Clark v. Duke: The Struggle for Water Rights and the Future of North Carolina’s Public Energy Policy

Abstract

[ILLUSTRATION OMITTED] Democracy in government is almost impossible until we have a democracy in industrialism to the extent of public ownership of all the great agencies such as transportation by rail, water power, coal mines, and oil wells ... Public ownership of these utilities will insure democracy in government....--Walter Clark, North Carolina Supreme Court Chief Justice Leading North Carolinians, among them James B. Duke, the fortune behind the American Tobacco and Southern Power companies, crowded into a Raleigh courtroom in November 1920. The state's Corporation Commission was considering the Southern Power Company's application for a rate increase--the first application of its kind by a North Carolina public energy corporation, and the first decision by the Corporation Commission on electrical rates. That North Carolina's Corporation Commission would consider, and later exercise, regulatory control over the state's largest power company--owned by the South's wealthiest industrialist--would not have been possible less than a year earlier. (1) In the first quarter of the twentieth century, the state's Democratic party hindered numerous political reforms in North Carolina--from the enactment of women's suffrage to the regulation of electrical rates charged by energy companies. Nevertheless, during the second decade of the twentieth century, North Carolina saw significant reform to its public energy policy as the state's water power resources shifted from a laissez-faire public energy market to a corporate monopoly that was held in check--at least in theory--by the Corporation Commission. In 1898, the Democratic party's White Supremacy Campaign crushed the half decade-long fusion of Populists and Republicans. With the Populists defeated, and many finding their way back into a conservative Democratic party, no grassroots movement stood in the way of the Southern Power Company's bid for electrical control. Despite a 1913 grant of statutory authority to police regulatory rates, the state's Corporation Commission cautiously avoided conflict, reluctant to use its authoritative power. As a result, only the state's court system could prevent the company's dictation of the state's public energy policy. At the head of the court was North Carolina's patrician Populist (a registered Democrat) and Supreme Court Chief Justice Walter Clark, whose outspokenness blurred the lines between jurist and progressive reformer. Clark had advocated for full public ownership of public resources in popular addresses and national journals. For Clark, mere regulatory control of a corporate monopoly on North Carolina's water resources, and the energy acquired through their use, was an unnecessary compromise that fell short of the ideal. To achieve his goals of public ownership, Clark pitted himself against Duke in editorials and courtrooms. GAS, NO SOOT, NO DIRT As the electrification of North Carolina progressed in the early twentieth century, water was regarded as a valuable energy source--something that was cheap, abundant, and renewable. Clark wrote on the potential of hydropower, There will be no coal to go in, no ashes to go out, no gas, no soot, no dirt. Many local newspapers were similarly optimistic, reporting that electricity derived from hydropower would soon replace steam as the main energy source for railroads, mills, cities, and homes, and lauding water power investors. But as Raleigh's News and Observer lamented, the nineteenth century had lacked men of business sense with the necessary capital to establish large plants and fully utilize the water power that has so long swept unused into the sea. (2) Change seemed possible in 1899, when North Carolina published results from its first large-scale analysis of the State's ability to harness water power in the North Carolina Geological Survey's Bulletin No. 8. Inquirers--investors and those contemplating the development of water power in the near future--were rewarded with pre-publication copies of the report. …