On April 21, 2015, the Supreme Court issued its much-anticipated decision in ONEOK Inc. v. Learjet, Inc. addressing the extent to which the Natural Gas Act (“NGA”) preempts state antitrust claims brought against jurisdictional sellers.1 In a 7-2 ruling, the Court held that the NGA does not preempt state law antitrust damages claims that are “directed at practices affecting retail rates.” The Court’s decision allows companies that purchased natural gas pegged to price indices to move forward with their damages claims against gas marketers for allegedly manipulating the reported price of natural gas. In doing so, the Supreme Court has opened the door to expanded antitrust liability for FERC jurisdictional entities in the natural gas industry.

BACKGROUND -

Natural gas makes it way to end users through the sequential process of production, sale, interstate transportation, and retail distribution. The NGA authorized the federal government to exercise rate-setting authority over the sales for resale in interstate commerce, interstate transportation and natural gas companies engaged in such sales or transportation, while leaving regulation over “retail” rates, among other things, to state authorities. In prior decisions, the Supreme Court had ruled that state law claims were invalid under the doctrine of “field preemption” if they challenged conduct covered by the NGA. Simply put, if the conduct at issue was subject to FERC’s jurisdiction, it could not also be subject to state law. In 2003, after the well-publicized cases of market participants reporting false information to natural gas price indices, FERC adopted new regulations designed to prohibit this form of “market manipulation.” See generally FERC, Final Report on Price Manipulation in Western Markets (Mar. 2003); see also Energy Policy Act of 2005, Pub. L. 109-58 (authorizing FERC to issue rules to prevent market manipulation in jurisdictional wholesale gas markets).