennessee Electric Power Company, Alabama Power, Georgia Power, and Mississippi Power, all of which were in the proposed service area of the TVA. As long as TVA followed a course similar to what had been used at Hoover Dam or was currently being used at Wilson Dam, the potential conflict could be resolved. But the Wilson Dam terms with Alabama Power were up for relicensing in 1934, making it the first test case for how TVA would deal with private power. Willkie proposed a sharing relationship between TVA and private power, but Lilienthal was having none of it.
Lilienthal’s efforts at regulating private industries in Wisconsin had jaded him about the intentions and trustworthiness of private power, and his growing fan base of progressives gave him plenty of support for keeping the TVA ideologically pure. More pragmatically, if private companies were still in charge of transmission and distribution, the TVA yardstick would remain incomplete—the government would be unable to measure for itself a significant portion of the costs of providing electricity. More broadly, by refusing to acquiesce on any front, Lilienthal ensured that the TVA would have considerably greater leverage over power in the entire region than if private power retained any foothold.
As he went into negotiations with Willkie over the future contract for Wilson Dam power, Lilienthal knew that he had Roosevelt’s unequivocal support. The TVA was an ideal model of the policies behind the New Deal—a federal agency that absorbed enormous amounts of labor and, more philosophically, applied systematic planning to a regional economic development problem. Roosevelt called the TVA the “apple of his eye” and made regular trips to the valley to see its progress.
Throughout the Great Depression, the TVA was abuzz with dam-building activity. Each dam was an additional source of power and a direct threat to existing power companies; Willkie was negotiating for private power from a position of declining strength. Wilson Dam was significant, but the dams begun by the TVA during the Depression were equally impressive and cheaper for the TVA to build than such dams would be for private power companies. When a private power company built a dam or a steam power plant, it had to recoup all those construction costs through higher rates. But when the TVA built a dam, the federal government covered some of the costs in the name of broader public interest such as navigation and flood control. This support reduced the cost of power generation and thus reduced the rates TVA needed to charge, so Lilienthal could set far lower power rates than his for-profit private power competitors could afford.
On top of lowering the rates, Lilienthal played his hand to the max by suggesting that the TVA might start building power lines directly parallel to those already built by Alabama Power & Light—a not-so-subtle hint that Willkie could either surrender by selling his company’s existing lines and system to TVA or be directly competed out of business. What’s more, the smaller distribution lines—the final handoff of power from generation and transmission to the individual homeowner or business—were being built through heavily subsidized Public Works Administration loans given to a growing network of public, municipal utility cooperatives (i.e., nonprofits). The emerging power grid in the Tennessee Valley eliminated the need for private power at any step. And this intentionally combative approach to regulating the price of power through direct competition was like Lilienthal’s earlier approach in Wisconsin: regulation with a vengeance.
From the beginning it was unclear whether the TVA would be able to move forward as an activity of the federal government, because it stretched ideas about the types of activities the federal government could engage in. Yet a series of Supreme Court decisions gave the TVA somewhat unexpected support. In 1936, stockholders of the Alabama Power Company sued the TVA for its proposal to buy the company’s property and equipment. The stockholders hired Wendell Willkie as their attorney, and he scaled up the case into a broadside attack on the TVA as exceeding the scope of congressional power. But the Supreme Court found against Willkie. In this first test of the TVA’s role, the Court ruled that the proposal from the TVA for “disposing” surplus energy from Wilson Dam was constitutional.
In 1938, Alabama Power itself sued the federal government for giving grants to municipal cooperatives that would then purchase power from the TVA. Once again, the Court ruled in favor of the TVA. And then, in 1939, five companies under Wendell Willkie’s holding company sued more directly against the TVA’s constitutionality in a case known as TEPCO.13 During the process, the TVA was ordered to freeze its power program for six months, thus giving Willkie a brief window of hope that FDR’s public power company would come crashing down. But the Supreme Court once again ruled in favor of the TVA, thus frustrating Willkie’s attempts to upend the agency through the courts.
Willkie realized there was little he could do to stop the federal government from going into the power business. He could not compete with the bottomless coffers of the federal treasury during the New Deal financing the TVA’s infrastructure projects, nor with the Supreme Court’s unexpected decisions supporting the constitutionality of the TVA. Lilienthal’s entirely government-backed system created a subsidized grid from start to finish that replicated at lower costs what Willkie and private power were trying to develop themselves. The accuracy of the “yardstick” was questionable, and Willkie began saying that “TVA’s yardstick is rubber from the first inch to the last,” and that “The TVA touches four states but drains the nation.” Nevertheless, in the aftermath of Willkie’s loss in the TEPCO court case, he and Lilienthal finally came to an agreement. The remaining private power properties in the Tennessee Valley, like those owned by Commonwealth and Southern, were sold to the TVA. But the TVA was constrained in its potential territorial expansion; congressional approval would be required for TVA to expand. Private power had lost the regulatory battle.14
Then a strange thing happened: the TVA began programs to increase power use in the region rather than just provide power. As each new dam was completed, more power became available in a market that was developing a surplus of power and a dearth of buyers. Following this development, Lilienthal subtly shifted the meaning of the yardstick from being a metric for cost comparison to being a measure of the effectiveness of government-provided electricity on a grand scale. With Willkie and private industry out of business in the Tennessee Valley, there was less need for a regulation yardstick for price comparison. Now the yardstick metaphor was used to illustrate how the TVA should be a model for the rest of the country, and the model was somewhat tautological: if electricity were provided at cheap rates, then demand would be stimulated at a large scale, which would continue to drive down the per-unit cost of electricity that could be generated cheaply through centrally planned, efficient development of the hydropower sources within an entire watershed. Lilienthal argued that the rest of the United States should use this model, measuring its success against the (repurposed) regulatory yardstick of the TVA experience.15
Ironically, the TVA was intended to be a model for the rest of the nation but, despite its success, it was never replicated elsewhere. In 1945 Lilienthal wrote an article titled “Shall We Have More TVAs?” for the New York Times Magazine. Flush with success, he answered with a not too surprising yes. Indeed, the original plan had been to offer federal power throughout the United States. During the 1932 presidential campaign, Roosevelt had proposed beginning with four federal power projects in each corner of the United States on major rivers: the Colorado River for the Southwest, the Tennessee River for the Deep South, the Columbia River in the Northwest, and the St. Lawrence in the Northeast. In the end, the St. Lawrence never materialized to a
ny degree, and the Colorado and Columbia developed into “administrations” that sold or managed power produced by other agencies, such as the Corps or the Bureau of Reclamation. Only the TVA, on the Tennessee River, would manifest the federal government’s grand plan of regulating private power through competition—and for good reason. Its steep topography and abundant rainfall made its many rivers ideal for hydropower.
Although New England or even the Mid-Atlantic states may have offered similarly optimal river conditions for other river authorities, cities and towns already peppered the banks of rivers, along with their existing small dams and associated mills and industries. Building a Merrimack River Authority in the model of the TVA would have required inundating towns and cities like Lowell, Massachusetts, which was founded and grew up around the water-powered mills of the river. The Tennessee Valley was far less developed and had minimal existing hydropower. Large dams could be built without large economic impacts, or at least without political pushback. Such dams were not possible in the North, where populations and industries had already settled into river valleys. Besides the other hurdles for any agency trying to replicate the TVA’s success, by the time its success had been proven there was simply no longer the political appetite for another experiment like the TVA. What fit the needs of a Deep South valley in the midst of the Depression seemed highly out of place as the economy recovered and political winds changed: when asked in 1953 what he meant by the phrase “creeping socialism,” President Dwight Eisenhower gave the TVA as an example. Only two decades after its creation, the TVA was already drawing political scorn.16
Lilienthal’s modified yardstick was realized when electricity consumption rose as prices fell. But this development was not unique to the Tennessee Valley: energy consumption nationwide grew by 65 percent from 1945 to 1965 while the real price of electricity dropped by half. As the nation became increasingly electrified, power companies scrambled to keep up with demand, adding larger coal-fired power plants as well as a growing number of hydroelectric dams. Although a mention of the TVA to this day conjures images of its signature dams—Wilson, Norris, and Fontana—by 1960, within only a few years of completing construction on most of its dams, the TVA produced more power from coal-fired power plants than from the hydroelectric dams that had been used to justify its existence and that so many resources had gone into building. In 1966 the TVA began expanding into nuclear power, like many other electric utilities of that time. In the 1980s the TVA was synonymous worldwide with the planned, systematic development of entire river basins, and it dispatched engineers internationally to share their hydropower skills. Yet by that time, the distribution of power sources for the TVA was already indistinguishable from that for any other power company—hydropower made up less than 10 percent of its total generation.17
That the TVA was not replicated, or that it largely became just like all other power utilities, should not minimize its legacy, and that of hydropower in general, for national development. The TVA pioneered the management of an entire river basin for multiple purposes—flood control, navigation, water supply, and especially power production. Its scientists and engineers had impeccable standards of professionalism and were leaders in the development of forestry and agriculture programs, along with floodplain management, turbine technology, nuclear power production, and many other programs. They were renowned for their rapid development of fundamental and applied science, all the more impressive for their accomplishments in what had been a rural, backwater, dirt-poor corner of the country.
What’s more, the TVA’s effects stretched far beyond the Tennessee Valley region: Its dams were essential during World War II, when the U.S. Army made enormous requests to supply TVA-generated electricity at a peculiar facility near the town of Oak Ridge, Tennessee. The secretive site consumed such shocking quantities of TVA’s hydropower that Lilienthal, who did not know what was actually being done at Oak Ridge, requested that the site be placed under TVA’s (i.e., his) direction. His request was denied, and the site remained under the management of personnel from the Manhattan, New York, district office of the U.S. Army Corps of Engineers—leading it to be called, simply, the Manhattan Project.
The TVA’s growth was commensurate with that of the power industry; for much of the nineteenth and twentieth centuries, power was unquestioningly prioritized over almost all other potential uses of rivers. When milldams came along, the potential of valuable riverine real estate for turning millwheels or turbines quickly took precedence over commercial navigation, which had once been favored. When towns or farms were in the way of a TVA reservoir, the residents were moved and the town drowned. The inexorable drive for power seemed to overwhelm anything in its way; regulation was written in the service of the economy and favored the power industry. But in the 1960s, a new lobby would gain political clout, and environmental concerns began, increasingly, to have the final say in how rivers were used.
The seven men who gathered in Washington, D.C., in 1979 were members of the Endangered Species Act Committee. They met to decide the intertwined fates of a dam and a fish, earning the nickname of the “God Committee” or “God Squad” for their power to decide the future of a species. And what brought the God Committee together that first time was the TVA. The agency originally designed to be the regulator was now being regulated.
The existence of the God Committee was in many ways an indication of just how much priorities in society had changed over the past two decades. Environmental concerns became increasingly valued, potentially gaining equal footing with economic development. The environmental movement ushered in a whole new era of regulation—environmental regulation. These new regulations came one after the other like a tidal wave: the National Environmental Policy Act opened the decade on January 1, 1970, and was quickly followed by the Clean Air Act in 1970 and the Clean Water Act in 1972. Although these new regulations put new constraints on how power companies, along with all other industries, did their business, most of them were malleable in some way. The power companies could adapt by shifting here or there, or filing a report, or paying a fine. But the Endangered Species Act of 1973 (ESA) was resolutely inflexible and would prove particularly troublesome to power companies—and the TVA especially. The ESA says that no federal agency can pursue an action—like building a dam—if that action would potentially damage the habitat of an endangered species. The act was a regulatory trump card, made impossible to subvert by virtue of its sheer simplicity.
Almost immediately after the ESA passed, a strange sequence of events led it on a collision course with the TVA. The first event occurred when a previously unknown and ostensibly unremarkable species of fish was listed as endangered. In the mid-1970s, scientists had begun documenting the rarity of different species. Some species, like the bald eagle, were known to be rare and demanded protection. When scientists documented a particular species as being so rare that its future persistence was in doubt, the federal government required the species to be “listed” as “endangered”—a designation that brought out handcuffs imposed by the ESA, which constrained actions potentially affecting that species.
Only a few months after the ESA had passed, David Etnier, an ecologist at the University of Tennessee, found an unfamiliar darter—a type of small fish—in the Little Tennessee River. Darters are rather unimpressive fish. Only three inches long when fully grown, and lacking any particularly unique features, they wouldn’t generally be noticeable or attractive to anyone but an ecologist. Etnier noted some differences between the fish he found and those found in other rivers, documented the fish as a new species, and named it the snail darter for its culinary preferences.18
You wouldn’t go fishing for snail darter; in fact, you wouldn’t be aware of its presence in a river unless you were looking for it very, very carefully. Unless you’re on the Little Tennessee River, you shouldn’t even bother looking—the Little Tennessee River is the snail darter’s only known native habitat. And Etnier found it in the sole remaining undammed stretch; the
TVA had put everything else under lakes. But this undammed condition of the Little Tennessee was meant to be temporary. In fact, when Etnier found the snail darter, the TVA was just finishing the Tellico Dam, which would put this last bit of river under a lake.19
The snail darter and the Tellico Dam are inseparable, bound together in regulatory infamy. In comparison to other TVA dams, the Tellico is unimpressive. Most of the dam is made of earth, and there is a small concrete plug at the far end of the valley. Most TVA dams are easily spotted on the horizon due to a spider web of high-voltage power lines. These lines are conspicuously missing from the Tellico, because the Tellico produces no power. It was built as supplemental storage for a larger adjacent dam on the Tennessee River, to which it is connected by a small canal. The Tellico was intended to be in the system of dams first envisioned by the TVA as part of its Progressive Era plan to harness entire rivers through careful, proactive planning. But the TVA had just not gotten around to completing the Tellico until the 1970s, so it was one of the last dams for the TVA, but a first for the ESA.20
The Tellico Dam project had been pushed down the TVA dam-building priority list for decades because it was projected to create relatively limited economic benefits; as proposed in the initial plan for the Tennessee Valley in the 1930s, there would be a 10 percent gain in economic benefits relative to the costs. By the 1970s, however, the TVA was finding other ways to justify its few remaining projects, and its newest approach was to justify projects based on the potential for surrounding development. As the TVA explained it, if the dam were built, in addition to enabling a marginal increase in power production, the large reservoir and available canal would be a boon to the local community. True, building the dam would require the TVA, which had been founded primarily as a way to bring rural backwaters out of poverty, to inundate a rural community with some of the last remaining fertile river-valley farms. But assuming that industrial and residential development would follow the construction of the Tellico Dam allowed the TVA to recalculate the estimated economic benefits of the project, resulting in higher property values. This fiscal sleight of hand was enough to justify the project, if only barely, and put TVA back in the dam-building business one last time.