The U.S. Court of Appeals for the District of Columbia Circuit recently rejected a shipper's attempt to require FERC approval for a pipeline's rate changes under a negotiated contract. See Iberdrola Renewables, Inc. v. Federal Energy Regulatory Commission (Docket No. 08-1195) (Feb. 26, 2010) (see here - opinions). The court found that:
The contract’s plain language settles this matter. Even if we were to consider this extrinsic evidence, it is of no help to Iberdrola. Both parties were aware that FERC had instructed Alliance to remove that language [i.e., language making rate changes subject to FERC review] from its tariff and to include it in the Transportation Agreement if the parties wanted FERC approval for any negotiated rate changes. They were, therefore, on notice that FERC would only review rate changes if the parties included such a provision in their contract. Their knowledge of how FERC would read the contract is the most probative piece of extrinsic evidence of the parties’ intent, and it cuts strongly against Iberdrola.
Because the negotiated contract did not include an express role for FERC, the court followed "the well-established rule that freely negotiated rates are presumed just and reasonable."