By TONI ELLINGTON
Oral argument in the U.S. Supreme Court is set for January 12, 2015, in the case of ONEOK, Inc. v. Learjet, Inc., No. 13-271. The case is an appeal from a decision of the Ninth Circuit Court of Appeal arising under the Natural Gas Act, 15 U.S.C. §717, et seq.
The Natural Gas Act of 1938 was enacted to regulate rates charged by interstate natural gas transmission companies. The Act originally gave the Federal Power Commission control over regulation of natural gas rates. The Federal Power Commission later became the Federal Energy Regulatory Commission (“FERC”).
The question before the Court is whether the Natural Gas Act preempts state law claims which challenge industry practices that directly affect the wholesale natural gas market when those claims are asserted by litigants who purchased gas in retail transactions. The respondents in the case brought state law claims against natural gas companies over industry practices which affected prices in the wholesale natural gas market. The Ninth Circuit held that the respondents’ claims were not preempted and subject to federal jurisdiction, because the respondents allegedly were damaged when they bought natural gas in retail sales.
The case has prompted amicus briefs from members of the energy and natural gas industries, including Electric Power Supply Association, Interstate Natural Gas Association of America, Natural Gas Supply Association, Western Power Trading Forum, and Noble Americas Energy Solutions, as well as the United States government. The industry groups claim the Ninth Circuit’s decision imposes new regulatory burdens on natural gas transportation, marketing, and sales activities downstream, which are regulated by FERC. Under the Ninth Circuit’s decision, a party could evade FERC jurisdiction and forum shop for a state court which might be willing to impose more onerous restrictions than FERC.
For updates, stay tuned to this blog, or contact Toni Ellington at (504) 599-8500.
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