Understanding the Mobile Sierra Doctrine: Key Legal Insights

Definition & Meaning

The Mobile Sierra Doctrine is a legal principle that arises from the Federal Power Act and the Natural Gas Act. It establishes that rates negotiated by private parties in wholesale transactions are presumed to be just and reasonable. The Federal Energy Regulatory Commission (FERC) cannot modify these rates unless there is a clear threat to the public interest or the contract allows for such modifications. Essentially, this doctrine protects freely negotiated arrangements, ensuring they are upheld unless significant harm to the public is demonstrated.

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Legal Use & context

The Mobile Sierra Doctrine is primarily used in the context of energy regulation, particularly concerning the rates charged for electricity and natural gas. It is relevant in cases where private entities negotiate contracts for energy supply. Legal practitioners may encounter this doctrine in administrative proceedings before the FERC, where they may argue for or against the modification of existing contracts. Users can manage certain aspects of these cases using legal templates available through US Legal Forms, which are drafted by experienced attorneys.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

Example 1: A natural gas supplier and a utility company negotiate a long-term contract for gas delivery at a set rate. If the utility later seeks to alter the rate due to market fluctuations, the Mobile Sierra Doctrine would likely prevent FERC from intervening unless the change poses a significant risk to public interest.

Example 2: A power plant operator enters into a power purchase agreement with a regional utility. If the utility attempts to renegotiate the terms unilaterally, the operator could invoke the Mobile Sierra Doctrine to uphold the original agreement (hypothetical example).

Relevant laws & statutes

The Mobile Sierra Doctrine is rooted in two key Supreme Court cases from 1956:

United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956)
Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956)

Comparison with related terms

Term	Definition	Difference
Mobile Sierra Doctrine	Presumes negotiated rates are just unless proven otherwise.	Focuses on the protection of negotiated contracts.
Cost of Service	Rates based on the cost of providing service.	Does not assume negotiated rates are reasonable.

Common misunderstandings

What to do if this term applies to you

If you are involved in a wholesale energy transaction and believe the Mobile Sierra Doctrine may apply, consider the following steps:

Review your contract to understand its terms regarding rate modifications.
Consult with a legal professional to assess the implications of the doctrine for your situation.
Explore US Legal Forms for templates that can assist in drafting or reviewing contracts related to energy transactions.

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Quick facts

Typical Fees: Varies based on contract terms.
Jurisdiction: Federal Energy Regulatory Commission (FERC).
Possible Penalties: Modification of contracts may lead to legal disputes or regulatory penalties.