TVA: mission accomplished?

TVA: mission accomplished?

Pride of the New Deal may shed part of its role and, some say, its soul

By ELLEN DAHNKE
Staff Writer

Franklin Roosevelt once joked about how he would explain the philosophy of the Tennessee Valley Authority.

"I'll tell them it's neither fish nor fowl, but whatever it is it will taste awfully good to the people of the Tennessee Valley," Roosevelt told Sen. George Norris, TVA's Republican champion from Nebraska, in 1932.

Sixty five years later, TVA Chairman Craven Crowell announced in January that TVA had lost its appetite for the non-power side of its historic mission. His critics call that foul.

Debates about TVA's purpose aren't new, as Roosevelt's remarks suggest. Over the years, TVA's mission and its future have divided supporters, much like the Tennessee River itself cuts twice across the Tennessee landscape. The debate is emotional, fierce and quaintly proprietary for an enormous institution that cuts a swath across seven states in the Southeast.

"TVA was created as a regional development agency, and it still is," Crowell said in a recent interview. "I think my proposal enhances the mission of TVA."

"One of its most important missions has been to provide low-cost electricity and economic development in the form of jobs."

Alan Jones, executive director of the Tennessee Environmental Council, disagrees.

"I think the best mission for TVA would be to recapture the idealism of its early days," he said. Jones has more than just an environmentalist's interest in TVA: His grandfather died helping to build Kentucky Dam.

"I grew up hearing older folks talk about TVA like it was almost a gift from God in lifting people up," Jones recalled. "There's a sense that TVA isn't what it once was. But there's also a sense that the

agency never could recapture the urgency and wonder that created one of the great public works of all time in those fabled "First Hundred Days" of the New Deal. The power vs. nonpower debate about TVA is much more than a matter of a $106 million appropriation in a $5.6 billion budget.

TVA's charge when it was created in the midst of the Depression was indeed to turn on the lights in the Tennessee Valley. Private power companies said they couldn't afford to build in rural areas. Many counties were limited to power in a single town.

But TVA was also mandated to provide flood control, river navigation and soil conservation to halt the awful erosion that was washing away rich farmland.

There was even a certain missionary fervor to TVA. U.S. Labor Secretary Frances Perkins in 1933 had told the country that most of the Valley's residents were so poor they couldn't afford shoes — a barefoot image of Tennessee that persists in some areas of the country to this day.

The trigger for the creation of TVA was Muscle Shoals. In World War I, the government began to look at Muscle Shoals as the site for plants to make ammonium nitrate. In peacetime, the plants would shift to fertilizer production.

In 1921, Henry Ford, the king of the automobile, offered to buy the plants and lease Wilson Dam, which was being built during the war.

Norris, a progressive Republican from Nebraska, had other ideas. Twice he got Congress to pass bills to harness the Tennessee River for public power as well as flood control and navigation. Twice it was vetoed by Republican presidents — first Calvin Coolidge, then Herbert Hoover.

Roosevelt found even more uses for Norris' project in the depths of the Depression. Much of the idea of planning natural resources owes a debt to Roosevelt's cousin, Theodore. TVA would reforest the area, stabilize the land and develop the region for "the general social and economic welfare of the nation." FDR not only signed the bill when it was passed May 18, 1933, he called TVA the "apple of my eye."

"In the current climate for less government, it's hard to imagine how welcome TVA was in some quarters. Dr. John Muldowny, associate dean of academic affairs at the University of Tennessee, co-authored a book with Dr. Michael McDonald on the resettlement of people to build what became Norris Dam.

"There was so little real, active opposition," Muldowny said. "TVA had printed a questionnaire asking people how they felt about being moved. We saw these responses that said 'If government says we should, then we'll do it.'"

TVA's first three directors were as divided on its mission as succeeding generations would be. Arthur E. Morgan, a former Unitarian minister and president of a small Ohio college, became chairman. He saw TVA as a regional development agency that would encourage small artisan shops and cottage industries. Another Morgan — Harcourt — president of the University of Tennessee, was also named a director. Then, Roosevelt named a 33-year-old lawyer, David Lilienthal, who had fought to regulate private power companies in Wisconsin.

That Lilienthal — not TVA's first chairman A.E. Morgan — became synonymous with TVA, shows some indication of who won those early struggles. Lilienthal made the power mission, along with economic development, ascendant, going on eventually to become TVA's chairman and later chairman of the Atomic Energy Commission.

Steven Neuse, an associate professor of political science at the University of Arkansas and the author of a Lilienthal biography, said the director began to have second thoughts in the late '30s about so heavy an emphasis on power.

"In 1938, once they had gotten rid of A.E. Morgan, he and some of his supporters began to think about the emphasis on power," Neuse said. "Lilienthal, I think, realized that TVA was only a big utility, it wasn't what it should be."

That's when Lilienthal gave his "Grass Roots" speech, which later formed the basis for his book TVA: Democracy on the March. He outlined a vision that captured some of the early idealism of TVA.

"Then, of course, Americans went to war," explained Neuse.

Even its power mission began to change in the 1940s, notes Dr. Walter Creese, a professor of architectural history and preservation and author of TVA's Public Planning: The Vision, the Reality.

"TVA went from building dams to steam plants to coal-fired plants to atomic plants," Creese said. "I think because the power source changed so radically, the way TVA was perceived changed too."

"If I had to indict anyone, I would say that TVA didn't keep its eye on what it was supposed to be doing."

In 1959, TVA separated power and nonpower on its ledgers. The power portion became self-sustaining. The nonpower side would get a federal subsidy to maintain it.

It was in the 1960s and '70s that TVA took two fatal steps that may have made the severing of the nonpower side inevitable. In 1966, TVA embarked on what was to be a 17-reactor nuclear system. The cost and the lack of demand for that much power eventually scrapped all but five reactors. About half of the current $27 billion debt is for nuclear power plants, some of which were never built.

But many people believe TVA truly lost its virtue on the nonpower side of its mission in the fight over the Tellico Dam in the 1970s.

TVA and Tennessee's congressional delegation successfully portrayed the Tellico Dam controversy as the classic example of environmentalists run amok. A group of fishermen, canoers, and some landowners used the newly enacted Endangered Species Act to stop the opening of the Tellico Dam on the Little Tennessee River just after TVA had spent nearly $100 million on it. The Supreme Court in 1978 ruled in their favor. The river was home to the lowly snail darter, which according to testimony, wouldn't survive the dam. But Goliath — TVA — won after all when the species was exempted by Congress from the act.

Ignored in all the jokes about the "nutty treehuggers" and "those damned fish" were a presidential committee and a 1978 report by the General Accounting Office, both of which questioned whether the dam, not the snail darter, wasn't the indulgence. The panel unanimously concluded the dam didn't make financial sense. GAO pointed out that there were at least 22 major lakes not being used in a 60-mile radius where the dam was built. To many, TVA seemed to have built a lake solely for developers. Almost identical issues about cost-effectiveness and a rare species of mussel led TVA to stop the Columbia Dam.

If TVA has failed to live up to hopes as a protector of natural resources, its economic development success is unquestioned. Indeed, economic development, along with the environmental research center, will continue on the power side.

Of course, TVA succeeded in economic development the very first day it brought cheap electricity to the region, retarded flooding and restored farmlands that had washed away into gullies. That meant jobs. TVA's cheap power not only lifted the region out of the Depression, it has sustained incomparable industrial growth in the Tennessee Valley to this day.

"TVA gives our recruiting an advantage because we can offer reasonably priced power with great reliability," said Fred Harris, the top economic development recruiter at the Nashville Area Chamber of Commerce and former state deputy commissioner of Economic and Community Development.

John Hatmaker, chairman of the Tennessee Valley Industrial Association, which represents industries directly served by TVA power, said he's pleased the agency intends to concentrate on power.

"Overall, they've done fairly well," the Kerr-McGee executive said. "They've been up and down, but in the last several years, TVA's been trying to act more competitively by offering low-cost power."

"Realistically, companies go where they can get the cheapest power."

But others believe TVA would lose its soul without the nonpower side of its mission still intact.

Steven Smith, head of the Tennessee Valley Energy Reform Coalition, insists that TVA must have a broader mission if it is going to continue to claim support in the region.

"The nonpower side may be small, but it's the most visible part of the TVA mission," said Smith. He's hoping to convince authorities to implement a regional policy planning commission for TVA on the model of the Bonneville Power public power company in the Northwest.

U.S. Rep. Bob Clement, a former member of the TVA board, has similar worries. He and the rest of the TVA congressional delegation have defended the agency's nonpower budget every year in an increasingly hostile battle with, first, two Republican presidents, then a Republican Congress. Now, he fears Crowell's request — and a Democratic President's budget — will strengthen those who want to privatize TVA. Clement's fears mirror a statement by then-Sen. Howard Baker exactly 20 years ago that "it's getting harder to find."

"What we needed was time," said Clement. "They did this without consulting anyone in advance."

"People are saying if it's nothing but a federal power agency, why should it exist at all?" Crowell argues that TVA never intended to suggest that the nonpower programs would either save money or that the work was unnecessary.

"Just because some other agency takes over a TVA activity, doesn't mean it's not important," Crowell said.

Crowell also points out that TVA's mission has changed and adapted throughout its history.

"TVA's decision to divest itself of certain programs isn't something

new," he explained. TVA doesn't have the forestry, the soil conservation, even the fertilizer programs of its past. Land Between the Lakes, he noted, was supposed to be a 10-year demonstration project only when it was created in 1963. TVA no longer operates parks which were handed over to three state governments, including Tennessee's.

The decision to emphasize power is a realistic appraisal of what TVA faces in the coming deregulation of the power industry, Crowell said. "We have to continue making ourselves competitive," responded the chairman.

That would, of course, put TVA back where it started — in a fight with private power companies. In 1933, TVA got into a protracted battle with private power companies including the Commonwealth and Southern holding companies, whose president was Wendell Wilkie, a future opponent of Roosevelt's, over how they would be allowed to sell power.

TVA eventually won that battle after six years of court fights and negotiations. But that fight is also a palpable reminder that TVA isn't quite what it started out to be. The battle for TVA initially centered on Wilson Dam at Muscle Shoals. Under the 1933 TVA Act, Muscle Shoals was supposed to be the headquarters of the agency. Like a lot of things in its 65-year history, TVA took another direction.