The U.S. Supreme Court case Federal Power Commission v. Sierra Pacific Power Co., in 1955, revolved around the issue of whether or not the Federal Power Commission (FPC) had authority to modify a contract between two private utility companies - Sierra Pacific and California Electric Company - under Section 206(a) of the Federal Power Act. The FPC argued that it could alter rates set by contracts if they were found unjust or unreasonable, while Sierra Pacific contended that this was beyond its jurisdiction as long as both parties agreed on terms voluntarily and without discrimination against other customers. The Supreme Court ruled in favor of Sierra Pacific, stating that unless there is clear evidence of public interest being adversely affected, voluntary contracts should be respected and left unaltered by regulatory bodies like FPC.

In the dissenting opinion for Federal Power Commission v. Sierra Pacific Power Co., Justice Frankfurter argued that the majority's decision was a departure from established principles of administrative law and an intrusion into the domain of legislative policy-making. He contended that it is not within the Court's purview to determine whether rates are just and reasonable, but rather this responsibility lies with Congress or its delegated agency - in this case, the Federal Power Commission (FPC). The FPC had found no evidence of exploitation or abuse by Sierra Pacific, yet their contractually agreed-upon rates were overturned because they did not align with what would be considered "just and reasonable" under normal circumstances. This approach disregards contractual autonomy and undermines regulatory certainty. Furthermore, he criticized how such judicial intervention could lead to arbitrary results as courts lack expertise in complex economic matters compared to specialized agencies like FPC.