morgan stanley capital group public utility district snohomish county et argued february decided june doctrine federal energy regulatory commission ferc must presume electricity rate set freely negotiated contract meets reasonable requirement federal power act fpa see presumption may overcome ferc concludes contract seriously harms public interest see gas pipe line mobile gas service fpc sierra pacific power ferc current regulatory regime wholesale electricity seller may file tariff simply utility enter freely negotiated contracts purchasers contracts filed ferc go effect dramatic increase price electricity western result respondents entered contracts petitioners locked rates high historical standards respondents subsequently asked ferc modify contracts contending rates presumed reasonable administrative law judge concluded presumption applied contracts seriously harm public interest ferc affirmed ninth circuit remanded held contract rates presumptively reasonable ferc initial opportunity review contracts without applying presumption therefore presumption apply contracts entered tariffs alternatively held different standard overcoming presumption purchaser challenges contract whether contract exceeds zone reasonableness held commission required apply presumption evaluating contracts sierra held rate set contract must presumed reasonable absent serious harm public interest regardless contract challenged fpc texaco distinguished also ninth circuit rule requiring ferc ask whether contract formed environment market dysfunction supported cases plainly undermines role contracts fpa statutory scheme pp ninth circuit zone reasonableness test fails accord adequate level protection contracts standard buyer challenge must generally standard seller challenge contract rate must seriously harm public interest ninth circuit misread sierra holding standard evaluating challenge setting aside contract rate whether consumers electricity bills higher contract rates equaled marginal cost presumption setting aside contract rate requires finding unequivocal public necessity permian basin area rate cases extraordinary circumstances arkansas louisiana gas hall pp judgment nonetheless affirmed alternative grounds based two defects ferc analysis first analysis flawed incomplete extent ferc looked simply whether consumers rates increased immediately upon conclusion relevant contracts rather determining whether contracts imposed excessive burden line relative rates consumers obtained contracts elimination dysfunctional market sierra excessive burden customers current burden burden imposed contract outset see second unclear ferc orders whether found respondents evidence inadequate support claim petitioners engaged unlawful market manipulation altered playing field contract negotiations case commission presume contract reasonable like fraud duress unlawful market activity directly affecting contract negotiations eliminates premise presumption rests contract rates product fair negotiations remand ferc amplify clarify findings two points pp affirmed remanded scalia delivered opinion kennedy thomas alito joined ginsburg joined part iii ginsburg filed opinion concurring part concurring judgment stevens filed dissenting opinion souter joined roberts breyer took part consideration decision cases morgan stanley capital group petitioner public utility district snohomish county washington et al american electric power service corporation et petitioners public utility district snohomish county washington et al writs certiorari appeals ninth circuit june justice scalia delivered opinion doctrine federal energy regulatory commission ferc commission must presume rate set freely negotiated contract meets reasonable requirement imposed law presumption may overcome ferc concludes contract seriously harms public interest cases present two questions scope doctrine first presumption apply ferc initial opportunity review contract rate without presumption second presumption impose high bar challenges purchasers wholesale electricity challenges sellers statutory background federal power act fpa stat amended gives authority regulate sale electricity interstate commerce market historically characterized natural monopoly therefore subject abuses market power see et seq modeled interstate commerce act fpa requires regulated utilities file compilations rate schedules tariffs commission provide service electricity purchasers terms prices set forth utilities wishing change tariffs must notify commission days change go effect unlike interstate commerce act however fpa also permits utilities set rates individual electricity purchasers bilateral contracts explained elsewhere fpa departed scheme purely regulation acknowledged contracts commercial buyers sellers used ratesetting verizon communications fcc like tariffs contracts must filed commission go effect fpa requires rates reasonable utility files new rate commission change tariff new contract commission may suspend rate five months investigates whether rate reasonable commission may however decline investigate permit rate go effect amount determination rate reasonable see cfr rate goes effect whether commission deemed reasonable filed commission may conclude response complaint motion rate reasonable replace lawful rate supp statutory requirement rates reasonable obviously incapable precise judicial definition afford great deference commission rate decisions see fpc texaco permian basin area rate cases repeatedly emphasized commission bound one ratemaking formula see mobil oil exploration producing southeast distribution permian basin supra ferc must choose method entails appropriate balancing investor consumer interests fpc hope natural gas exercising broad discretion commission traditionally reviewed set tariff rates method ensures seller electricity recovers costs plus rate return sufficient attract necessary capital see mcgrew federal energy regulatory commission hereinafter mcgrew two cases decided day addressed authority commission modify rates set bilaterally contract rather unilaterally tariff gas pipe line mobile gas service rejected utility argument natural gas act requirement file new rates commission authorized abrogate lawful contract purchaser simply filing new tariff see filing requirement explained merely precondition changing rate authorization change rates violation lawful contract contract sets reasonable rate see fpc sierra pacific power applied holding mobile analogous provisions fpa concluding complaining utility supersede contract rate simply filing new tariff sierra however commission concluded contrary holding newly filed tariff superseded contract also contract rate reasonable solely yield ed less fair return net invested capital utility thus confronted question commission may evaluate whether contract rate reasonable answered question following way commission conclusion appears face based erroneous standard hile may commission may normally impose upon public utility rate produce less fair return follow public utility may agree contract rate affording less fair return entitled relieved improvident bargain circumstances sole concern commission seem whether rate low adversely affect public interest might impair financial ability public utility continue service cast upon consumers excessive burden unduly discriminatory emphasis deleted said later case regulatory system created fpa premised contractual agreements voluntarily devised regulated companies contemplates abrogation agreements circumstances unequivocal public necessity permian basin supra past years decisions courts appeals refined presumption allow greater freedom contract gas pipe line memphis light gas water held parties contract presumption specifying contracts new rate filed commission supersede contract rate courts appeals held contracting parties may also agree middle option memphis light contract allow seller supersede contract rate filing new rate may nonetheless permit commission set aside contract rate results unfair rate return violates public interest see papago tribal util auth ferc cadc louisiana power light ferc thus doctrine developed regulated parties retained broad authority specify whether ferc review contract rate solely whether violates public interest also whether results unfair rate return presumption remains default rule moreover even though challenges mobile sierra brought sellers lower courts concluded presumption also applies purchaser rather seller asks ferc modify contract see potomac elec power ferc cadc boston edison ferc seemingly blessed conclusion explaining fpa hen commercial parties avail rate agreements principal regulatory responsibility relieve contracting party unreasonable rate verizon citing sierra supra years commission began refer two modes review one presumption without public interest standard reasonable standard see southern co gulf utils southern co ferc pp decisions courts appeals likewise see kansas cities ferc cadc northeast utils serv ferc take nomenclature stand obviously indefensible proposition standard different statutory standard applies contract rates rather term public interest standard refers differing application standard contract rates see philadelphia elec less confusing adopt solicitor general terminology referring two differing applications standard ordinary reasonable standard public interest standard see reply brief respondent ferc recent ferc innovations tariffs recent decades commission undertaken ambitious program reforms part impetus changes technological evolution historically electric utilities vertically integrated monopolies particular geographic area single utility control generation electricity transmission distribution consumers see midwest iso transmission owners ferc cadc since however engineering innovations lowered cost generating electricity transmitting long distances enabling new entrants challenge regional generating monopolies traditional utilities see generally new york ferc public util dist snohomish cty ferc cadc take advantage changes commission attempted break regulatory economic barriers hinder free market wholesale electricity sought promote competition areas industry amenable competition segment generates electric power ensuring segment industry characterized natural monopoly namely transmission grid conveys generated electricity exert monopolistic influence areas see new york supra snohomish supra end ferc required order transmission provider offer transmission service customers equal basis filing open access transmission tariff promoting wholesale competition open access transmission services public utilities fed reg see new york supra requirement prevents utilities grid offering favorable transmission terms affiliates thereby extending monopoly power areas industry pry open market reduce technical inefficiencies caused different utilities operate different portions grid independently commission encouraged transmission providers establish regional transmission organizations entities transmission providers transfer operational control facilities purpose efficient coordination order fed reg see midwest iso supra encouraged management entities independent system operators entities operate transmission facilities nondiscriminatory manner see midwest iso supra addition coordinating transmission service regional transmission organizations perform functions running auction markets electricity sales offering contracts hedging potential grid congestion see blumsack measuring benefits costs regional electric grid integration energy backdrop technological change reforms commission past two decades begun permit sellers wholesale electricity file tariffs tariffs instead setting forth rate schedules contracts simply state seller enter freely negotiated contracts purchasers see generally rates wholesale sales electric energy capacity ancillary services public utilities order fed reg hereinafter rates mcgrew ferc subject contracts entered tariffs subjected traditional contracts requirement immediate filing apparently theory requirement satisfied initial filing tariffs see brief respondent ferc hereinafter brief ferc ferc grant approval tariff utility demonstrates lacks adequately mitigated market power lacks capacity erect barriers entry avoided giving preferences affiliates see rates fed reg addition initial authorization tariff ferc imposes ongoing reporting requirements seller must file quarterly reports summarizing contracts entered even extremely contracts see california ex rel lockyer ferc must also demonstrate every four months still lacks adequately mitigated market power see ibid ferc determines filings seller reattained market power may revoke authority prospectively see rates fed reg commission finds seller violated regional transmission organization market rules tariff commission orders commission may take appropriate remedial action ordering refunds requiring disgorgement profits imposing civil penalties see ibid ninth circuit circuit generally approved ferc scheme tariffs see lockyer supra louisiana energy power auth ferc cadc hitherto approved express opinion today lawfulness system one issues us suffices present cases recognize seller files tariff purchasers longer option buying electricity rate set tariff contracts longer need filed ferc subjected investigatory power going effect california electricity regulation consequences california enacted assembly bill ab massively restructured california electricity market see cal stat ch codified cal pub util code ann west supp see generally cudahy whither deregulation look portents annual survey law hereinafter cudahy bill transferred operational control transmission facilities california three largest utilities independent service operator see pacific gas elec ferc also established california power exchange calpx nonprofit entity operated market spot market electricity bill required california three largest utilities divest facilities required utilities purchase sell bulk electricity calpx spot market permitting limited leeway enter contracts see public util dist snohomish cty ferc case ferc approved consistent requirements independent service operator established order ferc also approved calpx utilities authority make sales rates calpx finding light divesture generation units conditions imposed restructuring plan utilities adequately mitigated market power see pacific gas elec ferc pp calpx opened business march summer expanded include auction sales electricity forward contracts contracts sellers promise deliver electricity one day future sometimes many years participation california large utilities forward market limited said ab strictly capped amount power purchase outside spot market see diminishment role contracts california electricity market turned one seeds energy crisis summer price electricity calpx spot market jumped dramatically fifteenfold see ibid increase result combination natural economic regulatory factors flawed market rules inadequate addition generating facilities preceding years drop available hydropower due drought conditions rupture major pipeline supplying natural gas california strong growth economy electricity demand unusually high temperatures increase unplanned outages extremely old generating facilities market manipulation californians renewable energy sellers energy ancillary ferc pp california utilities part forbidden obtain power contracts turmoil spot market hit hard see cudahy high prices led rolling blackouts saddled utilities mounting debt late commission took action central plank emergency effort eliminate utilities reliance calpx spot market shift purchases forward market end ferc abolished requirement utilities purchase sell power calpx encouraged enter contracts see san diego gas electric sellers energy ancillary ferc pp see also commission also put price caps wholesale electricity see san diego gas elec sellers energy ancillary ferc june electricity prices began decline normal levels genesis cases principal respondents cases western utilities purchased power contracts tumultuous period although located california high prices california spilled western see petitioners sellers entered contracts respondents contracts parties included rates high historical standards example respondent snohomish signed contract purchase electricity petitioner morgan stanley rate hour mwh whereas prices pacific northwest historically averaged contract prices substantially lower however prices snohomish paid spot market energy crisis prices peaked see crisis passed buyer remorse set respondents asked ferc modify contracts contended rates contracts presumed reasonable given sellers tariffs contracts never initially approved commission without presumption see nevada power enron power marketing ferc pp respondents also argued contract modification warranted even presumption contract rates high violated public interest see ferc preliminary order commission instructed administrative law judge alj consider different factors deciding whether presumption overcome contracts terms contracts available alternatives time sale relationship rates commission benchmarks effect contracts financial health purchasers impact contract modification national energy markets hearing alj concluded presumption apply contracts contracts seriously harm public interest fact according alj even presumption apply respondents entitled contracts modified ferc alj decision commission ruling commission staff issued report staff report concluding unlawful activities various sellers spot market affected prices forward market see respondents raised report oral argument commission argued petitioners unlawfully manipulating market prices thereby engaging fraud deception violation rate tariffs ibid petitioners contended however staff report demonstrated correlation rates spot forward markets causal connection see ibid ferc affirmed alj commission first held presumption apply contracts issue although agreeing respondents presumption applies ferc initial opportunity review contract rate commission relied somewhat metaphysical ground grant authority petitioners qualified initial opportunity see ferc commission held respondents overcome presumption recognized staff report found spot market distortions flowed forward power prices ferc concluded finding even true determinative finding unjust unreasonable spot market caused forward bilateral prices unjust unreasonable relevant contract modification reasonable standard review interest standard justify contract modification enough show forward prices became unjust unreasonable due impact spot market dysfunctions must shown rates terms conditions contrary public interest commission determined factors identified sierra well test respondents demonstrated contracts threatened public interest see ferc rehearing respondents reiterated complaints including charge contracts product market manipulation enron morgan stanley sellers ferc pp commission answered evidence support finding market manipulation specifically affected contracts issue ibid respondents filed petitions review ninth circuit granted petitions remanded commission finding two flaws commission first agreed respondents rates set contract whether pursuant tariff presumptively reasonable ferc initial opportunity review contracts without applying presumption satisfy prerequisite tariff regime said commission must promptly review terms contracts formation must modify appear reasonable evaluated without presumption rather merely revoking authority prospectively leaving contracts intact see initial review must include inquiry market conditions contracts issue formed market dysfunction ground finding contract reasonable second ninth circuit held even assuming presumption applied standard overcoming presumption different purchaser challenge contract namely whether contract rate exceeds zone reasonableness granted certiorari see ii application presumption contracts concluded rate authority noted earlier ferc order review agreed ninth circuit premise commission must initial opportunity review contract without presumption maintained authorization rate authority qualified initial review however ferc changes tune arguing prerequisite least ferc reasonably conclude therefore chevron deference order see brief ferc chevron natural resources defense council uphold discretionary agency decision agency offered justification different provided opinion see sec chenery ferc lucked chenery doctrine application cases conclude commission required decision sierra apply presumption evaluation contracts provided different rationale necessary result cause upsetting ruling remand idle useless formality chenery require convert judicial review agency action game nlrb plurality opinion broad agreement ninth circuit central premise one statutory standard assessing wholesale electricity rates whether set contract tariff standard plain text fpa rates shall reasonable see also supp disagree ninth circuit interpretation sierra requiring contrary statute commission apply standard differently depending contract rate challenged ninth circuit view sierra premised idea long rate reasonable contract formed presumption reasonableness continued throughout term contract words long commission concludes either hearing allowing rate go effect contract rate reasonable initially filed rate presumed reasonable future proceedings misreading sierra sierra grounded commonsense notion wholesale markets party charging rate party charged often sophisticated businesses enjoying presumptively equal bargaining power expected negotiate reasonable rate two verizon therefore mutually contract rate seriously harms consuming public may commission declare sierra thus provided definition means rate satisfy standard contract context definition applies regardless contract reviewed ninth circuit contrast essentially read sierra equivalent estoppel doctrine whereby initial commission opportunity review prevents commission modifying rates absent serious future harm public interest tewksbury lim applying doctrine rate contracts energy sierra said nothing sort given commission passive permission rate go effect constitute finding rate reasonable odd treat initial opportunity review curtailing later challenges ninth circuit found support prerequisite decision fpc texaco case warned commission attempt rely solely market forces evaluate rates charged small producers inconsistent natural gas act insistence rates reasonable see ninth circuit apparently took mean initially filed contracts must subject review without presumption texaco nothing doctrine held commission improperly implemented scheme total deregulation applying standard review rates see cast doubt proposition proper regulatory scheme ordinary mode evaluating contractually set rates look whether rates seriously harm public interest whether unfair one parties voluntarily assented contract cf agree ninth circuit ferc must inquire whether contract formed environment market dysfunction applying presumption markets perfect one reasons parties enter contracts precisely hedge volatility market imperfections produce one commission responses energy crisis remove regulatory barriers contracts perverse rule rendered contracts less likely enforced volatility market rule come play contract formed period dysfunction significantly harm consuming public since contracts seriously harm public set aside even presumption enabling sophisticated parties weathered market turmoil entering contracts renounce contracts storm passed ninth circuit holding reduce incentive conclude contracts future rule support case law plainly undermines role contracts fpa statutory scheme sure ferc ample authority set aside contract unfair dealing contract formation stage instance finds traditional grounds abrogation contract fraud duress see ferc evidence unfairness bad faith duress original negotiations addition dysfunctional market conditions contract formed caused illegal action one parties ferc apply presumption see part iii infra mere fact market imperfect even chaotic reason undermine stabilizing force contracts fpa embraced alternative purely regulation verizon may add evaluating market dysfunction difficult highly speculative task one fpa likely require agency engage holding sophisticated parties bargains reiterate address lawfulness ferc scheme assuredly critics needed revision scheme properly addressed challenge scheme disfigurement venerable doctrine hold ferc may abrogate valid contract harms public interest application excessive burden exception challenges turn ninth circuit second holding zone reasonableness test used evaluate buyer challenge rate high view fails accord adequate level protection contracts standard buyer challenge must generally speaking standard seller challenge contract rate must seriously harm public interest standard commission applied proceedings agreement ninth circuit starting premise clear three factors identified sierra rate might impair financial ability public utility continue service cast upon consumers excessive burden unduly discriminatory precisely applicable challenge purchaser example relevant question whether customers utility excessively burdened whether customers purchaser three factors event exclusive components public interest decision commission recognized realities see ferc nevada companies failed show contract terms issue impose excessive burden customers emphasis added record also demonstrates snohomish presented evidence contract morgan stanley adversely affected snohomish ratepayers emphasis added evaluating totality circumstances see also brief ferc disagree ninth circuit overarching zone reasonableness standard established evaluating challenge setting aside contract rate whether consumers electricity bills higher otherwise challenged contracts called rates within reasonable range rates equal marginal cost ninth circuit derived test statement sierra contract rate modified low imposed excessive burden wholesale purchasers ninth circuit took excessive burden mean merely burden caused one set consumers forced pay marginal cost compensate rates charged consumers see proceeded apply similar notion excessive burden challenges burden contract rate falls purchaser customers affect customers third parties misreading sierra later cases presumption validity disappears rate marginal cost presumption validity reinstitution rather regulation said presumption setting aside contract rate requires finding unequivocal public necessity permian basin extraordinary circumstances arkansas louisiana gas hall way descriptions thought refer mere exceeding marginal cost ninth circuit standard give short shrift important role contracts fpa reflected decision sierra threaten inject volatility electricity market undermining key source stability fpa recognizes contract stability ultimately benefits consumers even rates subset public might high historical standards permits rates set contract tariff commission recently put first foremost duty protect consumers unjust unreasonable rates however uncertainties regarding rate stability contract sanctity chilling effect investments seller willingness enter contracts turn harm customers long run rates fed reg besides wrong principle practical effect ninth circuit rule impose onerous new burden commission requiring calculate marginal cost power sold contract assuming ferc even ventured undertake analysis rather reverting ancien régime ratesetting regulatory costs enormous think fpa intended reserve commission power extraordinary circumstances public severely iii defects ferc analysis supporting remand despite significant disagreement ninth circuit find two errors commission analysis therefore affirm judgment alternative grounds first appears ninth circuit concluded see commission may looked simply whether consumers rates increased immediately upon relevant contracts going effect rather determining whether contracts imposed excessive burden consumers line relative rates obtained contracts elimination dysfunctional market example commission concluded two respondents experience rate decreases approximately percent retail service period covered contracts ferc baseline computation rate paying contracts went effect disparity certainly relevant consideration disparity contract rate rates consumers paid contracts line open market longer dysfunctional disparity past certain point amount excessive burden contemplated sierra involved challenge years contract excessive burden customers opinion referred assuredly current burden burden imposed outset contract see unequivocal public necessity justifies overriding presumption disappear factor contract enters force thus ferc analysis point flawed least incomplete ninth circuit put entirely possible rates increased high energy crises dysfunction spot market even acknowledged decrease rates consumers still paid forward contracts otherwise increase great even taking account desirability fostering contracts rates impose excessive burden consumers otherwise seriously harm public interest rates must disallowed second respondents alleged ferc petitioners cases engaged market manipulation spot market see ferc snohomish nevada companies argue contracts product market manipulation enron morgan stanley respondents established commission staff engaged market manipulation staff report concluded said abnormally high prices spot market energy crisis influenced terms contracts forward market commission dismissed relevance staff report ground demonstrated forward market prices high overcome presumption conclude however clear one party contract engaged extensive unlawful market manipulation alter playing field contract negotiations commission presume contract reasonable like fraud duress unlawful market activity directly affects contract negotiations eliminates premise presumption rests contract rates product fair negotiations mere fact unlawful activity occurred different related market automatically establish effect upon contract especially given staff report unsurprising finding high prices one market produced high prices unable determine commission orders whether found evidence inadequate support claim respondents alleged unlawful activities affected contracts issue said order rehearing ferc found evidence support finding market manipulation respondents specifically affected contracts issue perhaps must read light commission described rejection staff report ground high spot market prices caused manipulation irrelevant unless forward market prices fail standard light statement initial order apparent response claim manipulation respondents ferc finding unjust unreasonable spot market prices caused forward bilateral prices unjust unreasonable relevant contract modification reasonable standard review emphasize mere fact party engaging unlawful activity spot market deprive forward contracts benefit presumption reason ferc able abrogate contract grounds without finding causal connection unlawful activity contract rate however causality established presumption apply remand commission amplify clarify findings two points judgment appeals affirmed cases remanded proceedings consistent opinion ordered chief justice justice breyer took part consideration decision cases morgan stanley capital group petitioner public utility district snohomish county washington et al american electric power service corporation et petitioners public utility district snohomish county washington et al writs certiorari appeals ninth circuit june justice ginsburg concurring part concurring judgment recommending denial petition certiorari cases federal energy regulatory commission urged review premature given interlocutory nature th issues brief respondent federal energy regulatory commission opposition regard commission called attention new measures taken well recent enactments congress bearing evaluation contracts view developments commission suggested await record produced fer remand agree better informed awaited commission decision remand think plain however commission erred two respects identified see ante therefore concur judgment join part iii opinion morgan stanley capital group petitioner public utility district snohomish county washington et al american electric power service corporation et petitioners public utility district snohomish county washington et al writs certiorari appeals ninth circuit june justice stevens justice souter joins dissenting basic question presented complicated cases whether federal energy regulatory commission ferc commission must presume rate set freely negotiated contract meets reasonable requirement imposed law ante opening sentence opinion tells us doctrine term makes first appearance reports today mandates affirmative answer holding finds support either case lends name doctrine nevertheless interest guarding disfigurement venerable doctrine ante mangles governing statute precedent federal power act fpa stat et wholesale electricity prices established first instance public utilities either via tariffs contracts purchasers whether set tariff contract rates must filed commission see ibid section fpa provides rates charges shall reasonable rate charge reasonable hereby declared unlawful pursuant ferc determines rate rule regulation practice contract affect ing rate unjust unreasonable commission shall determine reasonable rate rule regulation practice contract thereafter observed force shall fix order provisions distinguish roles utilities initially set rates commission may override rates reasonable distinguish rates set unilaterally tariff rates set bilaterally contract however utility sets prices standard review rates must reasonable purports acknowledge one statutory standard assessing wholesale electricity rates whether set contract tariff standard ante unlike rates set tariff however holds freely negotiated contract rate presumptively reasonable unless seriously harms public interest ante according presumption represents differing application standard different standard altogether ante disagree significant difference requiring heightened showing overcome otherwise conclusive presumption imposing heightened standard review agree applying separate standard review contract rates obviously indefensible also true respect presumption even presumption tantamount separate standard nothing statute mandates differing application statutory standard rates set contract ibid section fpa provides without qualification exception ferc may replace unjust unreasonable contract lawful contract permian basin area rate cases construing identical language natural gas act statute say anything mandatory presumption contracts much less define burden proof overcoming delineate circumstances nonapplication cf ante statute prohibit ferc considering marginal cost reviewing rates set contract cf ante congress intended impose detailed constraints commission authority review contract rates done fpa congress instead used general words reasonable wanted give ferc courts wide latitude setting policy explained chevron natural resources defense council power administrative agency administer congressionally created program necessarily requires formulation policy making rules fill gap left implicitly explicitly congress morton ruiz congress explicitly left gap agency fill express delegation authority agency elucidate specific provision statute regulation legislative regulations given controlling weight unless arbitrary capricious manifestly contrary statute sometimes legislative delegation agency particular question implicit rather explicit case may substitute construction statutory provision reasonable interpretation made administrator agency omitted consistent understanding administrative law cases interpreting fpa invariably emphasized courts without authority set aside rate adopted commission within reasonableness permian basin see ante asserting reasonableness test fails accord adequate level protection contracts deference makes eminent sense agencies bound service single regulatory formula permitted unless statutory authority otherwise plainly indicates make pragmatic adjustments may called particular circumstances permian basin despite paying lipservice principle see ante binds commission rigid formula making found statutory text supports vision doctrine invokes important role contracts fpa ante contracts play important role fpa insofar statute departed scheme purely regulation verizon communications fcc allowing parties establish rates contract congress intend immunize rates review gas pipe line mobile gas service fpc sierra pacific power supposed progenitors presumption make point uncertain terms see sierra commission undoubted power prescribe change contract rates whenever determines rates unlawful mobile ontracts remain fully subject paramount power commission modify necessary public interest accordingly fact fpa tolerates contracts make subservient contracts ii neither eponymous cases presumption subsequent decisions substantiates atextual reading acknowledges mobile says nothing standard review applies rates established contract see ante rather mobile merely held utilities unilaterally abrogate contracts purchasers filing new rate schedules commission see neglects mention however although mobile occasion comment standard review imply congress permitted parties establish rates contract protection public interest afforded supervision individual contracts end must filed commission made public sierra public utility entered contract sell electricity special low rate order forestall potential competition see several years later utility complained rate provided little profit therefore reasonable commission agreed set aside rate solely yield ed less fair return net invested capital see vacated remanded ground commission applied erroneous standard hile may commission may normally impose upon public utility rate produce less fair return reasoned follow public utility may agree contract rate affording less fair return entitled relieved improvident bargain seller agreed rate later challenges low sole concern commission seem whether rate low adversely affect public interest might impair financial ability public utility continue service cast upon consumers excessive burden unduly discriminatory ibid elaborated meant public interest purpose power given commission protection public interest distinguished private interests utilities evidenced recital act scheme regulation imposed necessary public interest read light purpose clear contract may said either simply unprofitable public utility ibid sierra therefore held accordance statement policy fpa whether rate reasonable measured public interest private interests regulated sellers contrary opinion see ante sierra instructs public interest touchstone review rates contract rates sierra drew distinction commission authority impose low rates utilities authority abrogate low rates agreed utilities actions impact public interest differently public interest governs rates set bilaterally rates set unilaterally commission imposes rates afford less fair return compromises public interest attracting necessary capital impact different however utility agreed low rate investors recognize utility regulator responsible unattractive rate return sierra used public interest shorthand interest consumers paying lowest possible reasonable rate consistent maintenance adequate service public interest permian basin quoting atlantic refining public serv whereas high rates directly implicate interest low rates indirectly rate low might impair financial ability public utility continue service cast upon consumers excessive burden unduly discriminatory sierra nothing sierra purports mandate serious harm standard review require assumption high rates low rates impose symmetric burdens public interest cf ante later explained fpc texaco commission ignore even small dent consumer pocket act makes unlawful rates reasonable say little unlawfulness permitted brushing aside text fpa well holdings mobile sierra cherry picks language verizon arkla permian basin verizon arkla mentioned line cases passing neither case anything review rates see verizon arkla furthermore statement permian basin unequivocal public necessity speaks difficulty establishing injury public interest context challenge reliance stray sentences calls mind admonishment permian basin commission exercise regulatory authority must assessed light purposes consequences references isolated phrases previous cases iii lacking grounding fpa precedent concludes matter policy presumption necessary ensure stability volatile energy markets reduce regulatory costs see ante course desirability fostering contracts ante plays public interest insofar commission responsibilities include protection future well present consumer interests permian basin see also gas pipe line memphis light gas water seems plain congress expressing conviction public interest requires protection consumers excessive prices natural gas also manifesting concern legitimate interests natural gas companies whose financial stability public vital stake fpa congress charged ferc courts balancing interests consumers see permian basin responsibility supplant commission balance interests one nearly liking instead assure commission given reasoned consideration pertinent factors moreover even ferc authority endorse rule announced today fpa indulge much less require practically insurmountable presumption see papago tribal util auth ferc cadc opinion scalia rates set contract comport public interest therefore reasonable congress enacted fpa precisely concluded regulation necessary protect consumers deficient markets follows commission lacks authority place exclusive reliance market prices texaco see also subjecting producers regulation anticompetitive conditions industry congress assumed reasonable rates conclusively determined reference market price reason already rejected policy rationale proffered today may economists persuasively argued assumptions competitive structure natural gas industry true longer true today may also control prices industry time shortage counterproductive interests consumer increasing production natural gas role however overturn congressional assumptions embedded framework regulation established act proper task legislature public interest may considered multifaceted points view representational process omitted balancing interests consumers entails difficult judgment calls extent ferc actually engages balancing reasoned determination entitled deference ferc abdicate statutory responsibility ensure reasonable rates expedient presumption say commission abrogate contract increases rates underscore agency obliged step regulatory process assess requirements broad public interests entrusted protection congress permian basin iv even holds today presumption merely differing application statutory standard ferc orders must set aside decided basis ferc orders repeatedly aver agency applying public interest standard different distinctly demanding statutory standard see app burden showing contract contrary public interest higher burden showing contract reasonable fact contract may found unjust unreasonable demonstrate contract contrary public interest cases indeed commission misunderstanding cases egregious sellers concerned orders overturned asked commission clarification public interest standard review authorize unjust unreasonable rates ferc clarified follows rates become unjust unreasonable contract issue subject standard review commission precedent may change contract simply longer reasonable parties rate contracts provide public interest standard review commission bound higher burden support modification contracts whereas texaco faulted commission failing expressly mention standard cases ferc refused outright apply addition misrepresenting ferc understanding doctrine presumption rather separate standard overstates extent ferc considered lawfulness rates recognizes must three factors identified sierra neither exclusive precisely applicable challenge purchaser see ante brief respondent ferc although ferc applied termed sierra test app contends agency err also evaluated circumstances see ante ferc review infected misapprehension standard dictated doctrine app whereas focus reasonableness rates charged conduct contracting parties ferc restricted review contracting parties behavior around time formation see ferc seems thought powerless conduct review unless contract already subject abrogation based contract defenses fraud duress including contracts within scope however congress must concluded contract defenses insufficient protect public interest see ante holding presumption applies circumstances absent traditional grounds abrogation illegal action contracting party indeed nothing fpa cases precludes ferc considering circumstances exogenous contract negotiations including natural disasters market manipulation entities parties challenged ferc error obvious face orders repeatedly state commission belief consider evidence relevant reasonableness contract although commission attempt recast ferc orders applying statutory standard see ante brief respondent ferc doctrine set forth sec chenery accept appellate counsel post hoc rationalizations agency action agency order must upheld basis articulated order agency texaco internal quotation marks omitted furthermore even assuming ferc subjectively believed applying standard despite repeated declarations contrary order must deemed ambiguous falls short standard clarity administrative orders must exhibit order get around chenery doctrine mischaracterizes ferc orders also takes radical tack concludes whatever rationale set forth ferc orders chenery apply commission required decision sierra apply presumption evaluation contracts ante point prompts comment ferc lucked ibid commission lucked purely fortuitous victory also pyrrhic one although ferc prevails cases despite offered justification different provided opinion paid tremendous price curtailed agency authority interpret terms reasonable thereby substantially narrowed ferc discretion protect public interest means thinks best contrary congressional intent ferc longer flexibility adjust review contractual rates account changing conditions energy markets among consumers cf permian basin dministrative authorities must permitted consistently obligations due process adapt rules policies demands changing circumstances decision appeals ninth circuit deserves praise efforts bring freewheeling doctrine back line fpa cases endorse opinion entirety however verges sort improper policymaking criticized opinion decisions hobble commission albeit different sides congress authorized courts prescribe energy policy imposing presumptions prerequisites making marginal cost sole concern concern therefore vacate remand cases order give commission opportunity evaluate contract rates light proper understanding discretion respectfully dissent footnotes together american electric power service et al public utility district snohomish county et also certiorari footnotes also use commission refer federal power commission ferc predecessor holding challenged ninth circuit concluded contracts issue contain memphis clause citing gas pipe line memphis light gas water see supra precluded application presumption say dissent alleges post opinion stevens public interest also relevant challenge unilaterally set rates contract case see fpc sierra pacific power dissent criticizes commission decision took account heading totality circumstances circumstances contract formation circumstances exogenous contract negotiations including natural disasters market manipulation entities parties challenged contract post considerations relevant whether contracts impose excessive burden consumers relative paid absent contracts precisely uncertainty whether commission considered circumstances exogenous contract negotiations discussed part iii opinion causes us approve remand ferc elsewhere ninth circuit softened standard somewhat saying ven particular rate exceeds marginal cost may still within reasonable range reasonableness price results normal market forces part general trend toward rates reflect cost sure think one sure precisely means basis opinions event wrong point departure general principle rates exceed marginal cost contradicts ninth circuit purported find support zone reasonableness test case law district columbia circuit cited case stands proposition scheme must assure market forces long pull cause rates approximate marginal cost interstate natural gas assn ferc nowhere opinion suggest standard reforming particular contract validly entered scheme whether rates approximate marginal cost token approval ferc decision set prospective area rates solely reference contract prices permian basin area rate cases support dissent thinks post view standard abrogating existing valid contract anything less standard standard permian basin applied actually confronted issue contract modification see dissent claims misread fpa provisions distinguish rates set unilaterally tariff rates set bilaterally contract post dissent interpretation whatever plausibility original matter squared sierra plainly distinguished unilaterally bilaterally set rates said relevant consideration commission latter case whether public interest harmed circumstances identified sierra implicating public interest refer something small dent consumer pocket subsequent cases described standard high one end day dissent simply argues settled understanding fpa prevailed lower courts commission half century although dissent correct never used phrase doctrine cases probably understanding uniform circuit split concerning meaning arose ninth circuit erroneous decision cases one searches commission reports decisions since alone cited doctrine see brief electric power supply association et al amici curiae courts appeals used term doctrine doctrine times since ever context understanding honored statutory decision subject revision congress understood way many years lower courts federal agency statute governs hence surely private actors trying observe law footnotes see also arkansas louisiana gas hall arkla clear purpose congressional scheme rate filing gran commission opportunity every case judge reasonableness rate permian basin area rate cases commission plenary authority limit proscribe contractual arrangements contravene relevant public interests repeatedly quotes following snippet opinion permian basin regulatory system created act premised contractual agreements voluntarily devised regulated companies contemplates abrogation agreements circumstances unequivocal public necessity cited ante like fpc sierra pacific power however permian basin made statement course rejecting challenge read context reference unequivocal public necessity loose restatement sierra required evidence injury public interest underscored rarely utility able demonstrate contract price adversely affect public interest quoting sierra expansive reading unequivocal public necessity statement squared permian basin discussion commission authority review rates set contract although natural gas act premised upon continuing system private contracting commission plenary authority limit proscribe contractual arrangements contravene relevant public interests citation omitted reconciled permian basin rejection producers arguments commission wrongly invalidated existing contracts imposing ceiling rates see commission compelled adopt contract prices basis computing area rates see contends ferc application doctrine honored represents settled understanding fpa ante explained however ferc interpretation fpa cases construing fpa indefensible supra quoting ante therefore entitled deference quite sensibly instructs ferc clear one party contract engaged extensive unlawful market manipulation alter playing field contract negotiations commission presume contract reasonable mere fact unlawful activity occurred different related market automatically establish effect upon contract especially given staff report unsurprising finding high prices one market produced high prices ante disagree however suggestion fpa restricts ferc review contract rates limited criteria fpa specify market deficiencies weigh ferc review contract rates depending circumstances one balances interests consumers evidence market turmoil may argues support rather detract finding contract rates reasonable see ante whether given contract rate ultimately benefits consumers ante however determination congress vested ferc see app finding unjust unreasonable spot market prices caused forward bilateral prices unjust unreasonable relevant contract modification reasonable standard review previously concluded contracts issue proceeding provide standard rather evidence intent contracts may changed pursuant interest standard review interest standard justify contract modification enough show forward prices became unjust unreasonable due impact spot market dysfunctions omitted complainants required meet public interest standard review reasonable standard review taken account causal connection spot market prices forward bilateral market prices staff report make findings regarding justness reasonableness contract rates findings relevant reasonable standard applicable