United States: Energy

In a seven-to-two decision, the Supreme Court this year opened the door for more exceptions to circumstances where federal regulation prevents application of state antitrust laws. Under Oneok v Learjet, the court held that claims of natural gas purchasers under a state’s antitrust laws are not barred by federal ‘field preemption,’ even though the Federal Energy Regulatory Commission (FERC) had authority to regulate the conduct that caused the damage.

Congress passed the Natural Gas Act (NGA) in 1938. That Act strikes a delicate balance between state and federal areas of control over the natural gas industry. The NGA gives the FERC jurisdiction to regulate the rates pipeline companies charge to wholesale distributors engaged in interstate commerce. To enhance the FERC’s ability to regulate those rates, the NGA also gives it the authority to regulate ‘any rule, regulation, practice or contract affecting such rate.’ In Oneok, the Supreme Court was asked to decide whether the NGA occupies the field of natural gas pipeline regulations so pervasively that the California antitrust laws are barred by federal field pre-emption when applied to pipeline companies.

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