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Oneok, Inc. v. Learjet, Inc.

United States Supreme Court

April 21, 2015

ONEOK, INC., ET AL. PETITIONERS
v.
LEARJET, INC., ET AL

Argued January 12, 2015

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

SYLLABUS

[191 L.Ed.2d 515] Respondents, a group of manufacturers, hospitals, and other institutions that buy natural gas directly from interstate pipelines, sued petitioner interstate pipelines, claiming that the pipelines had engaged in behavior that violated state antitrust laws. In particular, respondents alleged that petitioners reported false information to the natural-gas indices on which respondents' natural-gas contracts were based. The indices affected not only retail natural-gas prices, but also wholesale natural-gas prices.

After removing the cases to federal court, the petitioner pipelines sought summary judgment on the ground that the Natural Gas Act pre-empted respondents' state-law claims. That Act gives the Federal Energy Regulatory Commission (FERC) the authority to determine whether rates charged by natural-gas companies or practices affecting such rates are unreasonable. 15 U.S.C. § 717d(a). But it also 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. § 717(b). The Act leaves regulation of other portions of the industry--such as retail sales--to the States. Ibid.

The District Court granted petitioners' motion for summary judgment, reasoning that because petitioners' challenged practices directly affected wholesale as well as retail prices, they were pre-empted by the Act. The Ninth Circuit reversed. While acknowledging that the pipelines' index manipulation increased wholesale prices as well as retail prices, it held that the state-law claims were not pre-empted because they were aimed at obtaining damages only for excessively high retail prices.

Held : Respondents' state-law antitrust claims are not within the field of matters pre-empted by the Natural Gas Act. Pp. 10-16.

(a) The Act " was drawn with meticulous regard for the continued exercise of state power." Panhandle Eastern Pipe Line Co. v. Public Serv. Comm'n of Ind., 332 U.S. 507, 517-518, 68 S.Ct. 190, 92 L.Ed. 128. Where, as here, a practice affects nonjurisdictional as well as jurisdictional sales, pre-emption can be found only where a detailed examination convincingly demonstrates that a matter falls within the pre-empted field as defined by this Court's precedents. Those precedents emphasize the importance of considering the target at which the state-law claims aim. See, e.g., Northern Natural Gas Co. v. State Corporation Comm'n of Kan., 372 U.S. 84, 83 S.Ct. 646, 9 L.Ed.2d 601; Northwest Central Pipeline Corp. v. State Corporation Comm'n of Kan., 489 U.S. 493, 109 S.Ct. 1262; 103 L.Ed.2d 509. Here, respondents' claims are aimed at practices affecting retail prices, a matter " firmly on the States' side of [the] dividing line." Id., at 514, 109 S.Ct. 1262; 103 L.Ed.2d 509.

Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 108 S.Ct. 1145, 99 L.Ed.2d 316, is not to the contrary. That opinion explains that the Act does not pre-empt " traditional" state regulation, such as blue sky laws. Id., at 308, n. 11, 108 S.Ct. 1145, 99 L.Ed.2d 316. Antitrust laws, like blue sky laws, are not aimed at natural-gas companies in particular, but rather [191 L.Ed.2d 516] all businesses in the marketplace. The broad applicability of state antitrust laws supports a finding of no pre-emption here.

So, too, does the fact that States have long provided " common-law and statutory remedies against monopolies and unfair business practices," California v. ARC America Corp., 490 U.S. 93, 101, 109 S.Ct. 1661, 104 L.Ed.2d 86. As noted earlier, the Act circumscribes FERC's powers and preserves traditional areas of state authority. § 717(b). Pp. 10-14.

(b) Neither Mississippi Power & Light Co. v. Mississippi ex rel. Moore, 487 U.S. 354, 108 S.Ct. 2428, 101 L.Ed.2d 322, nor FPC v. Louisiana Power & Light Co., 406 U.S. 621, 92 S.Ct. 1827, 32 L.Ed.2d 369, supports petitioners' position. Mississippi Power is best read as a conflict pre-emption case, not a field pre-emption case. In any event, the state inquiry in Mississippi Power was pre-empted because it was directed at jurisdictional sales in a way that respondents' state antitrust suits are not. Louisiana Power is also a conflict pre-emption case, and thus does not significantly help petitioners' field pre-emption argument. Pp. 14-15.

(c) Because the parties have not argued conflict pre-emption, questions involving conflicts between state antitrust proceedings and the federal rate-setting process are left for the lower courts to resolve in the first instance. Pp. 15-16.

(d) While petitioners and the Government argue that this Court should defer to FERC's determination that field pre-emption bars respondents' claims, they fail to point to a specific FERC determination that state antitrust claims fall within the field pre-empted by the Natural Gas Act. Thus, this Court need not consider what legal effect such a determination might have. P. 16.

715 F.3d 716, affirmed.

Neal K. Katyal argued the cause for petitioners.

Anthony A. Yang argued the cause for the United States, as amicus curiae, by special leave of the court.

Jeffrey L. Fisher argued the cause for respondents.

Stephen R. McAllister argued the cause for Kansas et al., as amici curiae.

BREYER, J., delivered the opinion of the Court, in which KENNEDY, GINSBURG, ALITO, SOTOMAYOR, and KAGAN, JJ., joined, and in which THOMAS, J., joined as to all but Part I-A. THOMAS, J., filed an opinion concurring in part and concurring in the judgment. SCALIA, J., filed a dissenting opinion, in which ROBERTS, C. J., joined.

OPINION

BREYER, JUSTICE

In this case, a group of manufacturers, hospitals, and other institutions that buy natural gas directly from interstate pipelines sued the pipelines, claiming that they engaged in behavior that violated state antitrust laws. The pipelines' behavior affected both federally regulated wholesale natural-gas prices and nonfederally regulated retail natural-gas prices. The question is whether the federal Natural Gas Act pre-empts these lawsuits. We have said that, in passing the Act, " Congress occupied the field of matters relating to wholesale sales and transportation of natural gas in interstate commerce." Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 305, 108 S.Ct. 1145, 99 L.Ed.2d 316 (1988). Nevertheless, for the reasons given below, we conclude that the Act does not pre-empt the state-law antitrust suits at issue here.

[191 L.Ed.2d 517] I

A

The Supremacy Clause provides that " the Laws of the United States" (as well as treaties and the Constitution itself ) " shall be the supreme Law of the Land . . . any Thing in the Constitution or Laws of any state to the Contrary notwithstanding." Art. VI, cl. 2. Congress may consequently pre-empt, i.e., invalidate, a state law through federal legislation. It may do so through express language in a statute. But even where, as here, a statute does not refer expressly to pre-emption, Congress may implicitly pre-empt a state law, rule, or other state action. See Sprietsma v. Mercury Marine, 537 U.S. 51, 64, 123 S.Ct. 518, 154 L.Ed.2d 466 (2002).

It may do so either through " field" pre-emption or " conflict" pre-emption. As to the former, Congress may have intended " to foreclose any state regulation in the area," irrespective of whether state law is consistent or inconsistent with " federal standards." Arizona v. United States, 567 U.S. ___, ___, 132 S.Ct. 2492, 2502, 183 L.Ed.2d 351, 370 (2012) (emphasis added). In such situations, Congress has forbidden the State to take action in the field that the federal statute pre-empts.

By contrast, conflict pre-emption exists where " compliance with both state and federal law is impossible," or where " the state law 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'" California v. ARC America Corp., 490 U.S. 93, 100, 101, 109 S.Ct. 1661, 104 L.Ed.2d 86 (1989). In either situation, federal law must prevail.

No one here claims that any relevant federal statute expressly pre-empts state antitrust lawsuits. Nor have the parties argued at any length that these state suits conflict with federal law. Rather, the interstate pipeline companies (petitioners here) argue that Congress implicitly " 'occupied the field of matters relating to wholesale sales and transportation of natural gas in interstate commerce.'" Brief for Petitioners 18 (quoting Schneidewind, supra, at 305, 108 S.Ct. 1145, 99 L.Ed.2d 316 (emphasis added)). And they contend that the state antitrust claims advanced by their direct-sales customers (respondents here) fall within that field. The United States, supporting the pipelines, argues similarly. See Brief for United States as Amicus Curiae 15. Since the parties have argued this case almost exclusively in terms of field pre-emption, we consider only the field pre-emption question.

B

1

Federal regulation of the natural-gas industry began at a time when the industry was divided into three segments. See 1 Regulation of the Natural Gas Industry § 1.01 (W. Mogel ed. 2008) (hereinafter Mogel); General Motors Corp. v. Tracy, 519 U.S. 278, 283, 117 S.Ct. 811, 136 L.Ed.2d 761 (1997). First, natural-gas producers sunk wells in large oil and gas fields (such as the Permian Basin in Texas and New Mexico). They gathered the gas, brought it to transportation points, and left it to interstate gas pipelines to transport the gas to distant markets. Second, interstate pipelines shipped the gas from the field to cities and towns ...


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