Should TVA headquarters be in Alabama? Why Supreme Court said no | Know Your Knox
Even a cursory reading of the Tennessee Valley Authority Act, the 1933 federal legislation that created the nation's largest public power provider, suggests its headquarters should be in Alabama and not Knoxville, Tennessee.
In the space of 30 pages, the act mentions Knoxville once, and only because of the nearby headwaters of the Tennessee River.
The act mentions a small town in Alabama 13 times, including this most critical line: "The Corporation shall maintain its principal office in the immediate vicinity of Muscle Shoals, Alabama."
Muscle what?
Muscle Shoals is a town of 17,000 people on the Tennessee River in northwest Alabama. It is home to Wilson Dam and two nitrate plants – built during World War I and purchased by TVA in 1933 – and was arguably the federal utility's most important site in its infancy. But the TVA headquarters have always been in Knoxville.
Today, those headquarters are a tower downtown, the quiet corporate center for a sprawling system of power plants and dams across seven states.
But imagine for a second the boost to the economy of little Muscle Shoals if it were home to the federal utility, which today has over 10,000 employees, 10 million customers and $12 billion in annual revenue.
That's the starting point of this David and Goliath story, which spans two world wars, several smaller wars and seven years of intense litigation ultimately decided by the Supreme Court.
But these were not biblical times. In this version, Goliath wins.
Why is TVA headquartered in Knoxville?
TVA's first major construction project was Norris Dam, built between 1933 and 1936 about 25 miles northwest of Knoxville.
Muscle Shoals was another critical place for President Franklin Roosevelt's new initiative to bring electricity and jobs to a impoverished region struggling through the Great Depression.
But TVA's first infrastructure in Muscle Shoals – two nitrate plants and a hydroelectric dam – had been built years before to make explosives for World War I.
Henry Ford had tried to purchase them in the 1920s to make a "Detroit of the South," said TVA historian Pat Ezzell. Instead, TVA would repurpose them to make fertilizer as it took a national lead on new farming techniques.
If Ford had gotten his hands on the Muscle Shoals plants and used them to make automobiles, there might not be a TVA today, Ezzell said. Preston Hubbard's 1961 book "Origins of the TVA: The Muscle Shoals Controversy," featured on Ezzell's bibliography of TVA history, tells that story.
"I think we still hold the record for the amount of patents and licenses for fertilizer in the country today," Ezzell told Knox News. "You could argue that TVA changed the face of farming in the Southeast and even nationally."
So, why is TVA headquartered in Knoxville and not Muscle Shoals? "That is such a simple question with a very, very, very complex answer," Ezzell said.
The TVA Board of Directors started meeting in Knoxville as a convenient location near the Norris Dam project. From its first days and through the busy construction period of 1933 to 1939, Knoxville gradually became the utility's de facto headquarters.
One advantage for Knoxville was the University of Tennessee at Knoxville, which allowed TVA to use its library, law library and laboratories. The two institutions maintain a strong partnership 90 years later.
Settling in Knoxville was a matter of expediency for TVA as it set to work electrifying the rural South.
"I don't think that there was much thought put into it," Ezzell said. "I think it was just, 'We got to get to work, we got to get stuff set up,' and they start setting it up."
It was not until 1938 that the question of TVA's headquarters arose during a congressional investigation into a separate TVA matter. The investigative committee agreed with TVA that the board had the authority to choose the place of its main office.
The TVA board examined the question again in 1939 and considered moving to Alabama. In 1940, the board asked Congress for money to build an office in Muscle Shoals, but the request was denied because it was not critical for defense during World War II.
After the war, TVA came closest to moving to Muscle Shoals, even approaching a lease purchase agreement, Ezzell said. Then the Korean War broke out in 1950, delaying the move further.
Finally, in 1953, TVA announced that its headquarters would be moved from Knoxville to Muscle Shoals.
"It was not a sudden decision. They'd been talking about it obviously since the beginning days at TVA," Ezzell said. "You can imagine the political fallout from saying you're going to move these offices ... This turned into a political fight."
But the fight ended for the moment when TVA's contractor to build the Muscle Shoals office died in 1954. By the time the utility selected a new contractor, there was a new chairman of the board who deferred the issue "indefinitely," Ezzell said.
Muscle Shoals was home to TVA's National Fertilizer Development Center and it was a critical outpost for its agricultural work. Between 1955 and 1961, TVA moved about 70 agricultural relations staff to Muscle Shoals.
But even if TVA had not given much thought to placing its headquarters in Knoxville, the state of Alabama was thinking about it.
State of Alabama v. Tennessee Valley Authority
In 1975, one year before TVA moved its staff from 25 disparate offices in downtown Knoxville into its twin office towers, state lawyers in Alabama began researching a way to sue TVA.
Alabama Attorney General Charles Graddick sued the utility in 1977, asserting it had violated the TVA Act by placing its headquarters somewhere other than Muscle Shoals.
Alabama scored an early victory. In 1979, U.S. District Judge Frank McFadden in Birmingham ordered TVA to move to Muscle Shoals. He prevented TVA from signing an office lease longer than a year in Knoxville or entering into long-term contracts in the city.
Graddick argued TVA had stripped Alabama's economy of thousands of jobs, millions in tax revenue and millions in employee pay. TVA's lawyers said Congress had known for nearly 50 years that TVA was headquartered in Knoxville and had not raised the issue. It also said TVA was active across its system, including in northern Alabama.
But in 1981, after TVA appealed the decision, the 5th U.S. Circuit Court of Appeals in New Orleans overruled McFadden, saying that TVA only needed a fixed address in Muscle Shoals to claim a "principle office" there. A small room in the National Fertilizer Development Center acted as this office.
Ezzell read aloud the Kingsport Times' take on the decision: "The TVA is one step closer to eliminating the ridiculous claim by the state of Alabama that TVA must move its headquarters to Muscle Shoals. No thought was given to TVA consumers who would have to bear the substantial cost of the move."
The state of Alabama appealed the decision to the Supreme Court. On Oct. 5, 1981, the Supreme Court declined to take the case, upholding the circuit court's ruling.
The Knoxville News Sentinel that day bore the front page headline, "Supreme Court Lets TVA Stay." At the time, TVA's board and around 5,000 of its employees lived in the Knoxville region.
Assistant Alabama District Attorney Ed Carnes said, "This was a noble effort, but we lost. This is it – finally and conclusively."
Headlines in Alabama struck a different tone. The Birmingham Post-Herald read: "State loses TVA offices plea." The Opelika-Auburn News sounded more resigned: "TVA Headquarters to Remain in Knoxville"
TVA headquarters a 'non-issue' today
Today, the tug-of-war that pitted Alabama against TVA is a "non-issue," Ezzell said.
"Every once in a while, and it's rare, I'll hear somebody say, 'You know that the headquarters was supposed to be in Alabama, don't cha?'" Ezzell said. "It's always just a chuckle."
Though TVA's administrative headquarters remains in Knoxville, its board meets quarterly all across the seven-state Tennessee Valley, including the Muscle Shoals region. TVA has several hubs elsewhere, including a power operations hub in Chattanooga and the agricultural hub in Northern Alabama.
When asked what kind of advantage it was to Knox News that the massive entity is stationed in Knoxville, TVA staff looked blank and then offered, "You're more likely to see executives at events."
Like office spaces around the country, the pandemic dealt a blow to TVA's downtown headquarters. Only a fraction of its Knoxville employees now come to work in person each day.
TVA began subleasing its East Tower to the University of Tennessee and Knox County Schools for their administrative offices in 2020. Since then, one of the two towers has borne the UT logo and been called the "UT Tower."
Still, TVA's East Region, which includes Knoxville, is home to the bulk of its workforce. It includes:
4.2 million people
39 local power companies, including the Knoxville Utilities Board
Nine direct-serve industrial customers, including the Department of Energy
7,800 employees (out of 10,000 across TVA)
Over 12,000 megawatts of power generation, including Watts Bar and Sequoyah Nuclear Plants and Kingston coal plant
The utility is exploring options for leaving its massive office complex in downtown Chattanooga. Among the options for the complex, which contains 1.4 million square feet, are demolition or a sale.
Know Your Knox answers your burning questions about life in Knoxville. Want your question answered? Email [email protected].
Daniel Dassow is a growth and development reporter focused on technology and energy. Phone 423-637-0878. Email [email protected].
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This article originally appeared on Knoxville News Sentinel: Supreme Court settled TVA Knoxville headquarter fight | Know Your Knox