45 F.4th 115
D.C. Cir.2022Background
- Wabash Valley Power Association is a generation/transmission cooperative owned by 25 member utilities; its board acts by majority vote and each member has one board seat.
- Wabash sells power to retail-serving members under near-identical long-term contracts (1977/2006 and new 2020 contracts); rates are set by reference to a Formulary Rate Tariff.
- The 2020 contracts added Section 22, which purports to subject any changes to the Formulary Rate Tariff to the Mobile–Sierra public‑interest presumption that contract rates are "just and reasonable."
- Tipmont (a non‑executing member) protested to FERC, arguing the Formulary Rate Tariff is a generally applicable tariff, not a bilaterally negotiated contract rate, so Mobile–Sierra should not apply.
- FERC agreed, concluding the Formulary Rate Tariff is set unilaterally by Wabash’s board (not individually negotiated), declined to apply the Mobile–Sierra presumption, and rejected the 2020 contracts; Wabash petitioned for review.
- The D.C. Circuit reviewed whether FERC’s interpretation of the contracts (that the tariff is generally applicable and not entitled to the Mobile–Sierra presumption) was reasonable and upheld FERC.
Issues
| Issue | Wabash's Argument | FERC/Tipmont's Argument | Held |
|---|---|---|---|
| Whether rates set under the Formulary Rate Tariff are "contractually negotiated" so the Mobile–Sierra (public‑interest) presumption applies | Section 22 properly binds tariff changes to Mobile–Sierra; members negotiated and control Wabash, so contracts deserve the presumption | The tariff is generally applicable and set by the board unilaterally; individual members lack bargaining power and contracts are standardized, so Mobile–Sierra does not apply | Court upheld FERC: rates are more like unilateral tariffs than bilateral negotiated rates; Mobile–Sierra presumption does not apply |
| Whether the standardized/form nature of the contracts automatically triggers Mobile–Sierra | Freely negotiated contracts can be form contracts and still receive the presumption | Standardized, non‑individualized contracts plus limited member bargaining power weigh against the presumption | Court rejected a per se rule for form contracts but found here the standardized terms and weak individual bargaining supported FERC’s conclusion |
Key Cases Cited
- United Gas Pipe Line Co. v. Mobile Gas Serv. Corp., 350 U.S. 332 (1956) (establishes Mobile–Sierra public‑interest presumption for freely negotiated wholesale‑energy contracts)
- FPC v. Sierra Power Co., 350 U.S. 348 (1956) (companion Mobile–Sierra decision applying presumption)
- Morgan Stanley Capital Group Inc. v. Public Utility Dist. No. 1, 554 U.S. 527 (2008) (clarifies standards: ordinary just‑and‑reasonable review for tariffs vs. Mobile–Sierra for contracts)
- NRG Power Mktg., LLC v. Maine Pub. Utils. Comm’n, 558 U.S. 165 (2010) (distinguishes contract rates from generally applicable prescriptions)
- United Gas Pipe Line Co. v. Memphis Light, Gas & Water Div., 358 U.S. 103 (1958) (holding that paying the seller’s filed tariff without more does not convert a tariff into a contract rate)
- Dominion Transmission, Inc. v. FERC, 533 F.3d 845 (D.C. Cir. 2008) (contract must set firm rates or a specific methodology to trigger Mobile–Sierra)
- Okla. Gas & Elec. Co. v. FERC, 827 F.3d 75 (D.C. Cir. 2016) (Mobile–Sierra applies only where parties had adversarial negotiations and independent interests)
- Union Pac. Fuels, Inc. v. FERC, 129 F.3d 157 (D.C. Cir. 1997) (interpretation of whether Mobile–Sierra applies is a contract‑interpretation question)