Amicus Curiae Brief — American Electric Power Service Co. Corp. v. Public Utility District No. 1 of Snohomish County, Washington (Nos. 06-1462, 06-1457)

Nos. 06-1454, 06-1457, 06-1462, 0€

Supreme Court of the United States

SEMPRA GENERATION ei al., PETITIONERS,

Vv.

PUBLIC UTILITIES COMMISSION OF THE STATE OF CA, et al.

MORGAN STANLEY CAPITAL GROUP, INC., PETITIONER,

Vv.

PUBLIC UTILITY D1sT. NO. 1 OF SNOHOMISH COUNTY Wa, et al.

CALPINE ENERGY SERVICES, L.P., et al., PETITIONERS,

Vv

PUBLIC UTILITY Dist. No. 1 OF SNOHOMISH COUNTY WA, ef al.

DYNEGY POWER MARKETING, INC., et al., PETITIONERS,

We

PUBLIC UTILITIES COMMISSION OF THE STATE OF CA, et al.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Ninth Circuit

BRIEF OF THE NATURAL GAS SUPPLY

ASSOCIATION AND INDEPENDENT PETROLEUM

ASSOCIATION OF AMERICA AS AMICI CURIE IN

SUPPORT OF THE PETITIONS FOR CERTIORARI

BARRY RUSSELL ROBERT R. GASAWAY

INDEPENDENT PETROLEUM Counsel of Record

ASSOCIATION OF AMERICA ASHLEY C. PARRISH

1201 15th Street, N.W. KIRKLAND & ELLIS LLP

Washington, D.C. 20005 655 Fifteenth Street, N.W.

(202) 857-4722 Washington, D.C. 20005

Attorney for the Independent (202) 879-5000

Petroleum Association of Am. _ Attorneys for the Natural

Gas Supply Association

August 6, 2007

yrs

i

QUESTIONS PRESENTED

Under the Natural Gas Act and the Federal

Power Act, as interpreted by this Court in United

Gas Pipe Line Co. v. Mobile Gas Service Corp., 350

U.S. 332 (1956) and in Federal Power Commission v.

Sierra Pacific Power Co., 350 U.S. 348 (1956), the

Federal Energy Regulatory Commission may not

modify valid contracts except in extraordinary

circumstances of unequivocal public necessity. In

conflict with this Court’s decisions and those of other

Courts of Appeals, the Ninth Circuit held that the

Commission may nullify a wholesale power contract,

even in the absence of public necessity, if the

contract rates were not pre-approved by the

Commission or if the contract is later deemed to have

been formed during a period of market “dysfunction.”

The questions presented are:

1. Whether the Ninth Circuit erred in failing to

abide by this Court’s decisions precluding the

Federal Energy Regulatory Commission from

retroactively abrogating valid, wholesale power

contracts absent a showing that abrogation is

required in the public interest.

2. Whether the Ninth Circuit erred in effectively

determining that the Mobile-Sierra public-interest

standard applies to sellers, but not buyers, that are

seeking to escape the terms of freely negotiated

wholesale power contracts.

QUESTIONS PRESENTED

TABLE OF AUTHORITIES

INTEREST OF AMICI CURIAE

INTRODUCTION

I.

II.

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TABLE OF CONTENTS

Because The Nation’s Electricity And

Natural Gas’ Markets Are Increasingly

Interdependent, The Ninth Circuit

Decisions Could Spill Over Into Natural

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The Ninth Circuit Decisions Introduce

Uncertainty By Undermining The

Principal of Stare. Decisis And The

Doctrinal Stability Of This Court’s Mobile-

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CONCLUSION

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TABLE OF AUTHORITIES

' Page(s)

Cases |

Boston Edison Co. v. FERC,

233 F.3d 60 (1st Cir. 2000)........................cccccc0e0 13

California v. FERC, |

a 13

Dickerson v. United States,

ee 11

Federal Power Commission v.

Sierra Pacific Power Co.,

IE sic sncerinssencconssncnnsnssessonssesiin passim

IBP, Inc. v. Alvarez,

546 U.S. 21, 126 S.Ct. 514 (2005) ........ 12

In re Permian Basin Area Rates Cases,

I cuneenininiion 13

Maislin Indus., U.S., Inc. v.

Primary Steel, Inc.,

III sss sscinncncessonsesussobosoensenedanenniaes 12

Payne v. Tennessee,

I eeeeaiion cag an

United Dist. Cos. v. FERC,

68 F346 1106 (D.C. Cit. 1906) .......ccccccccccccccsceccccees 9

United Gas Pipe Line Co. v.

Mobile Gas Service Corp.,

I secant passim

iv

Agency Cases

Pipeline Service Obligations and

Revisions to Regulations Governing

Self-Implementing Transportation Under

Part 284 of the Commission’s Regulations,

Order No. 636, FERC Stats. & Regs. J 30,939

(Apr. 8, 1992), on reh’g, Order No. 636-A,

FERC Stats. & Regs. J 30,950 (Aug. 3, 1992),

on reh’g, Order No. 636-B, 61 FERC 4 61,272

(1992), on reh’g, 62 FERC 4 61,007 (1993)........... 9

Statutes and Rules

15 U.S.C. § 3431(b)(1)(A) (2000)... eee eeeeeeeee ee 9

ee Se Fe itintcncnccscnccctenscctsitaniiciniinnsbii 9

18 C.F.R. § 284.284(a) (2007) ................cccccccccccccceeseces 9

bok f Be | __, , ESNNU NEN TN ESTE 9

Other Authorities

Asia Pacific Energy Research Centre,

Natural Gas Market Reform in the

APEC Region (2003),

available at http://www.iee).or.jp/aperc/

pdf/project2002/gas-market.pdf........................ 4,6

EIA,

The Majors’ Shift to Natural Gas (2001),

available at http://www.eia.doe.gov/emeu/

FERC, 2004 State of the Markets

Report (June 2005), available at

http://www.ferc.gov/EventCalendar/Files/

200506 15093455-06-15-05-som2004.pdf.............. 4

v

available at http://www.ferc.gov/

market-oversight/st-mkt-ovr/

GAO,

FERC, 2006 State of the Markets Report (2007),

Meeting Energy Demand in the 21st Century,

GAO-05-414T (March 16, 2005),

available at http://www.gao.gov/

new.items/d05414t.pdf ....................ccccceeeeees

Goldstein, Eli & Young, Warren,

Regulatory Failures and Regulatory

Successes: The Case of U.S. Electricity

Regulatory Reforms 8 (2002),

available at http://regulation.upf.edu/

National Association of

Regulatory Utility Commissioners,

Gas and Electricity Interdependence:

The Current Situation and Intermediate

and Long-Term Solutions (2003),

available at http://www.globalregulatory

network.org/pdfs/interdependence.pdf.......

National Petroleum Council,

Balancing Natural Gas Policy:

Fueling the Demands of a Growing

Economy 48 (2003),

available at http://www.npc.org/reports/

TTS

Shively, Bob & Ferrare, John,

Understanding Today’s Natural

Gas Business (2004) ........................c.-eeeeeee0

INTEREST OF AMICI CURIAE!

The Natural Gas Supply Association (“NGSA”)

represents U.S.-based producers and marketers of

natural gas on issues that broadly affect the natural

gas industry. The Independent Petroleum

Association of America (“IPAA”) represents

independent oil and natural gas producers and

associated service companies. As the voice of the

producers and marketers who find, produce, sell, and

deliver most of the Nation’s natural gas supply,

NGSA and IPAA work to ensure reliable and

efficient delivery of natural gas to end-consumers

and to increase the supply of natural gas to domestic

markets. NGSA’s and IPAA’s members have made

significant financial commitments in reliance on the

current structure of the Nation’s energy markets.

These commitments are necessary to satisfy the

demand for natural gas for all end-uses—including

electric power produced by natural gas generation

facilities, which represents the single fastest growing

! Petitioners and respondents have consented to the filing of

this brief in letters on file in the Clerk's office. Pursuant to S.

Ct. R. 37.6, amici state that no counsel for a party authored any

part of this brief. No person or entity other than amici, their

members, or their counsel made a monetary contribution to the

preparation or submission of this brief. The attorneys

preparing this brief direct the Court’s attention to the fact that

a second brief as amici curiae will be filed in these same cases

on behalf of the Electric Power Supply Association and others

by different attorneys from the same law firm. Although the

attorneys working on the two briefs have shared work product

and engaged in joint efforts, the resulting briefs are

independent statements reflecting the independent views of the

respective clients on whose behalf the two individual briefs are

being filed.

2

component of natural gas demand in the United

States.

The decisions of the Ninth Circuit below place in

doubt the willingness of that Circuit and the ability

of the Federal Energy Regulatory Commission

faithfully to apply this. Court’s landmark, half-

century-old, decisions in United Gas Pipe Line Co. v.

Mobile Gas Service Corp., 350 U.S. 332 (1956) and

Federal Power Commission v. Sierra Pacific Power

Co., 350 U.S. 348 (1956), at least as those decisions

apply to market-based rate contracts for electricity.

The Ninth Circuit decisions have therefore cast a

pall of uncertainty over future investments in

electric generating infrastructure, including

infrastructure designed to run on natural gas. More

broadly, the decisions raise troubling questions as to

how far any tremors from the precedential

aftershocks of the Ninth Circuit's doctrinal

departures will radiate out from electricity markets

and into natural gas markets within’ the

‘Commissiou’s jurisdiction. Depending on their

magnitude, those precedential aftershocks risk

unsettling crucial parts of what had been thought to

be settled rules and practices governing natural gas

transactions. It is for these reasons that NGSA and

IPAA are taking the unusual step of making their

views known to the Court, even though the

underlying decisions, properly interpreted, do not

apply to the natural gas industry.

INTRODUCTION

Over a_ half-century ago, this Court first

articulated what has come to be known as the

Mobile-Sierra doctrine. The Court described that

doctrine as embodying Congress's “reasonable

accommodation between the conflicting interests of

contract stability on the one hand and public

regulation on the other.” United Gas Pipe Line Co.

v. Mobile Gas Serv. Corp., 350 U.S. 332, 344 (1956);

see also Federal Power Commission v. Sierra Pac.

Power Co., 350 U.S. 348 (1956). Since then, the

courts and (with some infrequent exceptions) the

Commission have consistently and wisely declined

invitations to modify the terms of fixed-price bulk

energy contracts except in “extraordinary

circumstances” where revised contract terms are

clearly “necessary in the public interest.” Mobile, 350

U.S. at 344 (emphasis added).

Regulatory certainty, including the assurance

that contracts for Commission-jurisdictional services

are protected by Mobile-Sierra, has played a central

role in the Nation developing and maintaining “the

largest and most liquid gas market in the world.”

National Petroleum Council, Balancing Natural Gas

Policy: Fueling the Demands of a Growing Economy,

at 48 (2003). Together with pro-competitive

initiatives adopted by Congress and the Commission,

regulatory certainty has produced robust natural gas

markets that enable the natural gas industry to

respond effectively to price signals. Most

importantly, markets conveying clear price signals

have prompted billions of dollars of investment in

North American gas infrastructure, representing an

“important market success story” that sharply

4

contrasts to the endemic underinvestment

experienced under past regulatory regimes. FERC,

2004 State of the Markets Report, at 7, 145 (June

2005); see also EIA, The Majors’ Shift to Natural

Gas, at 19 (2001). Regulatory certainty has thus

enhanced the stability of natural gas supplies, which

is essential to keeping gas prices at reasonable levels

in a growing economy. See Asia Pacific Energy

Research Centre, Natural Gas Market Reform in the

APEC Region, at 149 (2003) (‘APEC Region”). The

happy result has been an “exciting new industry

characterized by free market enterprise, competition

and continual innovation.” Bob Shively & John

Ferrare, Understanding Today's Natural Gas

Business, at 1 (2004).

The Ninth Circuit’s doctrinal departures threaten

to undermine these successes. If allowed to stand,

the decisions risk exposing American consumers to

the same types of high and volatile prices and

frequent supply shortages that prompted Congress

and the Commission to discard the regulatory

practices of the past in favor of supply arrangements

that are at once more flexible, more stable, and more |

reliable.

REASONS FOR GRANTING THE WRIT

This Court should grant certiorari to correct the

Ninth Circuit's unwarranted and unwise judicial

policymaking in an industry of central national

importance. As petitioners explain, by setting aside

congressional policy, the Ninth Circuit decisions

have opened a conflict with the longstanding

precedent of both this Court and other Courts of

Appeals. Because fuel costs are the largest variable

cost involved in producing electricity, the lower

9)

court's destabilization of the already volatile

electricity market could have significant spillover

effects in the Nation’s natural gas markets. (See

Section I, below.) Moreover, by calling into question

the Ninth Circuit’s respect for Mobile-Sierra’s

well-understood principles, the decisions below may

infect the natural gas markets with legal

uncertainty—in the form of fears that the Ninth

Circuit's unwise decisions might be improperly

extended to encompass certain natural gas

transactions. (See Section II, below.) Both types of

disruption threaten the interests of the very

consumers the Ninth Circuit decisions were intended

to protect.

I. Because The Nation’s Electricity And

Natural Gas Markets Are _ Increasingly

Interdependent, The Ninth Circuit

Decisions Cuuld Spill Over Into Natural Gas

Markets.

The Ninth Circuit decisions dramatically depart

from this Court’s precedents by inventing a new test

for determining whether Mobile-Sierra’s public-

interest standard applies to wholesale power

contracts that incorporate market-based rates. The

decisions fundamentally alter the Mobile-Sierra

standard by creating a one-way ratchet according to

which buyer's remorse—but not seller’s

remorse—can supply a basis for invoking the public

interest to abrogate voluntarily-negotiated contract

rates. In so-called “high rate” cases, the Ninth

Circuit decisions hold, for the very first time, that

the Commission must modify contracts in all

instances where rates are deemed to be outside some

subjectively defined “zone of reasonableness.”

6

If the Ninth Circuit decisions are allowed to

stand, the most immediate result would be the

destabilization of the Nation’s electricity markets.

Next, because electricity generation is a large and

fast growing user of natural gas, see APEC Region, at

143 (the “fastest growth in gas use is projected to

occur in the electric power sector, with demand more

than doubling”), the uncertainty those decisions have

engendered in electricity markets will inevitably

splash back into the market for the natural gas

supplies used to fire much of the Nation’s electric

generating capacity. See FERC, 2006 State of the

Markets Report, at 3 (2007) (“2006 Markets Report”)

(“[a]though we often consider energy markets as

distinct (e.g., electricity and natural gas), they

increasingly influence one another”). |

Under the Ninth Circuit’s approach, generators

that use natural gas to power generating facilities

will be unable to rely on stable, long-term contracts

to sell the electricity they generate. The precise

adjustment that the markets will make to this

unexpected legal development is not yet clear. But

what is clear is that, precisely because they may no

longer enter stable sales contracts with electricity

customers, power generators may take a much

different view of making the multi-million dollar

commitments necessary to add new electric

generation capacity—the great majority of which is

fired by clean-burning natural gas. By calling into

question the economic viability of facilities that

purchase and consume natural gas, the decisions

below cannot help but have substantial impacts on

the natural gas industry.

7

Another likely result of the Ninth Circuit's

doctrinal shift is a destabilization of electric power

generators’ purchases of natural gas on the spot

market. See generally Eli Goldstein & Warren

- Young, Regulatory Failures and Regulatory

Successes: The Case of U.S. Electricity Regulatory

Reforms, at 8 (2002). The Ninth Circuit decisions,

particularly the one-way ratchet set in place by those

decisions, will discourage generators from entering

into long-term contracts to sell electricity and

undermine their ability to rely on existing long-term

contracts. Long-term contracts that are voidable by

electricity customers, but not by electricity

generators, will be seen as having much less value

from the perspective of generators. This will in turn

render generators less willing and less able to make

long-term commitments with suppliers of natural gas

and other fuels, inevitably pushing greater volumes —

of natural gas transactions to compete for the more

volatile supplies traded through spot market

purchases. Generally speaking, the greater the

proportion of natural gas sold through the spot

market, and the more questionable the legal validity

of the contracts used to hedge spot market risks, the

more market participants of every description will be

at the mercy of fluctuations in spot market prices.

For these reasons, the Ninth Circuit decisions

make events like the California energy crisis of

2000-2001 more likely to recur. Moreover, because of

the iterative nature of market responses in the

closely related markets for electricity and natural

gas, the Ninth Circuit’s policies create circumstances

conducive to a vicious cycle of instability across both

markets. “Since the availability and price of natural

gas directly affects electricity markets and electricity

8

prices and because so much of the electricity

generation added in the past decade, and planned to

be added in the future, is gas-fired, all consumers |

across the Nation are likely to experience the

impacts of energy price and supply volatility twice,

on both their gas and electricity bills.” National

Association of Regulatory Utility Commissioners,

Gas and Electricity Interdependence: The Current

Situation and Intermediate and Long-Term

Solutions, at 1 (2003). This Court’s review is needed

in order to short circuit this cycle before it begins.

Il. The Ninth Circuit Decisions Introduce

Uncertainty By Undermining The Principal

of Stare Decisis And The Doctrinal Stability

Of This Court’s Mobile-Sierra Regime.

In addition to the Ninth Circuit decisions’ indirect

impacts on natural gas markets through their effects

on electricity markets, NGSA and IPAA are

concerned about potential direct adverse impacts of

those decisions in the event they were to be

improperly construed as applying to Commission-

jurisdictional sales of natural gas. To be clear,

despite similarities between the Natural Gas Act and

the Federal Power Act, there are critical legal,

factual, and economic distinctions that dispositively

militate against extending the Ninth Circuit

decisions to natural gas sales. Accordingly, even

assuming the decisions below were correct in the

electricity context in which they were decided (they

are not), there still could be no legitimate basis for

applying those decisions in the context of sales of

natural gas.

In contrast to wholesale sales of electricity, a

substantial proportion of natural gas sales are not

9

subject to rate regulation by the Commission.

Congress found that markets for natural gas at the

wellhead and in the field were competitive and

therefore decontrolled rates for so-called “first sales”

of natural gas. See 15 U.S.C. § 3431(b)(1)(A) (2000)

(“for purposes of [the rate provisions] of the Natural

Gas Act, any amount paid in any first sale of natural

gas shall be deemed to be just and reasonable”).

Accordingly, the Natural Gas Act now limits the

Commission’s ratemaking jurisdiction over sales of

natural gas for resale in interstate commerce to

subsequent sales. See 15 U.S.C. § 717(b) (2000).

Moreover, the Commission has used its expertise and

authority to pre-authorize non-“first sales” for resale

at “negotiated rates.” 18 C.F.R. § 284.402(a) (2007);

see also 18 C.F.R. § 284.284(a) (2007). The

Commission embraced this market-oriented

approach based on findings that it could rely on

“market forces at the wellhead or in the field” to

constrain resale gas prices within the Natural Gas

Act’s “just and reasonable’ standard.” Pipeline Serv.

Obligations and Revisions to Regulations Governing

Self-Implementing Transp. Under Part 284 of the

Commission’s Regulations, Order No. 636, FERC

Stats. & Regs. | 30,939 at 30,440 (Apr. 8, 1992), on

reh’g, Order No. 636-A; FERC Stats. & Regs.

{ 30,950 (Aug. 3, 1992), on reh’g, Order No. 636-B, 61

FERC 4 61,272 (1992), on reh’g, 62 FERC ¥ 61,007

(1993), affd in part and remanded in part sub nom.

United Dist. Cos. v. FERC, 88 F.3d 1105 (D.C. Cir.

1996).

The decisions below do not apply to Commission-

jurisdictional sales for resale of natural gas. Nor do

they purport to reverse the elaborate statutory and

regulatory superstructure that has been built by

10

Congress and the Commission to develop and govern

well functioning markets for natural _§ gas.

Nonetheless, the Ninth Circuit’s willingness to

depart from precedent in one context (market-based

rate sales of electricity) suggests the possibility of

comparable departures in a second context (market-

based rate sales of natural gas). By raising the

specter that its misguided decisions might come to

infect market-based rate regulation of non-“first

sales” for resale of natural gas, the Ninth Circuit has

threatened the longstanding regulatory certainty

secured by Mobile-Sierra. Such certainty is essential

to well-functioning natural gas markets, because

only stable and well known contracting rules can

permit buyers to lock in particular prices and

quantities of natural gas using negotiated contracts

adapted to their own particular needs.

Although the Ninth Circuit decisions will have

the most immediate impact on regulatory certainty

in the context of electricity contracts, there can be no

assurance that the decisions’ ultimate reverberations

will be so limited. If the Ninth Circuit can, at the

stroke of a pen, discard a half-century-old legal

standard as to one class of contracts, and if it can

turn a balanced and parallel contracting rule into a

one-way ratchet, what is to prevent similar

treatment of the doctrine as regards other classes of

contracts? What is to prevent innovations in other

doctrines? And what, ultimately, is to prevent the

Ninth Circuit or other lower courts from revamping

any foundational rule governing energy markets?

The Ninth Circuit’s policy innovations have broad

implications for stability, predictability, and legal

expectations throughout the energy industry. At

11

present, “buyers of natural gas have options to

reduce their exposure to volatile prices,” both

through stable contracts to buy physical gas, as well

as financial hedging instruments. GAO, Meeting

Energy Demand in the 21st Century, GAO-05-414T,

at 16 (March 16, 2005); see also 2006 Markets

Report, at 44 (“buyers and sellers would largely lose

the benefits of hedging if there were no speculators

willing to assume the risk that hedgers want to lay

off’). At their most fundamental level, however, the

decisions below have imperiled the viability of these

risk-reducing options.

The Mobile-Sierra doctrine, and the respect for

settled expectations it demands, may appear to the

uninitiated as mere abstractions. But to participants

in the Nation’s energy markets, the doctrine is

omnipresent. A simple search of the Westlaw legal

database that collects Commission decisions shows

that of the approximately 5,000 administrative

decisions rendered by the Commission since 2000,

over 600 (approximately one in eight) mention

Mobile-Sierra. It may be only a slight exaggeration,

if it is an exaggeration at all, to say that Mobile-

Sierra is to energy regulation what the Miranda rule

is to the law of criminal arrests. Cf. Dickerson uv.

United States, 530 U.S. 428, 443-44 (2000).

Although the Ninth Circuit did not hesitate to

depart from the settled understandings of the

Federal Power Act, this Court has long recognized

that a set of stable and consistent legal rules serves

crucial functions. See, e.g., Payne v. Tennessee, 501

U.S. 808, 828 (1991) (considerations “in favor of stare

decisis are at their acme in cases involving property

and contract rights”), As many of this Court’s

12

decisions have observed, clear legal rules discourage

costly litigation that would otherwise entail

substantial direct costs, and then impose still further

costs by engendering additional rounds of follow-on

litigation as needed to clarify any remaining

uncertainty.

Energy suppliers, like other market participants,

“require clear signals regarding national policies and

confidence that those policies will be sustained over

time in order to undertake the _ substantial

investment needed to support expected increases in

consumption.” GAO, Meeting Energy Demand in the

21st Century, GAO-05-414T, at 7-8 (March 16, 2005).

These important supply signals can only be

scrambled if prices are to be set from time to time

according to a heavy and unpredictable regulatory

hand empowered by indefensible departures from

judicial precedent.

This Court has often recognized that principles of

stare decisis carry maximum force in contexts where,

as here, statutory as opposed to constitutional

policies are at issue. See IBP, Inc. v. Alvarez, 546

U.S. 21, 126 S.Ct. 514, 523 (2005) (“[c]onsiderations

of stare decisis are particularly forceful in the area of

statutory construction, especially when a unanimous

interpretation of a statute has been accepted as

settled law for several decades”). In addition, the

Court has sometimes found it necessary to remind

lower courts, including the Ninth Circuit, that only

this Court may revisit one of the Court’s own

precedents. See Maislin Indus., U.S., Inc. v. Primary

Steel, Inc., 497 U.S. 116, 131 (1990) (once this Court

has “determined a statute’s clear meaning,” it

adheres “to that determination under the doctrine of

13

stare decisis”); see also California v. FERC, 495 U.S.

490, 499 (1990) (recognizing the respect “this Court

must accord to longstanding and well-entrenched

decisions, especially those interpreting statutes that

underlie complex regulatory regimes”). Against this

backdrop, the Ninth Circuit decisions must be

viewed as an assault, not only on the Mobile-Sierra

doctrine, but also on principles of stare decisis more

generally.

Any change in a legal regime that acts, as do the.

Ninth Circuit decisions, to replace settled rules with

vague administrative directives necessarily opens a

door to arbitrary agency decisionmaking. Having

now “bargain[ed] in the shadow” of Mobile-Sierra for ~

more than five decades, Boston Edison Co. v. FERC,

233 F.3d 60, 66 (1st Cir. 2000), energy market

participants have ordered their affairs on the

assumption that the Commission will be allowed to

modify contracts only in accordance with Mobile-

Sierra’s narrow and well-defined understanding of

“extraordinary circumstances” of “unequivocal public

necessity.” In re Permian Basin Area Rates Cases,

390 U.S. 747, 820-22 (1968). Upsetting those

expectations not only engenders uncertainty, it

invites an interlude of impossible-to-predict agency

reaction. The risk that market participants will be

unnecessarily subject to the whim of uncertain

Commission policies poses an undeniable further

threat to the stability of our Nation’s energy

markets—one that can and should be defused by this

Court’s review of the decisions below.

14

CONCLUSION

For the foregoing reasons, and for reasons set

forth in the petition, the Court should grant the writ

of certiorari.

Respectfully submitted,

ROBERT R. GASAWAY

Counsel of Record

7 | ASHLEY C. PARRISH

KIRKLAND & ELLIS LLP

655 Fifteenth Street, N.W.

Washington, D.C. 20005

(202) 879-5000

Attorneys for the Natural

Gas Supply Association

August 6, 2007