United States v. City of Fulton

Background

The dispute involved the Secretary of Energy, the Southwestern Power Administration (a federal power agency), and three Missouri cities that buy federal hydroelectric power. SWPA proposed large rate increases after its costs rose. The Assistant Secretary approved new rates on an interim basis effective April 1, 1979. The Federal Energy Regulatory Commission later reviewed those rates, at one point disapproving and then reconfirming them through September 30, 1982. The cities paid the higher bills and sued to recover the amounts charged during the interim period. Lower courts sided with the cities, but the matter reached this Court.

Reasoning

The Court asked whether the Flood Control Act or the cities’ contracts clearly forbid making rates effective before final administrative review. It found the statute and contract language ambiguous on that point. The Court upheld the agency’s long-standing practice of allowing interim rates because it reasonably balanced two goals: keeping power affordable for customers and letting the Government recover its costs. The Court noted that interim approval included protections—public notice, administrative review, and refunds with interest if final review found rates too high—and that Congress left procedural details to the agencies.

Real world impact

The decision means federal power agencies may put rate increases into effect on an interim basis while higher-level review continues. That allows the Government to collect necessary funds faster during periods of rising costs. Consumers may face earlier higher bills, but may receive refunds with interest if final review finds the interim rates excessive. The Court reversed the lower-court judgment for the cities.