Supreme Court agrees that claims against interstate gas pipelines not pre-empted by FERC

The United States Supreme Court has affirmed a decision by the Ninth U.S. Circuit Court of Appeals, finding that state anti-trust claims brought by customers of interstate natural gas pipelines are not necessarily pre-empted by the Natural Gas Act, which is administered by the Federal Energy Regulatory Commission (FERC).

The high court handed down its decision in Oneok Inc. versus Leajet on April 21.

Organizations that buy natural gas directly from interstate pipelines had sued, claiming that the pipelines had violated state antitrust laws: that they reported false information to the natural-gas indices on which natural-gas contracts were based, according to a summary posted online by the Justia service, which covers the Supreme Court.

The indices affected both retail and wholesale natural-gas prices. The pipelines sought summary judgment, arguing that the Natural Gas Act pre-empted state-law claims. That act gives FERC authority to determine whether rates charged by natural gas companies or practices affecting such rates are unreasonable.

But the Gas Act limits FERC’s jurisdiction to the transportation of natural gas in interstate commerce, the sale in interstate commerce of natural gas for resale, and natural-gas companies engaged in such transportation or sale, leaving regulation of other portions of the industry, such as retail sales, to the states.

A federal district judge had granted summary judgment to the pipelines. The Ninth Circuit, however, reversed that decision.

The Supreme Court on April 21 affirmed the Ninth Circuit decision.

“The Supreme Court affirmed, emphasizing the importance of considering the target at which the state-law claims aim,” the Justia summary said of the decision.

“State antitrust laws are not aimed at natural-gas companies in particular, but rather all businesses and states have long provided “common-law and statutory remedies against monopolies and unfair business practices,” the Supreme Court said.

The case, ONEOK, INC., ET AL. v. LEARJET ET AL, was Docket No. 13-271.

Justice Antonin Scalia drafted a dissenting opinion, which was joined by Chief Justice John Roberts.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.