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Supreme Court: state natural gas action not preempted by federal law
Supreme Court: state natural gas action not preempted by federal law

[JURIST] The US Supreme Court [official website] ruled [opinion, PDF] Tuesday in favor of Learjet and other natural gas retail purchasers in their action against interstate natural gas pipeline ONEOK, finding that the Natural Gas Act [text] does not provide the Federal Energy Regulatory Commission [official website] exclusive control over the actions of energy firms. Learjet, representing a group of institutions that buy natural gas directly from interstate pipelines, brought suit against pipeline ONEOK for reporting false information affecting natural gas prices. In the 7-2 decision written by Justice Stephen Breyer, the court determined that because the action was targeting practices affecting retail sales, which are “firmly on the States’ side of [the jurisdictional] dividing line,” and was an area of regulation traditionally relegated to the states, that the federal regulation did not field preempt the state law antitrust claim. The petitioners and government argued that because the Natural Gas Act gives the FERC authority to to determine whether “any rate, charge, or classification … is unjust, unreasonable, unduly discriminatory, or preferential,” Congress implicitly “occupied the field of matters relating to wholesale sales and transportation of natural gas in interstate commerce.” Instead, the court held that the act limits FERC’s jurisdiction to the transportation and sale of natural gas in interstate commerce, leaving to the states regulation of other portions of the industry, including direct sales. The dissent, authored by Justice Antonin Scalia, stated that the opinion gives “the States [the power to] use their antitrust laws to regulate practices already regulated by the Federal Energy Regulatory Commission whenever ‘other considerations … weigh against a finding of pre-emption.'”

The Supreme Court granted [petition] certiorari on July 1, 2014, and heard oral argument [transcript] on January 15. The case came to the court after the US Court of Appeals for the Ninth Circuit [official website] reversed [opinion] a decision by the US District Court for the District of Nevada [official website] granting [opinion] summary judgment in favor of the defendant natural gas pipelines.