F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

T H E P E O P L E O F T H E S T A T E O F C A L I F O R

N I A , E X R

E L

. K A M A L A D

. H A R R I S , A T T O R

N E Y G E N E R A L ; P U B L I C U T I L I T I E S C O M M I S S I O N O F
T H E S T A T E O F C A L I F O R N I A ; S O U T H E R

N C A L I F O R

N I A E D I S O N C O ., Petitioners
,

v

.

F E D E R A L E N E R

G Y R E G U L A T O R Y C O M M I S S I O N , Respondent

,

C A R G I L L P O W

E R M A R K E T S , L L C; E L P A S O M A

R K E T I N G C O M P A

N Y , L L C; E X E L O N G E

N E R A T I O N C O M P A

N Y , L L C; I DACORP E N E R G Y S E R V I C E S C O M P A N Y ; I D A H O P O W

E R C O M P A N Y ; T A L E N M O N T A

N A , L L C; T A L E N E N E R G Y M A R K E T I N G , L L C; P U B L I C S E R

V I C E C O M P A

N Y O F C O L O R A D O ; S H E L L E N E R

G Y N O R T H A M E R I C A (US), L .P.; T R

A N S C A N A D A E N E R G Y L T D ., R espondents-Intervenors

. N o. 13-71276

F ERC No. EL 01-10-076S T A T E O F C A L I F O R N I A V

. F ERC 2

T H E C I T Y O F S E A T T L E , W A S H I N G T O N , P etitioner
,

P O R T L A N D G E N E R A L E L E C T R

I C C O M P A N Y ; D Y N E G Y P O W E R M A R K E T I N G ; MPS M E R

C H A N T S E R V I C E S , I N C ; MPS C A

N A D A C O R

P ., Intervenors
,

v

.

F E D E R A L E N E R

G Y R E G U L A T O R Y C O M M I S S I O N , Respondent

,

T A L E N M O N T A

N A , L L C; T A L E

N E N E R G Y M A R K E T I N G , L L C; T R A N S A L T A E N E R

G Y M A R K E T I N G (US), I NC.; T R A N S A L T A E N E R

G Y M A R K E T I N G (C A L I F O R

N I A ), I N C .; E L P A S O M A

R K E T I N G C O M P A

N Y , L L C, R espondents-Intervenors

. N o. 13-71487

F ERC No. EL 01-10-076

OPI NI ON

O n Petition for Review of an Order of the F ederal Energ

y Reg ulatory

Commission

Arg ued and Submitted J une 16, 2015—San F rancisco, California

F iled December 17, 2015S T A T E O F C A L I F O R N I A V

. F ERC 3

B efore: Sidney

R. Thomas, Chief J udg e, and M. Marg aret McKeown and Richard R. Clifton, Circuit J udg es.

Opinion by

J udg e McKeown

SUMMARY *

F ederal Energy Regulatory Com m ission

The panel denied a petition for review from a decision o f the F ederal Energ y R e gu l atory Commission (“F ERC”) with respect to petitioners’ c laim that the Mobile-Sierra presumption, which requires F ERC to presume that t h e r a te set in a freely

neg otiated wholesale-energ y contract was just and reasonab l e , cannot a

pply to the spot sales at issue; a nd dismissed evidentiary

challeng es for lack of jurisdiction.

The panel held that there was jurisdi c t i o n to r eview F ERC’s decis i on to employ the Mobile-Sierra presumption in the class of contracts at issue because, purs u an t t o the inquiry in S t e a m boaters v. FERC
, 759 F .2d 1382 (9th Cir. 1985), the test for f

inal action unde r the F ederal Power A ct

was met. The panel held that it lacked jurisdiction to consider the individual evide n t i a ry restrictions r aised in these cases because they were interim ruling s whose consequences could not be determined with any finality at this juncture.

* T h is su m m ary co n stitu

tes n o part o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.S T A T E O F C A L I F O R N I A V

. F ERC 4

The panel h eld that F ERC reasonably applied the MobileSierra presumption to the c lass of contracts a t issue in these

cases.

COUNSEL

Kevin J

. McKeon (arg

ued), J udit h D

. Cassel, W h itney E. Sny der, Hawke McKeon & Snisca k L L P, Harrisburg

, Pennsy lvania; K a m ala D. Harris, Attorney General o f California, Mark B reckler, Chief Assistant Attorney General, Marti n Goy ette, Senior A ssistant Attorney General, San F rancisco, California; David M. Gustafson, Deputy Attorney General, Oakland, California, for Petitioner People o f the State of California ex rel

. K a m a la D. H arris, Attorney General.

Candace J

. Morey
, S a rah R. T homas, Public Utilities Commission of the State of California, San F rancisco, California; Paul B

. Mohler, L a w Offices of Pa u l B. Mohler, PL C, W a shing to n , D.C., for Petitioner Public Utilities Commission of the State of California.

Rex S. Heinke (arg

ued), Akin Gump S t rauss H auer & F eld L L P, L os Ang eles, California; J erry E. Rothrock, Moy ers Martin, L L P
, Tulsa, Oklahoma; Greg ory C. Narver, Seattle City Attorney ’s Office, S eattle, Washing ton, for Petitioner City o f Seattle.

David L

. Morenoff, Gene r a l Counsel, Robert H. Solomon, Solicitor, L o na T. Perry

(arg ued), Deputy Solicitor, Susanna Y. Chu, Attorney
, W ashing ton, D.C., for Respondent F ederal Energ y Reg ulatory

Commission.S T A T E O F C A L I F O R N I A V

. F ERC 5

L awrence G. A cker, Van Ness F e ldman, L L P, W ashing to n, D.C.; Rex B lackburn, B rian R. B u c k ham, I daho Power Company
, B oise, I daho, for Respondents-I ntervenors I daho Power Company

and I DACORP Energ y

Services Co.

F loy d L

. Norton, I V, Morg a n, L e w is & B ockius L L P, W a shing ton, DC, for Respondents-I ntervenors Carg ill Power Markets, L L C and Public Service Company of Colorado.

Andrea J

. Chambers, K atharine E. L eesman, B allard Spahr L L P, W ashing ton, D.C., for Respondent-I ntervenor E x e lon Generation Company , L L C.

J oseph B

. W i l l i a ms, Matthew D. Spohn, Ry an C. Norfolk, Norton Rose F u lbrig h t U S L L P, W ashing ton, D.C., for Respondent-I ntervenor El Paso Marketing Company , L L C.

J eff r e y D. W atkiss, McDermott W ill & Emery
, L L P, W a shing ton, D.C., for Respondent-I nterv e n o r Shell E n erg y North America (US), L .P.

Damien R. L y ster, Vinson & Elkins L L P, W ashing ton, D.C., for Respondents-I ntervenors TansAlta E n erg y Marketing (U.S.) I nc. and TransAlta Energ y Marketing (California) I nc.

Kenneth L

. Wiseman (arg ued), Mark F

. Sundback, Andrews Kurth, L L P
, W ashing ton, D.C., for Rrespondent-I ntervenor TransCanada Energ

y L td.S T A T E O F C A L I F O R N I A V

. F ERC 6

OP INION

McKEOW

N, Circuit J udg e:

These appeals a

re the latest in a series o f petitions that
stem from the energ y c r i s i s in California and other western

s tates in 2000 and 2001. The key issue we consider i s t h e applicability of t h e Mobile-Sierra doctrine, which requires the Fe d eral Energ y Reg ulatory Commission (“F ERC”) to “presume that the rate set o u t i n a freely neg otiated wholesale-energ

y contract meet s t he ‘just and reasonable’ requirement” imposed by law. Morgan Stanley Capital Grp., Inc. v. Pub. Util. Dist. No. 1 , 554 U.S. 527, 530 (2008).

B A C K G R O U N D

The circumstances of the California e n e r gy crisis a re detailed in numerous cases. 1 W e recount only the h istory that is relevant to these petitions.

After the California leg islature dereg ulated the electricity market in the m i d-1990s, “wholesale electricity prices sky rocketed.” Port of Seattle v. FERC
, 499 F .3d 1016, 1022 (9th Cir. 2 007). Aver a ge r ates soared in the California a nd Pacific Northwest short-term supply markets (also known a s “spot markets”). Id. a t 1022–23. The spot markets in this

case were somewhat unique in th e p a r ticular way that rates were set:

1 S ee, e.g

. , Po r t o

f S ea t tle v. FERC , 4 9 9 F.3 d 10 1 6
, 1 02 2

– 2 6 (9 th Cir. 2 0 0 7 ); Pu b

. Utils. Co mm’n of S ta te o f C a l. v

. F E RC
, 4 6 2 F .3 d 1 0 2 7
, 1 0 3 6

– 4 4 (9 t

h Cir. 2 0 0 6 ) (“

Pu b

. Utils. Co mm’n ”); Bo n n eville Po wer Ad min

. v. FERC
, 4 2 2 F.3 d 9 0 8
, 9 10

– 1 4 ( 9 t h Cir. 2 0 0 5 ); Ca l

. ex rel. Lo ckyer v. FERC , 3 8 3 F.3 d 1 0 0 6 , 1 00 8 –1 1 (9 th Cir. 2 0 0 4 ) (“

Lo ckyer ”).S T A T E O F C A L I F O R N I A V

. F ERC 7

Unlike the Califo r n ia spot market, which operated thr o u g h a c e n t r a l i z ed power

ex c hang e using a central cleari n g p rice, the Pacific Northwest spot market operated
t h r o u g h b i l a t e r a l c o n t r a c t s n e g o t i a t e d i n dependently between buy ers and sellers, without a central clearing price. Most of these
contracts were entered into under the terms o f the W estern Sy stems P ower Pool (“W SPP”) Ag reement, a standard form contract for electricity sales.

Id. at 1 023 (citation omitted). These r ates became the subject of an investig ation before F E RC.

Under the F ederal Power Act (“F PA”), the rates charg ed by a public u tility must be “just and reasonable, and a ny such
rate or c harg e that is not just and r e a s o n a b le is hereby declared to be unlawful.” 1 6 U .S.C. § 824d(a). Section 206 of the F PA g ives F ERC the authority

, on its own initiative o r upon filing o f a complaint, to investig ate whether a particular
rate is “just and r easonable.” Po rt of Seattle

, 4 99 F

. 3d at 1023. I f F ERC finds a rate “ unjust, unrea s o n able, unduly discriminatory or p r eferential,” it must determine a just a nd reasonable rate and order that r a t e to b e “observed and in forc e

. ” I d

. (citing 1 6 U.S.C. § 824e(a)). F ERC may also order sellers to pay refunds to t h o s e entities that boug ht
energ y at the unlawful rate. I

d. (citing 16 U.S.C. § 824e(b)). Such r efunds a

re limited to a fifteen-month period following the “refund effective date,” a date established by FE R C t hat
may be no earlier than the filing o f the compla i n t n or later than five months after the filing

. 16 U .S.C. § 824e(b). F E RC
may not order any refunds fo r the period before the refund effective date. Port of Seattle , 499 F .3d at 1023.S T A T E O F C A L I F O R N I A V

. F ERC 8

The p et itioners here challeng e several F ERC orders that were issued following our remand in Port of Seattle . I n Port

o f S eattle we r eviewed several c halleng es to F ERC’s d en i al of r e f unds to wholesale buy ers of e lectricity that purchased
energ y in the Pacific Northwest spot market at unusually hig h prices. W e ex p lained that F E RC e rred by initially ex cluding from the refund proceeding purchases made by the California Energ y Resources Scheduling (“CERS”) division of the California Department of W ater Resources, a nd t hat F E RC abused its discretion by d e n y ing potential relief for transactions involving energ y that was ultimate l y consumed in California. Id. at 1022, 1032–34.

W e also held that F ERC’s f ailure to consider evidence o f market manipulation w as arbitrary a n d capricious. Id. at 1034–36. I t appeared that “Pacific Northwest sellers were apparently involved in Enron’s m an ipulation” of western energ y markets.” Id. at 1035. As a consequence, F ERC h ad
to “consider the possibility that the Pacific N o r t h w est spot market was not

. . . functional and co mpetitive.” Id. On remand, FE R C w as instructed to ex amine the evidence o f market manipulation “in detail and account for i t in any future o rders reg arding the award or denial of refunds in the Pacific N orthwest p roceeding .” Id. at 1035–36. I f the record

was not sufficient to inform a re a s o n e d decision, w e noted that F ERC may “find it n ec e s sary to call for additional fact-finding

. ” Id. at 1036.

After the remand, F E RC proceeded to plan evidentiary hearing s. See Puget S

ound Energy, Inc. v. All Jurisdictional Sellers of Energy
, 137 F E RC ¶ 61,001 (Oct. 3, 2011). F o r the fir st time in the history of this proceeding

, F ERC took the position that it would invoke the Mobile-Sierra doct rine, under which the r ates set forth in “short-term bilateral powerS T A T E O F C A L I F O R N I A V

. F ERC 9

sales contracts” like these would b e p r e s umptively just a nd reasonable. Id. at paras. 20–21. The presumption could only be avoided or overcome if specific criteria were met, such a s “where it c an be shown that o n e p a r t y to a contract eng ag ed in such ex tensive unlawful market manipulation a s to alter the play ing field for contract neg otiations.” Id.

Adoption of the Mobile-Sierra p resumption carried implications for the scope of evidence that F ERC intended to permit in the proceeding

. Electricity buy ers would need to “demonstrate that a particular s e l ler eng ag ed in unlawful market activity in the spot mar k e t a n d that such unlawful activity direc t l y affected the particular c ontract or contracts to w h i ch the seller was a party .” Id. at para. 21. “[ G] eneral alleg ations of market dy sfunction” would be insufficie nt to avoid or o vercome the presu m p tion. Id. F ERC ex p lained that parties could submit evidenc e o f several specific violations that mig ht entitle them to refunds: (1) violation o f the W SPP Ag reement; (2) violation of the terms of a specific b i l ateral contract underly ing a p articular purchase of electricity ; or (3) certain other vio lations identified in a previous F ERC case. Id. at paras. 18–19.

According to F ERC, a m a rket-wide remedy would be inappropriate because the Pacific Northwest spot market operated solely throug h bilateral contracts. Id. at para. 24. These contracts disting uished the transactions from those conducted by Ca l i f

o r n ia’s centraliz ed power ex chang e, which operated throug h central c learing prices instead of neg otiated
contracts.

The California Parties a

nd S e a ttle requested rehearing a

nd

c halleng e d F ERC’s invocation of the M obile-Sie r r a presumption a

nd the scope of p e r m issible evidence. AS T A T E O F C A L I F O R N I A V

. F ERC 10

request for ex p edited treatment of the requests for rehearing initially went u nanswered b y the ag ency , and the proceeding continued. F ERC set a schedule for parties to present contract-specific refu n d c laims as a part of settlement procedures.

W h i l e the requests for rehearing remained pending a n d settlement a ctivity proceeded, F ERC f urther addressed the Mobile-Sierra presumption and t h e scope of the Pacific Northwest proceeding in another o r der. D rawing on M organ Stanley, which F ERC cited to support its invoca t i o n o f the Mobile-Sierra presumption, F ERC clarified th a t refund claimants may overcome the presumption “by presenting evidence that a particular contract rate imposes an e x cessive burden on consumers or seriously harms the public interest.” 141 F ERC ¶ 61,248 a t paras. 1
, 1 2 –15 (Dec. 21, 2012). F ERC acknowledg ed that it had spawne d c onfusion reg arding the scope of the p roceeding

, but c la i m e d t hat it had not intended to modify the law as summari z e d i n M organ Stanley . 141 F ERC ¶ 61,248, at paras. 12–14.

F ERC eventually denied the r e q u e s ts for rehearing a nd reaffirmed its application o f the Mobile-Sierra presumption. 143 F ERC ¶ 61,020 at para. 1 3 ( Ap r

. 5, 2013). I t also reaffirmed the li m i t s i t imposed on the scope of permissible evidence. I

d

. a t para. 23. These petitions for r eview followed.

W h ile these petitions were pending before us, the F E RC proceeding marched on. Phase I of the proceedi ng was directed to whether the parties made a sufficie n t s howing to avoid or overcome the M obile-Sierra presumption with respect to their particular contracts a nd whether they were entitle d to modification of their c ontracted rates. I fS T A T E O F C A L I F O R N I A V

. F ERC 11

necessary , Phase I I would address refund methodology

. F ollowing an initial decision on Phase I
, 146 F ERC ¶ 63,028 (Mar. 28, 2014), FE R C then ruled on ex ceptions to the d e cision, 151 F ERC ¶ 61,173 (May 22, 2015). FE R C affirmed some of the Admini s t r a tive L aw J udg e’s (“AL J ”) ruling s a nd reversed others, u ltimately remanding with instructions to the AL J to make additional find i n gs

. Id. at para. 3.

A N A L Y S I S

I. J U R I S D I C T I O N

W e first address o ur jurisdiction over these p etitions. Seattle and the Calif

o r nia Parties characteriz e their MobileSierra challeng e as purely l egal and ripe for immediate review. According to F ERC, the refund orders ar e n o t f inal reviewable actions. W e disag r ee with both sides in part.

Our jurisd i c t i o n is g overned by Section 313(b) of the F PA. 16 U.S.C. § 825 l ( b) (providing for review in the United States Court of Appeals of “an o r der issued by the Commission”). “Althoug h section 313(b) is not limited on its face to final orders,” we have joined other circuits in the view that “review under section 313(b) is limited to orders o f d e f i n i t i v e s u b s t a n t i v e i m pact, where judicial abstention would result in irreparable injury to a party .” Steamboaters v

. FERC
, 759 F .2d 1382, 1387 (9th Cir. 1 9 85) (citing Papago Tribal Util. Auth. v. FERC
, 628 F .2d 235, 238 (D.C. Cir. 1980) ( “ Papago ”)). Under St e a mboaters

, we ask first “whether the order is final; second, whether, i f unreviewed, it would inflict irreparable harm on the p arty seeking review; and third, whether judicial review at this stag e of the processS T A T E O F C A L I F O R N I A V

. F ERC 12

would invade the p rovince r e served to t h e d iscretion of the
ag ency .” Id. at 1387–88.

B e fore proceeding with the Steam b o aters inquiry

, we underscore that the petitions r a i s e t wo ty pes of issues. The
p e titioners’ threshold q

uestion is w hether F ERC p roperly invoked the Mobile-Sierra presumption. This challeng e does
not implicate the scope of admissible e vidence; the objection is to the u s e of the Mobile-Sierra doctrine to shape the proceeding at all. W e think o f this i s sue as a facial applicability question: Did F E R C a ppropriately invoke the Mobile-Sierra pre sumption under these circumstances? 2 Petitioners also challeng e the restrictions that F ERC imposed

on the evidentiary p roceeding

. They want to b e allowed to introduce evidence o f, a mong other thing s, reporting violations, violations of o b l i gations under the Uniform Commercial Code a

n d state contract l a w, and violations b y sellers that were not parties to the challeng ed contracts. W e think of this issue as a question of the scope of the evidentiary proceeding

.

W ith reg ard to the facial a pplicability issue, the c riteria o f Steamboaters are satisfied. F ERC’s decisi o n to adopt the presumption in the contex t o f short-term spot market

2 W e n ote th at th e q u estio n o f w h eth er Mo b ile- S i e r ra ap p lies at all ad m i ts o f b o th a f

acial ap p l icab ility an aly sis an d a co n tract- sp e c i fic, asap p lied an aly sis th at is m o re ap p ro p riate in in d iv id u al p ro ceed in g s b ef ore th e ag en cy

. T h is d istin ctio n b eco m es relev an t w h en w e tu rn to t h e leg al
q u estio n o f w h e t h er FERC’ s in terp retatio n o f th e “ j u st an d reaso n ab l e”
stan d ard is p erm issib le. FERC’ s ap plicatio n o f th e Mo b ile-S ierra d o ctrin e to a class o f co n tracts m ay b e reaso n ab le ev en if i t b eco m es u n reaso n ab le

w h en in d iv id u al p arties to a p ro ceed in g p ro d u ce ev id en ce th at u n d erm in es th e p resu m

p t io n

.S T A T E O F C A L I F O R N I A V

. F ERC 13

c o n t racts has been definitively resolved, and we therefor e have jurisdiction to review this final ag e ncy decision.

I n order a fter order, F E RC has n o t b u d ged from its position. F ERC’s response that the decision is not f i n a l, b ecause the parties can overcome the presumption, b e gs t h e question. Unless the presumption applies, ther e i s no leg al hurdle to overcome. T h e petitioners challeng e only the facial applicability o f the Mobile-Sierra presumption in a particular class of cases, not how F ERC w ill apply it in th e specific proceeding s before it. 3 As to the f acial applicability question, F ERC h a s made a final decision that plainly “affects the leg al
p o s i tioning of the parties.” City of Fremont v. FERC
, 336 F .3d 910, 914 (9th Cir. 2003).

The practical consequence of not accepting review a t this stag e is that, if F ERC is wrong about the applicability of the Mobile-Sierra doctrine, the remaining p roceeding s will be predicated on a faulty leg al g round. As in City of F remont , the Mobile-Sierra presumption “will b e treated as a benchmark” and petitioners face “ t h e uphill task” to

overcome it in their individual p roceeding s. Id. a t 914. These proceeding s, which have multiplied and taken y ears to arrive a t this stage , a re n o o r dinary proceeding s. T o refrain from reviewing F E R C ’ s f

a c i a l a p p l i c a b i l ity determination a

nd introduce a risk, h o wever slig ht, that F ERC would c hang e its invocation of Mobi l e- S i e rra , would b e to ig nore the g reater risks to the parties in these ong oing p roceeding s. W e take to heart that “ [ t] he reviewability of an o rder must

. . . be

3 T o th e ex ten t th at th ey ch allen g e in d iv id u alized d eterm in atio n s u n der th e Mo b ile-S ierra d o ctrin e, th o s e d eterm in atio n s h av e n o t y et b een m ad e

an d th ere w o u ld b e n o f

in al ag en cy

actio n to rev iew

.S T A T E O F C A L I F O R N I A V

. F ERC 14

determined by reference to its practical function a n d consequences.” Papago
, 628 F .2d at 239.

F inally

, the issue pre s e n t s a leg al question capable o f resolution by this court in a way that does not invad e the
ag ency ’s p rovince. Deciding this pure leg al issue in no way interferes with F ERC’s d iscretion to a ccept evidence in rebuttal in the remaining p r o ceeding s. See Cal. D ep’t of W ater Res. v. FERC
, 361 F

. 3d 51 7
, 5 20 (9th Cir. 2 004); Papago
, 628 F .2d a t 2 38. “[ I ] mmediate review o f the Commission’s determination will not disrupt the continuing proceeding

, nor w ill it raise the dang er o f multiple appellate proceeding s concerning identical issues.” Papago
, 628 F .2d at 245.

W e thus conclude that the test for f inal action under the F PA is met and that we have jurisdic t i o n to review F ERC’s decision to employ the Mobile-Sierra p r esumption in the class of contracts at issue here.

W h en it comes to the scope of the evidentiary proceeding

, however, the challeng ed o rders are preliminary and lack “definitive substantive impact .” S teamboaters

, 759 F .2d at 1387; see also FPC v. Metro. E d ison Co.
, 3 04 U.S. 375, 383–84 ( 1938) (noting that “affording opportunity for
constant de l ay s.

. . for the p urpose of reviewing mere procedural requirements or inte r l o cutory directions” would “do violence” to the F PA); Ci t i e s of Anaheim v. FERC
, 723 F .2d 656, 660 (9th Cir. 1984) ( stating that “procedural orders” a re not reviewable). The orders do n o t h ave the requisite “definitive character dealing with th e m e rits of a proceeding before the Commission” to support review under Section 3 13(b) of the F PA. ASARCO, I nc. v. FERC
, 777 F .2dS T A T E O F C A L I F O R N I A V

. F ERC 15

764, 771 (D.C. Cir. 1985) (quoting Metropolitan Edison Co.
, 304 U.S. at 384) (emphasis added).

F o r i n stance, F ERC has already shifted course on the “shape” of the proceeding in a way t h a t sug g e sts some elements o f its orders may not be sufficiently final for review. I n October 2011, F ERC articulated what evidence it would permit. 1 37 F E RC ¶ 61,001 ( Oct. 3, 2011). More than a y e ar later, in December 2012, F ERC refined its stateme nt of the
scope of the proceeding

, a ckn o wledg ing that confusion h ad resulted from the prior order. 141 F ERC ¶ 61,248 (Dec. 21, 2012). Sig nificantly

, it appears that despite arg uments raised b y t h e petitioners, at least some evidence of bad faith may have been admitted in the Phase I proceeding

.

W h ile some harm mig h t flow from proceeding under a flawed evidentiary f

ramework, see City of

Fremont
, 336 F .3d
at 9 1 4, the same r isk stems from any order setting boundaries for a hearing

. I t is not enoug h to overcome the lack o f finality o f these orders on the scope of the evidentiary proceeding s. The final order that r e s u l t s from the remand hearing will b e reviewable a nd, inde ed

, will admit of more effective review of the ev i dentiary decisions since the court will be a ble to review all of the evidence taken tog e ther. The individual evidentiary restrictions c halleng ed here are classic interim r uling s w hose consequence cannot b e determined with any finality at this juncture.

J udicial r eview of the evidentiary issues thus “properly follows the conclusion of the proceeding .” Papago
, 628 F .2d
at 240; see also Cities of Anaheim

, 723 F .2d a t 661. I n contrast, an interim or midstream d etermination on the scope of the evidentiary procee d i n g would invite the “ disruptive
consequences of

judicial interference” and “bring [ ] the courtsS T A T E O F C A L I F O R N I A V

. F ERC 16

into the a djudication of the lawfulness of rates in advance o f administrati v e consideration.” Papago
, 628 F .2d at 242 (quoting S. Ry. Co. v. Seaboard Allied Milling Corp.
, 442 U.S. 444, 4 60 (1979)); see a lso Delmarva P ower & Light Co. v. FERC
, 671 F

. 2d 587, 5 9 5 ( D.C. Cir. 1982) (warn i ng ag ainst intruding on F ERC’s province where “ t h e facts bearing on the interpretat i o n o f [filing s and orders] a re unclear and disputed, a

n d these facts will bear he avily on determining whether the statute was violated”).

“Under the rule in Steamboaters

, the fact that one p art o f

an ag ency o r der remains pending b efore the ag ency does not deprive this court o f jurisdiction t o review a discrete issue that has been definitively resolv ed by the ag ency .” Cal. Dep’t of W

ater Res.
, 3 61 F .3d at 520. W e therefore ex ercise jurisdiction o nly as to the issue of w heth er F ERC erred b y invoking the M

obile-Sierra doctrine a n d hold that we lack jurisdiction to review F ERC’s evidentiary orders.

II. F A C I A L A P P L I C A B I L I T Y O F T H E M O B I L E -S I E R R A D O C T R I N E

The Mobile-Sierra doctrine takes its name from two cases that dealt with the authority of F ERC’s predecessor, the Federal Power Commission, to determine w hether rates set bilaterally by contract (as opposed to those set u nilaterally b y tariff) are just and r easonable. See United Gas Pipe Line Co. v. Mobile G as Serv. Corp. (“ Mobile ”), 350 U.S. 332 (1956); Fed. Powe r C omm’n v

. Sierra P a c. Power Co. (“ Sierra ”), 350 U.S. 348 (1956). W here it applies, the doctrine requires F ERC to presume that a contracted-for rate is “ j u s t a nd reasonable” under the F PA.S T A T E O F C A L I F O R N I A V

. F ERC 17

I n 2008, after we decided Port of Seattle

, the Supreme Court issued Morgan Stanley

, its first Mobile-Sierra decision in decades. 554 U.S. 5 27. W hile Mobile and Sie r r a a r ose from suits broug ht by reg ula t e d s e llers claiming that rates

were too low, Morgan Stanley involved buy ers’ challeng es to hig h contract rates. The Court ex plained that “[ t] h e re is only

one statutory standard for assessing wholesale e lec tricity rates, whether set by co n tract or tariff—the just-andreasonable standard.” Id. a t 545. Addressing the contract contex t, the Court set forth the baseline rule that F ERC must “presume that the rate set out in a f r ee l y neg otiated wholesale-energ

y contract meets t h e ‘just and reasonable’ requirement imposed by law.” Id. at 530. I n i n voking the presumption here, F ERC cited this rule from Morgan Stanley. 137 F ERC ¶ 61,001, para. 20.

T he Supreme Court emphasiz ed that the M obile-Sie r r a presumptio n i s j ustified by the particular role that contracts play in the administrative scheme. “Th e r egu latory sy stem created by the [ F PA] is premised o n co n t r a c tual ag reements voluntarily d evis ed by the reg ulated companies; it contemplate s abrog ation of these ag reements only in circums t ances of unequivocal public necessity .” M organ Stanley

, 5 5 4 U.S. at 534 (quoting In re Permian B a sin Area Rate Cas e s , 390 U.S. 747, 8 22 (1968)). W here the presumption applies, the inquiry into whether the rate is lawful f ocuses on whether the contract r ate “seriousl y h arm[ s] the public interest.” Id. at 548. 4

4 T h e Co u rt h as sin ce ex p lain ed th at “ th e Mo b ile-S ierra p u b lic in terest stan d ard i s n o t an ex cep tio n to th e statu to ry j u s t- an d

- reaso n ab le stan dard ; it is an ap p licatio n o f th at stan d ard in th e co n t ex t o f rates set b y co n tract.” NRG Po wer Mktg

., LLC v. Ma in e Pu b

. U tils. Co m m’n
, 55 8 U.S. 1 65
, 1 6 8 (2 0 1 0); see a lso Mo rg a n S ta n ley

, 5 5 4 U .S. at 5 4 6 (ex p lain in g th e d o ctrin eS T A T E O F C A L I F O R N I A V

. F ERC 18

The petitioners ar gu e that Morgan Stanley does not suppor t FE RC’s decision to invoke the Mobile-Sierra
presump t i o n with respect to contracts of the nature at issue here. The circumstances h ere, according to petitioners, render the presumption il l o gical because the contracts were not f reely neg otiated long

- term contracts with lawful prices. I nstead, the transa c tions were short-term spot sales with a hig h deg ree of p r e s sure on buy ers. Petitioners’ arg ument is essentially that the F PA’s “ j u s t and reasonable” standard should not b e i n t e rpreted as impliedly incorporating the Mobile- Sierra doctrine, a s it was in Morgan Stanley

. Id. at 545–46. Althoug h it is t r u e t hat the statutory lang uag e does
not c l e a r l y spell out the application of the “ just a nd reasonable” stand a r d

, under Chevron

, we defer to F ERC’s reasonable determination that Mobile-Sierra e x t ends to the
contex t of short-term spot sal es

. Chevron U.S.A. I n c. v

. Natural Resources Defense Council, I nc. , 467 U.S. 837, 843 (1984).

The mere short-term nature of these spot sale c o n t r acts d oes not render F ERC’s application of the M obile-Sie r r a doctrine unreasonable. Althoug h long -term contr acts may play a special role in stab i liz ing the energ y market (a role spotlig hted b y the “turmoil in the spot market” in the 2000- 2001 energ y crisi s , Morgan Stanley

, 5 54 U.S. at 539

– 40, 547–48), the Supreme Court has d rawn the rule s o t h at the presumption may be invoked with reg ard to any c ontractedfor rate. Id. at 551; see al s o N R G P o wer Mktg., LLC
, 558 U .S. at 1 6 8 ( “ The ‘ venerable Mobile-Sierra doctrine’
rests on ‘the stabiliz ing force of contracts.’”) ( q u o ting

p ro v id es “ a d ef

i n i t i o n o f w

h at it m ean s f

o r a rate to satisf

y th e j u st- an d

- reaso n ab le stan d ard in th e co n t ract co n tex t—a d ef

in i tio n th at ap p lies reg ard l ess o f

w h en th e co n tract is rev i ew ed ”).S T A T E O F C A L I F O R N I A V

. F ERC 19

M o r g an Stanley

, 554 U.S. a t 548). The fact that so m e contra c t s adopted the f

orm of the W SPP A g reement (a F ERC-jurisdictional st a ndardiz ed form a g reement) does not chang e our analy sis, as the sales wer e still made p ursuant to contracts. After the presumption is invoked, the parties may avoid or rebut it based o n a n evidentiary showing

, 5 but F ERC’s b a seline assumption that the presumption applies to the contracts at issue is not unreasonable in lig ht of M organ Stanley

.

The petitioners’ n umerous o ther arg uments are also

u n c onvincing

. W e see no reason why having notice of a § 206 proceeding w hen the contracts were formed would render it irrational to apply the presumption. The petitioners also overstate Lockyer

, which stopped short of establi shing that sellers who fail to meet r eporting requirements have automatically charg ed unlawful price s so as to d efeat the presumption. 383 F .3d at 1008.

5 It is im p o rtan t to rem em

ber th at j u st b ecau se t

h e p resu m

p tio n h as b een in v o k ed at th e b eg in n in g o f a g iv en p ro ceed i n g d o es n o t m ean it u ltim ately

w ill ap p ly to th at case in th e en d

. “ FERC h as am p le au th o rity to set asid e

a co n tract w

h ere th ere is u n f

air d ea l i n g a t th e co n tract f o rm atio n stag e—f o r in stan ce, if it f

in ds t rad itio n al g ro u n d s f

o r th e ab ro g atio n o f th e

co n tract su ch as f

rau d o r d u ress. In ad ditio n , if th e ‘ d y sf u n ctio n al’ m ark et

c o n d itio n s u n d er w

h ich th e co n tract w as f

o rm ed w ere cau sed b y i l leg a l actio n o f on e o f th e p art i e s , F ERC s h o u ld n o t ap p ly th e Mo b ile-S ierra
p resu m p tio n .” Mo rg a n S ta n ley

, 5 5 4 U .S. at 5 4 7 (citatio n o m itted ). FERC cited th ese po ssib ilities in its Decem b er 2 0 1 2 o rd er. 1 41 FERC ¶ 6 1 ,2 4 8
, at para. 7

. W h ere th e p resu m p tio n i s reb u t te d i n t h i s w ay , a p arty ch allen g in g a rate n o lo n g er h as t o sh o w th at th e “ co n tract rates at issu e im p o s e an ex cessiv e b u rd en o r serio u s ly h arm th e p u b lic in terest” in o rd er to p ro v e th at a rate is u n law f u l

. S ee id

. at p ara. 1 4

.S T A T E O F C A L I F O R N I A V

. F ERC 20

The W SPP Ag reement d oes not contain a “ Memphis ” clause 6 that permits parties to amend their contracts unilaterally by complaint. The W SPP Ag reement establishes standardiz ed terms for power transact i ons to which individual
terms (such as price, vol u m e , and duration) are appended in separate confirmation ag r eements. T he sections identified b y petitio n ers do not p ermit u nilateral amendments to confirmation ag reements or the a ssociated c o n tractual rates.

F inally

, the factual and evid e ntiary issues raised by the petitioners are more appropriately considered in the c ontex t of eventual challeng es to the scope of the evidentia ry proceeding s. F or ex a m p le, the California Parties a rg u e that CERS was bullied into making p urchases via t h e s e bilateral
contracts when seller s r efused to sell in the usual channels. Seattle claims that F ERC disreg arded this court’s instruction in Port of Seattle to take into account evidence o f market manipulati o n

. These arg uments relate to downstream proceeding s, such as w h e t h e r the p r esumption can be

overcome a

nd whether F E RC’s e ventual decision is based on

a proper record. These ty pes of factual and e v i dentiary
matters do not speak to whet her F ERC properly invoked Mobile-Sierra as a baseline, e ven if the evidence surrounding these contested circumstances u ltimately warrants avoidance

or rebuttal of the p resumption. “[ T] he mere f a c t t h a t the market is i m perfect, or even c haotic, is no reason to undermine the stabiliz ing force of contracts.” See M organ

6 T h e n am e o f th e clau se co m es f ro m Un ited Ga s P ip e Lin e Co

. v. Memp h is Lig h t, Ga s & W

a ter D iv.
, 3 5 8 U .S. 10 3
, 1 1 0

– 13 (1 9 5 8 ), in w h ich th e Su p rem e Co u rt h eld th at p arties m ay “ co n tract o u t of th e Mo b i leS i e r r a p r e su

m p tio n b y sp ecif

y in g in th eir co n tracts th at a n ew rate f iled

w ith th e C o m m i ssio n w o u ld su persed e th e co n tract rate.” Mo r g a n S ta n ley , 5 5 4 U.S. at 5 34

.S T A T E O F C A L I F O R N I A V

. F ERC 21

Stanley

, 5 5 4 U.S. at 547–48. W e thus decline to ex tend our analy sis to these d isg uised efforts to rebut the presumption a s

a p p lied to these individual parties b efore F ERC h as h ad a n opportunity to c onclude t h e proceeding s. W e need only decide whether F ERC reasona b l y applied Mobile-Sierra to the class of contracts at issue here, and we hold that F ERC’s interpretation is reasonable.

W e deny the petition w ith respect to petitioner s ’ claim that the M

o bile-Sierra presumption cannot apply to the spot

sa l e s a t issue in this case and dismiss the evidentiary challeng es for lack of jurisdiction.

DENIED IN P ART ; DISMISSED IN P ART

.