In 1979, the Southwestern Power Administration, a federal regulatory body acting on behalf of the Secretary of Energy, increased the cost of electricity generated by federally owned dams under its control. The price hike was initially implemented on an interim basis, and three years later, after furher review, the new rates were made permanent. A group of cities that purchased power from the dams filed suit to recover the extra fees it had paid before the interim rates were made final, claiming that Section 5 of the Flood Control Act of 1944 prohibited the imposition of interim fees. The Act stated that new rates would "become effective upon confirmation and approval by the Secretary (of Energy)." The cities asserted that the rates, while in their interim phase, had not yet received "confirmation and approval" from the Secretary and could therefore not be legally implemented.
The Court of Claims sided with the cities, holding that the new rates could only be charged once they received final approval from the Secretary. The Court of Appeals for the Federal Circuit affirmed.
Can the Secretary of Energy or his delegates impose new hydro-electricity prices on an interim basis under Section 5 of the Flood Control Act of 1944?
Yes. In an opinion delivered by Justice Thurgood Marshall, the Supreme Court unanimously held that the Secretary of Energy could impose rate hikes on an interim basis without violating the Act. The Court found that the language of the Act and its legislative history did not conclusively show whether Congress intended the Secretary to impose rate hikes on an interim basis. The Secretary's decision, therefore, only needed to be a reasonable attempt to balance the competing interests in the act: preventing unnecessarily high charges to customers while still allowing the dams to be self-sufficient (and therefore not a burden on government resources). Justice Marshall wrote "Interim ratesetting appears well suited to accommodating that dual goal... [and therefore] the procedures established by the Secretary to exercise his powers under the Flood Control Act both are within his delegated authority and constitute a reasonable accommodation of the policies underlying that Act." The Court further found that the rate increases were consistent with the cities' electricity contracts, which were based largely on the language of the Act.
Decisions
Decision: 9 votes for United States, 0 vote(s) against Legal provision: 16 U.S.C. 825
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Full Opinion by Justice Thurgood Marshall
