What Is the ''Mobile-Sierra Doctrine'' ?
The Mobile-Sierra doctrine is derived from the Supreme Court's companion cases United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332, 76 S.Ct. 373, 100 L.Ed. 373 (1956), and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348, 76 S.Ct. 368, 100 L.Ed. 388 (1956).
"Under the Mobile-Sierra doctrine Federal Energy Regulatory Commission (“FERC”) may abrogate or modify freely negotiated private contracts that set firm rates or establish a specific methodology for setting the rates for service ... only if required by the public interest." Atl. City Elec. Co. v. FERC, 295 F.3d 1, 14 (D.C.Cir.2002) (citing Texaco Inc. v. FERC, 148 F.3d 1091, 1095 (D.C.Cir.1998))
The doctrine requires FERC to "presume that the rate set out in a freely negotiated ... contract meets the `just and reasonable' requirement imposed by law. The presumption may be overcome only if FERC concludes that the contract seriously harms the public interest." Morgan Stanley Capital Group Inc. v. Pub. Util. Dist. No. 1 of Snohomish County, U.S. 128 S.Ct. 2733, 2736, L.Ed.2d (2008).
Generally, this requires "a finding that the existing rate `might impair the financial ability of [a] public utility to continue its service,' or that the rate would `cast upon other consumers an excessive burden, or be unduly discriminatory,' [or that there are] other `circumstances of unequivocal public necessity.' " Wis. Pub. Power, 493 F.3d at 271 (quoting Fed. Power Comm'n v. Sierra Pac. Power Co., 350 U.S. 348, 355, 76 S.Ct. 368, 100 L.Ed. 388 (1956); Permian Basin Area Rate Cases, 390 U.S. 747, 822, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968)).