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Court Seeks Obama Administration View of NatGas Price Manipulation Case

The U.S. Supreme Court has asked the Solicitor General to file a brief in a case in which a lower court decision revived state law challenges regarding companies that may have fixed natural gas prices during the energy crisis in 2000-2002, an indication that the court may reconsider that decision.

The case grew out of several claims that were filed in state and federal courts beginning in 2005, all of which were consolidated into a multidistrict litigation proceeding (In re: Western States Natural Gas Antitrust Litigation et al v. Oneok Inc. et al, No. 11-16786, DC Nos. 2:03-cf-01431-PMP-PAL, 2:06-cv-00233-PMP-PAL). Natural gas operators argued that the U.S. Natural Gas Act (NGA) preempts state law allegations.

A district court entered summary judgment in July 2011, finding that in most of the cases state law antitrust claims were preempted by the NGA. The case reached the U.S. Court of Appeals for the Ninth Circuit in San Francisco, which issued its opinion in April (see Daily GPI, April 16). The Ninth Circuit panel reversed in part and affirmed in part the district court's orders, granting summary judgment to the plaintiffs.

The panel held that the NGA does not preempt the plaintiffs' state antitrust claims. It also held that the 2003 enactment of the Federal Energy Regulatory Commission's (FERC) Code of Conduct didn't affect its conclusion that the NGA did not grant the Commission jurisdiction over claims arising from false price reporting and other anti-competitive behavior.

The U.S. Supreme Court was asked to review the decision in September (see Daily GPI, Sept. 6).

In a brief filed in the case, the Washington Legal Foundation (WLF) argued that Congress enacted the NGA to give FERC exclusive authority over the natural gas wholesale market. The Ninth Circuit decision "threatens to disrupt that uniform federal scheme by allowing attorneys motivated by large jury awards to create potentially 50 different state regulatory regimes that would bind the natural gas industry," WLF said.

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