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U.S. Supreme Court

United States v. City of Fulton, 475 U.S. 657 (1986)

United States v. City of Fulton

No. 84-1725

Argued January 21, 1986

Decided April 7, 1986

475 U.S. 657


Section 5 of the Flood Control Act of 1944 (Act) authorizes the Secretary of Energy (Secretary), acting through Administrators of regional Power Marketing Administrations, to fix rates for the sale of hydroelectric power generated at federally owned dams, and provides that "the rate schedules [shall] become effective upon confirmation and approval by the Secretary." Pursuant to the Secretary's regulatory scheme. new schedules increasing rates were developed by the Southwestern Power Administration after public participation, were approved and placed into effect on an interim basis, effective April 1, 1979, and were ultimately approved on a final basis by the Federal Energy Regulatory Commission (the Secretary's delegate) in January, 1982. Respondent cities, who had entered into power purchase contracts with the Government, paid the new increased rates and then filed suit in the Court of Claims to recover money paid pursuant to the interim rate increase between April, 1979, and January, 1982, contending that the Secretary violated § 5 of the Act and the terms of the power purchase contracts by putting the new rates into effect on an interim basis. The contracts in question provided that rates could be increased or modified, and that such rates would become effective

"on the effective date specified in the order of the Federal Power Commission [a predecessor of the Secretary with respect to § 5] containing such confirmation and approval."

The Court of Claims ruled for respondents on the question of liability (the subsequently organized Claims Court later entered judgment in their favor), and the Court of Appeals for the Federal Circuit affirmed.

Held: Neither the Act nor the power purchase contracts at issue preclude the Secretary from making hydroelectric power rates effective upon interim confirmation and approval, even though further administrative review is still pending. Pp. 475 U. S. 665-672.

(a) Although the above-quoted language of § 5 of the Act does not definitively speak to the question of interim rates, the relevant federal agencies' practice (at least since the mid-1970's) of allowing rates to become effective after interim confirmation and approval is as consistent with the statutory language as is respondents' preferred arrangement. While the legislative history of the Act does not resolve the ambiguity, the Secretary's interim ratesetting practice is a reasonable accommodation chanrobles.com-red

Page 475 U. S. 658

of the Act's conflicting policies of protecting consumers by ensuring that power be sold at the lowest possible rates consistent with sound business principles and of protecting the public fisc by ensuring that federal hydroelectric programs recover their own costs and do not require subsidies from the federal treasury. The Secretary's plan is not inconsistent with the congressional scheme, as respondents contend, on the ground that the plan's refund process if interim rates are ultimately found to be too high offers insufficient protection because refunds may not successfully trickle down to the same ultimate consumers who immediately bore the excessive charges. FPC v. Tennessee Gas Transmission Co., 371 U. S. 145, distinguished. Pp. 475 U. S. 666-671.

(b) Nor do interim rate increases violate the terms of respondents' power purchase contracts. The contracts contain no language unambiguously barring the imposition of interim rates. Moreover, respondents presented no evidence demonstrating that the parties intended the contractual language, which tracks that of the statute, to do anything other than incorporate the statute's procedural requirements. Pp. 475 U. S. 671-672.

751 F.2d 1255, reversed.

MARSHALL, J., delivered the opinion for a unanimous Court.


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