Title:

Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish County, Washington, et al. (06-1457)

American Electric Power Service Corporation, et al. v. Public Utility District No. 1 of Snohomish County, Washington, et al. (06-1462)

Subject:

Administrative Law, Energy Contracts, FERC, Oil & Gas Law

Question:

In 06-1457:

• Whether the Ninth Circuit erred by failing to abide by the Supreme Court's decisions in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956), and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956), which preclude the Federal Energy Regulatory Commission from retroactively undoing valid, bilaterally negotiated, arms-length wholesale energy contracts that have, at most, minimal impact on retail rates.

In 06-1462:

The Federal Power Act ("FPA"), 16 U.S.C. sections 791a et seq., sets forth the standards by which the Federal Energy Regulatory Commission ("FERC") regulates wholesale energy rates. In United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956), and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956), the Supreme Court determined that, under the FPA, FERC may undo a valid wholesale energy contract only in the extraordinary circumstance when the contract is contrary to the public interest. In conflict with Mobile and Sierra, and with decisions of the D.C. and First Circuits, the Ninth Circuit in the decision below held that FERC may nullify voluntary wholesale energy contracts—absent the requisite showing of public necessity—if FERC determines in hindsight that the negotiated rate is unreasonable or that, absent the challenged contracts, retail rates for energy would be slightly lower. Thus, the petition presents the following questions:

• Whether the Ninth Circuit misapplied the Supreme Court's holdings in Mobile and Sierra and created conflicts with the D.C. and First Circuits when it reversed FERC's decision to uphold valid wholesale energy contracts absent any showing that the public interest required their abrogation.
• Whether the Ninth Circuit misapplied the Mobile-Sierra doctrine by determining that the Mobile-Sierra public interest criteria apply only to sellers, but not to buyers, under wholesale power contracts, in direct conflict with Mobile, Sierra, and the decisions of other circuits.

Decisions:

• U.S. Court of Appeals - 9th Circuit Opinion Filed: December 19, 2006
• United States Supreme Court, Cert. Granted: September 25, 2007

Resources:

• Docket Sheet From the U.S. Supreme Court.
• Northwestern University - Medill School of Journalism: On the Docket