United States: FERC Versus State Authorities: Supreme Court Agrees To Review ONEOK v. Learjet

On July 1, 2014, the U.S. Supreme Court granted a petition to hear an appeal by several companies contending that antitrust claims filed against them under state law over alleged manipulation of gas prices during the western energy crisis from 2000 to 2002 were precluded by the Natural Gas Act ("NGA").1  The Court's decision to hear this appeal marks an important development in the preemptive effect of the NGA, and may potentially affect the scope of the Federal Energy Regulatory Commission's ("FERC") enforcement authority versus state authorities. 

The Supreme Court will hear arguments in the case in its next term.  The petitioners seek Supreme Court review of the April 2013 decision by the U.S. Court of Appeals for the Ninth Circuit.  The appeals court allowed natural gas buyers to pursue antitrust lawsuits over alleged price manipulation against ONEOK, Inc., Duke Energy Trading and Marketing, LLC, CMS Energy Corp., The Williams Cos., Inc., El Paso Corp., American Electric Power Co., Inc., Xcel Energy, Inc., and other companies involved in gas trading.

The Ninth Circuit decision reversed an earlier decision by the U.S. District Court for the District of Nevada dismissing the claims against these companies.2  The district court found that antitrust claims under state law were preempted by Section 5(a) of the NGA.  The Ninth Circuit disagreed, ruling that such a broad reading of NGA Section 5(a) could damage the jurisdictional provisions of NGA Section 1(b), which give states authority over natural gas sales that are not subject to FERC jurisdiction.

The Ninth Circuit reinstated the lawsuits and remanded the case back to the district court for further proceedings consistent with the appeals court's decision.  The appeals court also reversed the dismissal of American Electric Power as defendants from suits in Wisconsin and Missouri and affirmed all other orders in the appeals.

In the underlying lawsuits, retail buyers of natural gas alleged that traders manipulated gas prices "by reporting false information to price indices published by trade publications."3 The lawsuits also alleged that the traders engaged in wash sales, involving prearranged sales in which traders simultaneously offset one trade with an opposite buy or sell such that the trade involves no economic risk and no net change in beneficial ownership.  As the Ninth Circuit observed, "a number of energy trading companies admitted that their employees provided false pricing data to" publications during the western energy crisis.4

In considering the petition for review of the Ninth Circuit's decision, the Supreme Court invited the Solicitor General to file a brief expressing the views of the United States.  The Solicitor General argued that FERC had exclusive jurisdiction over the manipulation of privately published price indices in 2000 and 2001:

Under 15 U.S.C. 717d(a), FERC has exclusive authority over practices affecting rates charged by natural gas companies in connection with the interstate sale of natural gas for resale.  Because the manipulation of price indices that are used to establish rates in both jurisdictional and non-jurisdictional natural gas transactions is a practice that directly affects jurisdictional rates, the court of appeals erred in concluding that FERC did not have exclusive authority in 2000 and 2001 to regulate petitioners' manipulation of the indices.5

Notably, however, the Solicitor General contended that the Supreme Court's review was not warranted because the Ninth Circuit's decision (contrary to petitioners' assertions) does not contradict any decisions from state supreme courts.  Furthermore, the Solicitor General argued that "significant changes to the regulatory environment make it highly unlikely that the factual scenario giving rise to respondents' claims will recur, and FERC's expanded authority under the [Energy Policy Act of 2005] would presumably alter the preemption analysis going forward."6

Regarding the scope of FERC's authority under the NGA, the Solicitor General argued that "the NGA 'leaves no room either for direct state regulation of the prices of interstate wholesales of natural gas, or for state regulations which would indirectly achieve the same results.'"7

It is notable that the Supreme Court reverses decisions more often than it affirms them.8This case is unique for the points identified by the Solicitor General and the expanded authority granted to FERC in the Energy Policy Act of 2005.  Nevertheless, this decision will mark an important case for energy market participants. 


1   See generally In re W. States Wholesale Natural Gas Antitrust Litig., 715 F.3d 716 (9th Cir. 2013), cert. granted, No. 13-271, 2014 U.S. LEXIS 4690 (July 1, 2014).

2   See In re W. States Wholesale Natural Gas Antitrust Litig., No. 2:03-CV-1431 et al., 2011 U.S. Dist. LEXIS 83062 (D. Nev. July 18, 2011), rev'd and remanded by 715 F.3d 716 (9th Cir. 2013). 

3   In re W. States Wholesale Natural Gas Antitrust Litig., 715 F.3d at 723. 

4   Id. at 725.

5   Brief for United States as Amicus Curiae at 10, In re W. States Wholesale Natural Gas Antitrust Litig., No. 13-271 (May 27, 2014).

6   Id. at 11.

7   Id. at 12 (quoting N. Natural Gas Co. v. State Corp. Comm'n, 372 U.S. 84, 91 (1963)).

8   See, e.g., Statistics, SCOTUSblog, http://www.scotusblog.com/statistics/ (last visited July 7, 2014); Stephen Wermiel, SCOTUS for Law Students (Sponsored by Bloomberg Law):  Scoring the Circuits, SCOTUSblog (Jun. 22, 2014, 10:28 PM), http://www.scotusblog.com/2014/06/scotus-for-law-students-sponsored-by-bloomberg-law-scoring-the-circuits/

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.