297 U.S. 288 (1936), argued 19–20 Dec. 1935, decided 17 Feb. 1936 by vote of 8 to 1; Hughes for the Court, Brandeis concurring, McReynolds in dissent. Claiming that the Tennessee Valley Authority Act was unconstitutional, minority shareholders of a utility company sought to annul their board's agreement to purchase electricity from the T.V.A. The Court upheld the act and found Congress had authority to construct dams for national defense and improve interstate commerce. The sale of electricity—a byproduct—was authorized by Article IV, section 3 of the Constitution, granting the federal government power to sell property it lawfully acquires.
Justice Louis Brandeis believed the constitutional question should never have been addressed because the case involved a simple internal dispute among shareholders. He maintained that the Court should avoid making decisions on the constitutionality of legislation, and the case is remembered for his list of guidelines—the “Ashwander rules”: (1) The Court will not determine the constitutionality of legislation in nonadversary proceedings; (2) it will not anticipate a question of constitutional law; (3) it will not formulate a rule of constitutional law broader than needed; (4) it will not rule on constitutionality if there is another ground for deciding the case; (5) it will not determine a statute's validity unless the person complaining has been injured by it; (6) it will not invalidate a statute at the instance of persons who have taken advantage of its benefits; and (7) the Court will always ascertain whether any reasonable interpretation of a statute will allow it to avoid the constitutional issue.