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13-271 ONEOK, INC. V. LEARJET, INC. DECISION BELOW: 715 F.3d 716 CERT. GRANTED 7/1/2014 QUESTION PRESENTED: The Natural Gas Act occupies the field as to matters within its scope, preempting state regulation directed at practices that affect the wholesale natural gas market. Respondents brought state-law claims against natural gas companies, seeking to regulate industry practices that Respondents concede affected prices in the wholesale market. And yet the Ninth Circuit held--in direct conflict with two state courts of last resort--that Respondents' Claims were not preempted because Respondents allegedly were damaged when they bought natural gas in retail sales, which fall outside federal jurisdiction. The question presented is: Does the Natural Gas Act preempt state-law claims challenging industry practices that directly affect the wholesale natural gas market when those claims are asserted by litigants who purchased gas in retail transactions? LOWER COURT CASE NUMBER: 11-16786, 11-16798, 11-16802, 11-16818, 11-16869, 11- 16876
The U.S. Supreme Court case ONEOK, Inc., v. Learjet, Inc., 2014 revolved around the issue of whether federal or state law should apply in cases related to natural gas pricing disputes. The plaintiffs were a group of retail buyers who accused interstate pipeline companies including ONEOK of manipulating data to increase prices artificially during the Western Energy Crisis between 2000 and 2002. They filed lawsuits under state antitrust laws for overcharges that occurred due to this alleged manipulation. The defendants argued that these claims fell within the domain of federal regulation (the Natural Gas Act) and thus should be preempted by it. However, the Supreme Court ruled in favor of Learjet and other plaintiffs with a majority decision stating that even though pipelines are subject to Federal Energy Regulatory Commission jurisdiction, it does not preclude retail buyers from filing suits under state antitrust laws for practices affecting retail rates - which fall outside FERC's purview as per Natural Gas Act provisions.
In the dissenting opinion for ONEOK, INC., v. LEARJET, INC., Justice Antonin Scalia argued that state-level antitrust claims should be pre-empted by federal law when they are related to wholesale gas rates. He contended that the majority's decision failed to respect Congress' intent in creating a comprehensive and uniform system of federal regulation over natural gas companies and their rates. He further asserted that allowing states to regulate in this area would result in a patchwork of inconsistent regulations which could undermine the effective operation of the national market for natural gas. In his view, any claim relating directly or indirectly to wholesale rates falls within FERC’s exclusive jurisdiction under Natural Gas Act (NGA). Thus he disagreed with majority’s approach on grounds it blurred lines between retail and wholesale markets.