Document ID: ./input/supremecourt_opinions/opinions/boundvolumes/558bv.pdf
Page Number: 336

Cite as: 558 U. S. 165 (2010) 

175 

Opinion of the Court 

sulting  from  fair,  arm’s-length  negotiations,  how  can  it  be 
maintained that noncontracting parties nevertheless may es­
cape that presumption? 4 

Moreover,  the  Mobile-Sierra  doctrine  does  not  overlook 
third-party  interests;  it  is  framed  with  a  view  to  their  pro­
tection.  The  doctrine  directs  the  Commission  to  reject  a 
contract  rate  that  “seriously  harms  the  consuming  public.” 
Morgan Stanley, 554 U. S., at 545–546; see Verizon Commu­
nications  Inc.  v.  FCC,  535  U. S.  467,  479  (2002)  (When  a 
buyer  and  a  seller  agree  upon  a  rate,  “the  principal  regula­
tory  responsibility  [i]s  not  to  relieve  a  contracting  party  of 
an  unreasonable  rate,  .  .  .  but  to  protect  against  potential 
discrimination  by  favorable  contract  rates  between  allied 
businesses  to  the  detriment  of  other  wholesale  customers.” 
(emphasis added)). 

Finally, as earlier indicated, see supra, at 173–174, the D. C. 
Circuit’s conﬁnement of Mobile-Sierra to rate challenges by 
contracting  parties  diminishes  the  animating  purpose  of  the 
doctrine: promotion of “the stability of supply arrangements 
which  all  agree  is  essential  to  the  health  of  the  [energy]  in­
dustry.”  Mobile, 350 U. S., at 344.  That dominant concern 
was  expressed  by  FERC  in  the  order  on  review:  “Stability 
is particularly important in this case, which was initiated in 
part  because  of  the  unstable  nature  of  [installed  capacity] 
revenues and the effect that has on generating units, particu­

4 The D. C. Circuit emphasized a point no doubt true, but hardly disposi­
tive:  Contracts  bind  parties,  not  nonparties.  Maine  Pub.  Util.  Comm’n 
v.  FERC,  520  F.  3d  464,  478  (2008)  (per  curiam).  Mobile-Sierra  holds 
sway,  however,  because  well-informed  wholesale-market  participants  of 
approximately equal bargaining power generally can be expected to nego­
tiate  just-and-reasonable  rates,  see  Morgan  Stanley  Capital  Group  Inc. 
v.  Public  Util.  Dist.  No.  1  of  Snohomish  Cty.,  554  U. S.  527,  545  (2008), 
and because “contract stability ultimately beneﬁts consumers,” id., at 551. 
These reasons for the presumption explain why FERC, surely not legally 
bound  by  a  contract  rate,  must  apply  the  presumption  and,  correspond­
ingly, why third parties are similarly controlled by it.