NRG Power Marketing, LLC v. Maine Public Utilities Commission

The energy grid in New England was historically unstable, a problem that the Federal Energy Commission (FERC) (defendant), electricity providers, generators, and customers had long tried to resolve. In 2003 FERC directed the operator of the region’s transmission system to develop a framework for setting prices for various subregions in New England. The following year, the operator proposed a market structure, which was objected to by a number of parties. Ultimately, a settlement agreement was reached between 115 parties, with only eight remaining in opposition. Section 4.C of the settlement agreement provided that challenges to certain payments and prices would be adjudicated under the public-interest standard set forth in the Supreme Court’s decisions in United Gas Pipe Line Co. v. Mobile Gas Service Corp. and Federal Power Commission v. Sierra Pacific Power Co., known as the Mobile-Sierra doctrine. Under this standard, as set forth in § 4.C, FERC had to presume that rates freely negotiated in a wholesale energy contract are just and reasonable as required under the Federal Power Act (FPA). FERC approved the settlement agreement, including § 4.C. Six of the eight nonparty objectors (plaintiffs) challenged FERC’s approval of the settlement agreement in the United States Court of Appeals for the District of Columbia Circuit. The objectors prevailed in their challenge to § 4.C, with the court of appeals holding that Mobile-Sierra did not apply to challenges brought by noncontracting parties. The United States Supreme Court granted review.