United States v. City of Fulton
| Decision Date | 07 April 1986 |
| Docket Number | No. 84-1725,84-1725 |
| Citation | 475 U.S. 657,106 S.Ct. 1422,89 L.Ed.2d 661 |
| Parties | UNITED STATES, Petitioner v. CITY OF FULTON et al |
| Court | U.S. Supreme Court |
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. 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 accommoda- tion 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, 83 S.Ct. 211, 9 L.Ed.2d 199, distinguished. Pp. 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. 671-672.
751 F.2d 1255, (Fed.Cir.1985), reversed.
Andrew J. Pincus, Washington, D.C., for petitioner.
Charles F. Wheatley, Jr., Washington, D.C., for respondents.
This case presents the question whether the Secretary of Energy violated § 5 of the Flood Control Act of 1944, 16 U.S.C. § 825s, or his contractual obligations by putting rates for hydroelectric power generated at federally owned dams into effect on an interim basis pending further review by the Federal Energy Regulatory Commission. The Court of Claims held that the Secretary's actions exceeded his contractual and statutory authority, and granted summary judgment to respondents. 230 Ct.Cl. 635, 680 F.2d 115 (1982). After further proceedings, the Court of Appeals for the Federal Circuit affirmed, finding that the Court of Claims' decision was the law of the case and correct on the merits. 751 F.2d 1255 (1985). We granted certiorari, 473 U.S. 903, 105 S.Ct. 3523, 87 L.Ed.2d 649 (1985), and we now reverse.
In the Flood Control Act, Congress authorized the construction of a number of dam and reservoir projects, operated by the Army Corps of Engineers and producing large blocks of hydroelectric power. Congress had granted authority for several such projects before 1944, but had enacted no "general law governing the sale and distribution of power" so generated. S.Rep. No. 1030, 78th Cong., 2d Sess., 3 (1944). Intending "to place by law the responsibility for disposal of such power in an existing Federal agency," ibid., Congress provided:
Ch. 665, § 5, 58 Stat. 887, 890 (emphasis added) (codified as amended at 16 U.S.C. § 825s).
In order to sell the hydroelectric power turned over to him under that statute, the Secretary of the Interior created what eventually became five regional Power Marketing Administrations (PMAs). The PMA Administrators were assigned the responsibility of preparing rate schedules and the supporting accounting and cost allocation studies. There were no formal procedures for public participation in PMA preparation of rate schedules, although some of the PMAs (not including the Southwestern Power Administration (SWPA), immediately concerned in this suit) began to adopt such procedures starting in late 1977. See 45 Fed.Reg. 86976 (1980).
When determining whether to approve a PMA's proposed rates, the Federal Power Commission utilized its "special expertise" and its "independent judgment" in measuring the proposal against the statutory standards. Bonneville Power Administration, 34 F.P.C. 1462, 1465 (1965).1 Because the Flood Control Act imposed no particular procedures for Commission review of rate proposals, the Commission was largely free to design its own. See Southeastern Power Administration, 54 F.P.C. 1631, 1632, n. (1975). It developed a practice of affording notice and comment to customers and other affected parties when the Secretary submitted a rate schedule, and granting requests for oral argument or public hearing on a case-by-case basis.
The parties differ as to the degree to which Commission practice included the use of interim rates. The Solicitor General cites several instances in which the Commission did implement such rates; respondents answer that those instances were both isolated and unrepresentative. Our own examination of the historical record reveals that beginning in the 1970's, the Commission announced its intention to examine PMA rate proposals "on the basis of evidentiary records which are developed during the course of [adjudicatory] public hearings," Bonneville Power Administration, 54 F.P.C. 808, 810 (1975). It provided for full administrative hearings with cross-examination of witnesses.2 At the same time, the Commission adopted, in some cases, the practice of examining rates submitted to it by the Secretary and, if the rates appeared to lie within the statutory boundaries, approving them on an interim basis pending the formal hearing. It required that the PMA refund any overcharges with interest if the Commission found after a hearing that an approved interim rate had been too high. See Southeastern Power Administration, 54 F.P.C. 3 (1975); Bonneville Power Administration, 52 F.P.C. 1912 (1974); see also Bonneville Power Administration, 58 F.P.C. 2498 (1977) (Federal Columbia River Transmission System Act). The Department of the Interior initially took the view that full evidentiary hearings were inappropriate under the Flood Control Act, and that if such hearings were to be held the Commission had no power to approve rates on an interim basis. The Commission, however, explicitly rejected that position. Southeastern Power Administration, supra, at 1632-1633; see also Bonneville Power Administration, 59 F.P.C. 1194, 1195 (1977) (Federal Columbia River Transmission System Act). The Interior Department then acquiesced in the Commission's view. See ibid.
This regulatory scheme was upset in 1977, with the passage of the Department of Energy Organization Act, 42 U.S.C. § 7101 et seq. (DOE Act). That statute, designed to "assur[e] coordinated and effective administration of Federal energy policy and programs," § 7112, eliminated the Secretary of the Interior's role in hydroelectric power...
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