A federal court ruling that would have forced Metro and seven Washington area cities and counties to return $2 million in Metro construction money to Fairfax City was overturned yesterday by the 4th U. S. Circuit Court of Appeals in Richmond.

Metro officials had feared that, had the ruling by Alexandria U.S. District Judge Oren R. Lewis been sustained, a highly divisive precedent would have been in place to threaten Metro's sometimes fragile regional coalition.

Lewis had held that when Metro's regional partners negotiated an interim financial agreement to continue construction in 1976, it had in effect abandoned Fairfax City because the station closest to Fairfax city was not funded in the agreement.

Metro countered that such was not the case. The station in question - Vienna, to be located at the intersection of Interstate Rte. 66 and Nutley Road - was at that time under challenge as part of a federally mandated restudy of Metro.

Furthermore, Metro argued, the line to the Vienna station was to be built from Fairfax Drive and North Glebe Road in Arlington to Vienna in the Rte. 66 median. But the construction of Rte. 66 inside the Capital Beltway was itself under legal challenge at that time, so there was no certainty that the right-of-way would be available.

A no time, Metro and its partners said, has there been any lessening of the regional commitment to build the full 100-mile system including the Vienna station. The interim agreement - which will pay for completing 60 miles - was merely a tool to keep the Metro program moving.

Appellate Court Judge Donald S. Russell bluntly rejected Fairfax City's claims and Judge Lewis' reasoning. "The record," Russell wrote, "is wholly insufficient to support a finding of an unequivocal repudiation or abandonment by the defendants [Metro and the seven cities and counties] of the plan to construct the full length" of the route to Vienna.

Russell barely mentioned one of the key points that was heard when the suit was argued before Judge Lewis. That point was that Fairfax City never signed the interim agreement, although it was signed by the other Metro partners: the District of Columbia, Prince George's, Montgomery, Arlington and Fairfax counties, Alexandria and Falls Church.

Russell dismissed it in a footnote: "Finally, in order to proceed with those portions of the system then available for construction it was agreed to eliminate the city of Fairfax as a signatory of the plan."

Events of the past year also played a part in the Court of Appeals decision. The restudy of the Metro system has been completed, a financial plan has been proposed to pay for completion of the entire system including the Vienna station, and construction has started on I-66 inside the Beltway.

"Under such circumstances," Russell wrote, "it cannot be said the defendants . . . have abandoned the firm intention to complete the construction of a 100-mile Metro system for the Washington area . . ."

Neither Fairfax City nor Metro offithey had read the opinion.

It comes at a time when Fairfax City is giving signs of greater participation in regional affairs.

The city has withdrawn from contributing to Metro's operating costs and has started its own subsidized bus service into Washington. However, quiet discussions have been held between Fairfax city and other Northern Virginia officials about ways for Fairfax City in return to the Metro partnership. The lawsuit was clearly one of the major stumbling blocks in those discussions.