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SUPREME COURT OF THE UNITED STATES
_________________
No. 13–271
_________________
ONEOK, INC., et al. PETITIONERS v. LEARJET, INC.,
et al.
on writ of certiorari to the united states court of appeals for
the ninth circuit
[April 21, 2015]
Justice Breyer delivered the opinion of the Court.
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 (1988). Nevertheless, for the reasons given below, we
conclude that the Act does not pre-empt the state-law antitrust
suits at issue here.
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 (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.
___, ___ (2012) (slip op., at 10) (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 (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 implic-itly “ ‘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 (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 (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 across the Nation. Third,
local gas distributors bought the gas from the interstate pipelines
and resold it to business and residential customers within their
localities.
Originally, the States regulated all three segments of the
industry. See 1 Mogel §1.03. But in the early 20th century, this
Court held that the Commerce Clause forbids the States to regulate
the second part of the business—i.e., the interstate
shipment and sale of gas to local distributors for resale. See,
e.g., Public Util. Comm’n of R. I. v.
Attleboro Steam & Elec. Co.,273 U. S. 83–90 (1927);
Missouri ex rel. Barrett v. Kansas Natural Gas
Co.,265 U. S. 298–308 (1924). These holdings left a
regula-tory gap. Congress enacted the Natural Gas Act,52Stat.821,
to fill it. See Phillips Petroleum Co. v.
Wisconsin,347 U. S. 672–684, n. 13 (1954) (citing
H. R. Rep. No. 709, 75th Cong., 1st Sess., 1–2 (1937);
S. Rep. No. 1162, 75th Cong., 1st Sess., 1–2 (1937)).
The Act, in §5(a), gives rate-setting authority to the Federal
Energy Regulatory Commission (FERC, formerly the Federal Power
Commission (FPC)). That authority allows FERC to determine whether
“any rate, charge, or classification . . . collected by
any natural-gas company in connection with any transportation or
sale of natural gas, subject to the jurisdiction of
[FERC],” or “any rule, regulation, practice, or contract
affecting such rate, charge, or classification is unjust,
unreasonable, unduly discriminatory, or preferential.”15
U. S. C. §717d(a) (emphasis added). As the italicized
words make clear, §5(a) limits the scope of FERC’s authority to
activities “in connection with any transportation or sale of
natural gas, subject to the jurisdiction of the Commission.”
Ibid. (emphasisadded). And the Act, in §1(b), limits FERC’s
“jurisdiction” to (1) “the transportation of natural gas in
interstate commerce,” (2) “the sale in interstate commerce of
natural gas for resale,” and (3) “natural-gas companies engaged in
such transportation or sale.” §717(b). The Act leaves regulation of
other portions of the industry—such as production, local
distribution facilities, and direct sales—to the States. See
Northwest Central Pipeline Corp. v. State Corporation
Comm’n of Kan.,489 U. S. 493,507 (1989) (Section 1(b) of
the Act “expressly” provides that “States retain jurisdiction over
intrastate transportation, local distribution, and
distribution facilities, and over ‘the production or gathering of
natural gas’ ”).
To simplify our discussion, we shall describe the firms that
engage in interstate transportation as “jurisdictional sellers” or
“interstate pipelines” (though various brokers and others may also
fall within the Act’s jurisdictional scope). Similarly, we shall
refer to the sales over which FERC has jurisdiction as
“jurisdictional sales” or “wholesale sales.”
2
Until the 1970’s, natural-gas regulation roughly tracked the
industry model we described above. Interstate pipelines would
typically buy gas from field producers and resell it to local
distribution companies for resale. See Tracy, supra,
at 283. FERC (or FPC), acting under the authority of the Natural
Gas Act, would set interstate pipeline wholesale rates using
classical “cost-of-service” ratemaking methods. See Public Serv.
Comm’n of N. Y. v. Mid-Louisiana Gas Co.,463
U. S. 319,328 (1983). That is, FERC would determine a
pipeline’s revenue requirement by calculating the costs of
providing its services, including operating and maintenance
expenses, depreciation expenses, taxes, and a reasonable profit.
See FERC, Cost-of-Service Rates Manual 6 (June 1999). FERC would
then set wholesale rates at a level designed to meet the pipeline’s
revenue requirement.
Deregulation of the natural-gas industry, however, brought about
changes in FERC’s approach. In the 1950’s, this Court had held that
the Natural Gas Act required regulation of prices at the interstate
pipelines’ buying end—i.e., the prices at which field
producers sold natural gas to interstate pipelines. Phillips
Petroleum Co., supra, at 682, 685. By the 1970’s, many
in Congress thought that such efforts to regulate field prices had
jeopardizednatural-gas supplies in an industry already dependent
“on the caprice of nature.” FPC v. Hope Natural Gas
Co.,320 U. S. 591,630 (1944) (opinion of Jackson, J.); see
id., at 629 (recognizing that “the wealth of Midas and the
wit of man cannot produce . . . a natural gas field”).
Hoping to avoid future shortages, Congress enacted forms of field
price deregulation designed to rely upon competition, rather than
regulation, to keep field prices low. See, e.g., Natural Gas
Policy Act of 1978,92Stat.3409, codified in part at15
U. S. C. §3301 et seq. (phasing out
regulation of wellhead prices charged by producers of natural gas);
Natural Gas Wellhead Decontrol Act of 1989,103Stat.157 (removing
price controls on wellhead sales as of January 1993).
FERC promulgated new regulations designed to further this
process of deregulation. See, e.g., Regulation of Natural
Gas Pipelines after Partial Wellhead Decontrol, 50 Fed. Reg. 42408
(1985) (allowing “open access” to pipelines so that consumers could
pay to ship their own gas). Most important here, FERC adopted an
approach that relied on the competitive marketplace, rather than
classical regulatory rate-setting, as the main mechanism for
keeping wholesale natural-gas rates at a reasonable level.
Order No. 636, issued in 1992, allowed FERC to issue blanket
certificates that permitted jurisdictional sellers (typically
interstate pipelines) to charge market-based rates for gas,
provided that FERC had first determined that the sellers lacked
market power. See 57 Fed. Reg. 57957–57958 (1992); id., at
13270.
After the issuance of this order, FERC’s oversight of the
natural-gas market largely consisted of (1) ex ante examinations of
jurisdictional sellers’ market power, and (2) the availability of a
complaint process under §717d(a). See Brief for United States as
Amicus Curiae 4. The new system also led many large gas
consumers—such as industrial and commercial users—to buy their own
gas directly from gas producers, and to arrange (and often pay
separately) for transportation from the field to the place of
consumption. See Tracy, 519 U. S., at 284. Insofar as
interstate pipelines sold gas to such consumers, they sold it for
direct consumption rather than resale.
3
The free-market system for setting interstate pipeline rates
turned out to be less than perfect. Interstate pipelines,
distributing companies, and many of the customers who bought
directly from the pipelines found that they had to rely on
privately published price indices to determine appropriate prices
for their natural-gas contracts. These indices listed the prices at
which natural gas was being sold in different (presumably
competitive) markets across the country. The information on which
these in-dices were based was voluntarily reported by natural-gas
traders.
In 2003, FERC found that the indices were inaccurate, in part
because much of the information that natural-gas traders reported
had been false. See FERC, Final Report on Price Manipulation in
Western Markets (Mar. 2003), App. 88–89. FERC found that false
reporting had involved “inflating the volume of trades, omitting
trades, and adjusting the price of trades.” Id., at 88. That
is, sometimes those who reported information simply fabricated it.
Other times, the information reported reflected “wash trades,”
i.e., “prearranged pair[s] of trades of the same good
between the same parties, involving no economic risk and no net
change in beneficial ownership.” Id., at 215. FERC concluded
that these “efforts to manipulate price indices compiled by trade
publications” had helped raise “to extraordinary levels” the prices
of both jurisdictional sales (that is, interstate pipeline sales
for resale) and nonjurisdictional direct sales to ultimate
consumers. Id., at 86, 85.
After issuing its final report on price manipulation in western
markets, FERC issued a Code of Conduct. That code amended all
blanket certificates to prohibit jurisdictional sellers “from
engaging in actions without a legitimate business purpose that
manipulate or attempt to manipulate market conditions, including
wash trades and collusion.” 68 Fed. Reg. 66324 (2003). The code
also required jurisdictional companies, when they provided
information to natural-gas index publishers, to “provide accurate
and factual information, and not knowingly submit false or
misleading information or omit material information to any such
publisher.” Id., at 66337. At the same time, FERC issued a
policy statement setting forth “minimum standards for creation and
publication of any energy price index,” and “for reporting
transaction data to index developers.” Price Discovery in
Natural Gas and Elec. Markets, 104 FERC ¶61,121, pp. 61,407,
61,408 (2003). Finally, FERC, after finding that certain
jurisdictional sellers had “engaged in wash trading . . .
that resulted in the manipulation of [natural-gas] prices,”
terminated those sellers’ blanket marketing certificates. Enron
Power Marketing, Inc., 103 FERC ¶61,343, p. 62,303 (2003).
Congress also took steps to address these problems. In
particular, it passed the Energy Policy Act of 2005,119Stat.594,
which gives FERC the authority to issue rules and regulations to
prevent “any manipulative or deceptive device or contrivance” by
“any entity . . . in connection with the purchase or sale
of natural gas or the purchase or sale of transportation services
subject to the jurisdiction of” FERC,15 U. S. C.
§717c–1.
C
We now turn to the cases before us. Respondents, as we have
said, bought large quantities of natural gas directly from
interstate pipelines for their own consumption. They believe that
they overpaid in these transactions due to the interstate
pipelines’ manipulation of the natural-gas indices. Based on this
belief, they filed state-law antitrust suits against petitioners in
state and federal courts. See App. 244–246 (alleging violations of
Wis. Stat. §§133.03, 133.14, 133.18); see also App. 430–433 (same);
id., at 519–521 (same); id., at 362–364 (alleging
violations of Kansas Restraint of Trade Act, Kan. Stat. Ann.
§50–101 et seq.); App. 417–419 (alleging violations of
Missouri Antitrust Law, Mo. Rev. Stat. §§416.011–416.161). The
pipelines removed all the state cases to federal court, where they
were consolidated and sent for pretrial proceedings to the Federal
District Court for the District of Nevada. See28 U. S. C.
§1407.
The pipelines then moved for summary judgment on the ground that
the Natural Gas Act pre-empted respondents’ state-law antitrust
claims. The District Court granted their motion. It concluded that
the pipelines were “jurisdictional sellers,” i.e., “natural
gas companies engaged in” the “transportation of natural gas in
interstate commerce.” Order in No. 03–cv–1431 (D Nev., July 18,
2011), pp. 4, 11. And it held that respondents’ claims, which
were “aimed at” these sellers’ “alleged practices of false price
reporting, wash trades, and anticompetitive collusive behavior”
were pre-empted because “such practices,” not only affected
nonjurisdictional direct-sale prices but also “directly affect[ed]”
jurisdictional (i.e., wholesale) rates. Id., at
36–37.
The Ninth Circuit reversed. It emphasized that the
price-manipulation of which respondents complained affected not
only jurisdictional (i.e., wholesale) sales, but also
nonjurisdictional (i.e., retail) sales. The court construed
the Natural Gas Act’s pre-emptive scope narrowly in light of
Congress’ intent—manifested in §1(b) of the Act—to preserve for the
States the authority to regulate nonjurisdictional sales.
And it held that the Act did not pre-empt state-law claims aimed at
obtaining damages for excessively high retail natural-gas
prices stemming from interstate pipelines’ price manipulation, even
if the manipulation raised wholesale rates as well. See
In re Western States Wholesale Natural Gas Antitrust
Litigation, 715 F. 3d 716, 729–736 (2013).
The pipelines sought certiorari. They asked us to resolve
confusion in the lower courts as to whether the Natural Gas Act
pre-empts retail customers’ state antitrust law challenges to
practices that also affect wholesale rates. Compare id., at
729–736, with Leggett v. Duke Energy Corp., 308
S. W. 3d 843 (Tenn. 2010). We granted the petition.
II
Petitioners, supported by the United States, argue that their
customers’ state antitrust lawsuits are within the field that the
Natural Gas Act pre-empts. See Brief for Petitioners 18 (citing
Schneidewind, 485 U. S., at 305); Brief for United
States as Amicus Curiae 13 (same). They point out that
respondents’ antitrust claims target anticompetitive activities
that affected wholesale (as well as retail) rates. See Brief for
Petitioners 2. They add that the Natural Gas Act expressly grants
FERC authority to keep wholesale rates at reasonable levels. See
ibid. (citing 15 U. S. C. §§717(b), 717d(a)). In
exercising this authority, FERC has prohibited the very kind of
anticompetitive conduct that the state actions attack. See Part
I–B–3, supra. And, petitioners contend, letting these
actions proceed will permit state antitrust courts to reach
conclusions about that conduct that differ from those that FERC
might reach or has already reached. Accordingly, petitioners argue,
respondents’ state-law antitrust suits fall within the pre-empted
field.
A
Petitioners’ arguments are forceful, but we cannot accept their
conclusion. As we have repeatedly stressed, the Natural Gas Act
“was drawn with meticulous regard for the continued exercise of
state power, not to handicap or dilute it in any way.” Panhandle
Eastern Pipe Line Co. v. Public Serv. Comm’n of Ind.,332
U. S. 507–518 (1947); see also Northwest Central, 489
U. S., at 511 (the “legislative history of the [Act] is
replete with assurances that the Act ‘takes nothing from the State
[regulatory] commissions’ ” (quoting 81 Cong. Rec. 6721
(1937))). Accordingly, where (as here) a state law can be applied
to nonjurisdictional as well as jurisdictional sales, we must
proceed cautiously, finding pre-emption only where detailed
examination convinces us that a matter falls within the pre-empted
field as defined by our precedents. See Panhandle Eastern,
supra, at 516–518; Interstate Natural Gas Co. v.
FPC,331 U. S. 682–693 (1947).
Those precedents emphasize the importance of considering the
target at which the state law aims in determining
whether that law is pre-empted. For example, in Northern Natural
Gas Co. v. State Corporation Comm’n of Kan.,372
U. S. 84 (1963), the Court said that it had “consistently
recognized” that the “significant distinction” for purposes of
pre-emption in the natural-gas context is the distinction between
“measures aimed directly at interstate purchasers and
wholesales for resale, and those aimed at” subjects left to the
States to regulate. Id., at 94 (emphasis added). And, in
Northwest Central, the Court found that the Natural Gas Act
did not pre-empt a state regulation concerning the timing of gas
production from a gas field within the State, even though the
regulation might have affected the costs of and the prices of
interstate wholesale sales, i.e., jurisdictional sales. 489
U. S., at 514. In reaching this conclusion, the Court
explained that the state regulation aimed primarily at
“protect[ing] producers’ . . . rights—a matter firmly on
the States’ side of that dividing line.” Ibid. The Court
contrasted this state regulation with the state orders at issue in
Northern Natural, which “ ‘inva-lidly invade[d] the
federal agency’s exclusive domain’ pre-cisely because” they were
“ ‘unmistakably and unambiguously directed at
purchasers.’ ” Id., at 513 (quoting Northern
Natural, supra, at 92; emphasis added). Here, too, the
lawsuits are directed at practices affecting retail
rates–which are “firmly on the States’ side of that dividing
line.”
Petitioners argue that Schneidewind constitutes con-trary
authority. In that case, the Court found pre-empted a state law
that required public utilities, such as interstate pipelines
crossing the State, to obtain state approval before issuing
long-term securities. 485 U. S., at 306–309. But the Court
there thought that the State’s securities regulation was aimed
directly at interstate pipelines. It wrote that the state law was
designed to keep “a natural gas company from raising its equity
levels above a certain point” in order to keep the company’s
revenue requirement low, thereby ensuring lower wholesale
rates. Id., at 307–308. Indeed, the Court expressly said
that the state law was pre-empted because it was “directed
at . . . the control of rates and facilities of
natural gas companies,” “precisely the things over which FERC has
comprehensive author-ity.” Id., at 308 (emphasis added).
The dissent rejects the notion that the proper test for purposes
of pre-emption in the natural gas context is whether the challenged
measures are “aimed directly at interstate purchasers and
wholesales for resale” or not. Northern Natural,
supra, at 94. It argues that this approach is
“unprecedented,” and that the Court’s focus should be on
“what the State seeks to regulate . . . , not
why the State seeks to regulate it.” Post, at 6
(opinion of Scalia, J.). But the “target” to which our cases refer
must mean more than just the physical activity that a State
regulates. After all, a single physical action, such as reporting a
price to a specialized journal, could be the subject of many
different laws—including tax laws, disclosure laws, and others. To
repeat the point we made above, no one could claim that FERC’s
regulation of this physical activity for purposes of wholesale
rates forecloses every other form of state regulation that affects
those rates.
Indeed, although the dissent argues that Schneidwind
created a definitive test for pre-emption in the natural gas
context that turns on whether “the matter on which the State
asserts the right to act is in any way regulated by the Federal
Act,” post, at 3 (quoting 485 U. S., at 310,
n. 13), Schneidewind could not mean this statement as
an absolute test. It goes on to explain that the Natural Gas Act
does not pre-empt “traditional” state regulation, such as state
blue sky laws (which, of course, raise wholesale—as well as
retail—investment costs). Id., at 308, n. 11.
Antitrust laws, like blue sky laws, are not aimed at natural-gas
companies in particular, but rather all businesses in the
marketplace. See ibid. They are far broader in their
application than, for example, the regulations at issue in
Northern Natural, which applied only to entities buying gas
from fields within the State. See 372 U. S., at 85–86,
n. 1; contra, post, at 5–6 (stating that Northern
Natural concerned “background market conditions”). This broad
applicability of state antitrust law supports a finding of no
pre-emption here.
Petitioners and the dissent argue that there is, or should be, a
clear division between areas of state and federal authority in
natural-gas regulation. See Brief for Petitioners 18; post,
at 7. But that Platonic ideal does not describe the natural gas
regulatory world. Suppose FERC, when setting wholesale rates in the
former cost-of-service rate-making days, had denied cost recovery
for pipelines’ failure to recycle. Would that fact deny States the
power to enact and apply recycling laws? These state laws might
well raise pipelines’ operating costs, and thus the costs of
wholesale natural gas transportation. But in Northwest
Central we said that “[t]o find field pre-emption of [state]
regulation merely because purchasers’ costs and hence rates might
be affected would be largely to nullify . . . §1(b).” 489
U. S., at 514.
The dissent barely mentions the limitations on FERC’s powers in
§1(b), but the enumeration of FERC’s powers in §5(a) is
circumscribed by a reference back to the limitations in §1(b). See
post, at 1–3. As we explained above, see Part I–B–1,
supra, those limits are key to understanding the careful
balance between federal and state regulation that Congress struck
when it passed the Natural Gas Act. That Act “was drawn with
meticulous regard for the continued exercise of state power, not to
handicap or dilute it in any way.” Panhandle Eastern, 332
U. S., at 517–518. Contra, post, at 8. States have a
“long history of” providing “common-law and statutory remedies
against monopolies and unfair business practices.” ARC
America, 490 U. S., at 101; see also Watson v.
Buck,313 U. S. 387,404 (1941) (noting the States’
“long-recognized power to regulate combinations in restraint of
trade”). Respondents’ state-law antitrust suits relied on this well
established state power.
B
Petitioners point to two other cases that they believe support
their position. The first is Mississippi Power & Light
Co. v. Mississippi ex rel. Moore,487 U. S. 354
(1988). There, the Court held that the Federal Power Act—which
gives FERC the authority to determine whether rates charged by
public utilities in electric energy sales are “just and
reasonable,”16 U. S. C. §824d(a)—pre-empted a state
inquiry into the reasonableness of FERC-approved prices for the
sale of nuclear power to wholesalers of electricity (which led to
higher retail electricity rates). 487 U. S., at 373–377.
Petitioners argue that this case shows that state regulation of
similar sales here—i.e., by a pipeline to a direct
consumer—must also be pre-empted. See Reply Brief 11–12.
Mississippi Power, however, is best read as a conflict
pre-emption case, not a field pre-emption case. See 487 U. S.,
at 377 (“[A] state agency’s ‘efforts to regulate commerce must fall
when they conflict with or interfere with federal authority over
the same activity’ ” (quoting Chicago & North Western
Transp. Co. v. Kalo Brick & Tile Co.,450 U. S.
311–319 (1981))).
Regardless, the state inquiry in Mississippi Power was
pre-empted because it was directed at jurisdictional sales in a way
that respondents’ state antitrust lawsuits are not. Mississippi’s
inquiry into the reasonableness of FERC-approved purchases was
effectively an attempt to “regulate in areas where FERC has
properly exercised its jurisdiction to determine just and
reasonable wholesale rates.” 487 U. S., at 374. By contrast,
respondents’ state antitrust lawsuits do not seek to challenge the
reason-ableness of any rates expressly approved by FERC. Rather,
they seek to challenge the background marketplace conditions that
affected both jurisdictional and nonjurisdic-tional rates.
Petitioners additionally point to FPC v. Louisiana
Power & Light Co.,406 U. S. 621 (1972). In that case,
the Court held that federal law gave FPC the authority to allocate
natural gas during shortages by ordering interstate pipelines to
curtail gas deliveries to all customers, including retail
customers. This latter fact, the pipelines argue, shows that
FERC has authority to regulate index manipulation insofar as that
manipulation affects retail (as well as wholesale) sales.
Brief for Petitioners 26. Accordingly, they contend that state laws
that aim at this same subject are pre-empted.
This argument, however, makes too much of too little. The
Court’s finding of pre-emption in Louisiana Power rested on
its belief that the state laws in question con-flicted with
federal law. The Court concluded that “FPC has authority to effect
orderly curtailment plans involving both direct sales and sales for
resale,” 406 U. S., at 631, because otherwise there would be
“unavoidable conflict between” state regulation of direct sales and
the “uniform federal regulation” that the Natural Gas Act foresees,
id., at 633–635. Conflict pre-emption may, of course,
invalidate a state law even though field pre-emption does not.
Because petitioners have not argued this case as a conflict
pre-emption case, Louisiana Power does not offer them
significant help.
C
To the extent any conflicts arise between state antitrust law
proceedings and the federal rate-setting process, the doctrine of
conflict pre-emption should prove sufficient to address them. But
as we have noted, see Part I–A, supra, the parties have not
argued conflict pre-emption. See also, e.g., Tr. of Oral
Arg. 24 (Solicitor General agrees that he has not “analyzed this
[case] under a conflict preemption regime”). We consequently leave
conflict pre-emption questions for the lower courts to resolve in
the firstinstance.
D
We note that petitioners and the Solicitor General have argued
that we should defer to FERC’s determination that field pre-emption
bars the respondents’ claims. See Brief for Petitioners 22 (citing
Arlington v. FCC, 569 U. S. ___, ___–___ (2013)
(slip op., at 10–14); Brief for United States as Amicus
Curiae 32 (same). But they have not pointed to a specific FERC
determination that state antitrust claims fall within the field
pre-empted by the Natural Gas Act. Rather, they point only to the
fact that FERC has promulgated detailed rules governing
manipulation of price indices. Because there is no determination by
FERC that its regulation pre-empts the field into which
respondents’ state-law antitrust suits fall, we need not consider
what legal effect such a determination might have. And we conclude
that the detailed federal regulations here do not offset the other
considerations that weigh against a finding of pre-emption in this
context.
* * *
For these reasons, the judgment of the Court of Appeals for the
Ninth Circuit is affirmed.
It is so ordered.
SUPREME COURT OF THE UNITED STATES
_________________
No. 13–271
_________________
ONEOK, INC., et al. PETITIONERS v. LEARJET, INC.,
et al.
on writ of certiorari to the united states court of appeals for
the ninth circuit
[April 21, 2015]
Justice Scalia, with whom The Chief Justice joins,
dissenting.
The Natural Gas Act divides responsibility over trade in natural
gas between federal and state regulators. The Act and our cases
interpreting it draw a firm line between national and local
authority over this trade: If the Federal Government may regulate a
subject, the States may not. Today the Court smudges this line. It
holds that States may use their antitrust laws to regulate
practices already regulated by the Federal Energy Regulatory
Commission whenever “other considerations . . . weigh
against a finding of pre-emption.” Ante, at 16. The Court’s
make-it-up-as-you-go-along approach to preemption has no basis in
the Act, contradicts our cases, and will prove unworkable in
practice.
I
Trade in natural gas consists of three parts. A drilling company
collects gas from the earth; a pipeline company then carries the
gas to its destination and sells it at wholesale to a local
distributor; and the local distributor sells the gas at retail to
industries and households. See ante, at 3. The Natural Gas
Act empowers the Commission to regulate the middle of this
three-leg journey—interstate transportation and wholesale sales. 15
U. S. C. §717 et seq. But it does not empower the
Commission to regulate the opening and closing phases—production at
one end, retail sales at the other—thus leaving those matters to
the States. §717(b). (Like the Court, I will for simplicity’s sake
call the sales controlled by the Commission wholesale sales, and
the companies controlled by the Commission pipelines. See
ante, at 4.)
Over 70 years ago, the Court concluded that the Act confers
“exclusive jurisdiction upon the federal regulatory agency.”
Public Util. Comm’n of Ohio v. United Fuel Gas
Co.,317 U. S. 456,469 (1943). The Court thought it “clear”
that the Act contemplates “a harmonious, dual system of regulation
of the natural gas industry—federal and state regulatory bodies
operating side by side, each active in its own sphere,” “without
any confusion of functions.” Id., at 467. The Court drew
this inference from the law’s purpose and legislative history,
though it could just as easily have relied on the law’s terms and
structure. The Act grants the Commission a wide range of powers
over wholesale sales and transportation, but qualifies only some of
these powers with reservations of state authority over the same
subject. See §717g(a) (concurrent authority over recordkeeping);
§717h(a) (concurrent authority over depreciation and amortization
rates). Congress’s decision to include express reservations of
state power alongside these grants of authority, but to omit them
alongside other grants of authority, suggests that the other grants
are exclusive. Right or wrong, in any event, our inference of
exclusivity is now settled beyond debate.
United Fuel rejected a State’s regulation of wholesale
rates. Id., at 468. But our later holdings establish that
the Act makes exclusive the Commission’s powers in general, not
just its rate-setting power in particular. We have again and again
set aside state laws—even those that do not purport to fix
wholesale rates—for regulating a matter already subject to
regulation by the Commission. See, e.g., Northern Natural
Gas Co. v. State Corporation Comm’n of Kan.,372
U. S. 84,89 (1963) (state regulation of pipelines’ gas
purchases preempted because it “invade[s] the exclusive
jurisdiction which the Natural Gas Act has conferred upon the
[Commission]”); Exxon Corp. v. Eagerton,462
U. S. 176,185 (1983) (state law prohibiting producers from
passing on production taxes preempted because it “trespasse[s] upon
FERC’s authority”); Schneidewind v. ANR Pipeline
Co.,485 U. S. 293,309 (1988) (state securities regulation
directly affecting wholesale rates and gas transportation
facilities preempted because it regulates “matters that Congress
intended FERC to regulate”). The test for preemption in this
setting, the Court has confirmed, “ ‘is whether the matter on
which the State asserts the right to act is in any way regulated by
the Federal Act.’ ” Id., at 310, n. 13.
Straightforward application of these precedents would make short
work of the case at hand. The Natural Gas Act empowers the
Commission to regulate “practice[s] . . . affecting
[wholesale] rate[s].” §717d. Nothing in the Act suggests that the
States share power to regulate these practices. The Commission has
reasonably determined that this power allows it to regulate the
behavior involved in this case, pipelines’ use of sham trades and
false reports to manipulate gas price indices. Because the
Commission’s exclusive authority extends to the conduct challenged
here, state antitrust regulation of that conduct is preempted.
II
The Court agrees that the Commission may regulate index
manipulation, but upholds state antitrust regulation of this
practice anyway on account of “other considerations that weigh
against a finding of pre-emption in this context.” Ante, at
16. That is an unprecedented decision. The Court does not identify
a single case—not one—in which we have sustained state regulation
of behavior already regulated by the Commission. The Court’s
justifications for its novel approach do not persuade.
A
The Court begins by considering “the target at which the
state law aims.” Ante, at 11. It reasons that because
this case involves a practice that affects both wholesale and
retail rates, the Act tolerates state regulation that takes aim at
the practice’s retail-stage effects. Ibid.
This analysis misunderstands how the Natural Gas Act divides
responsibilities between national and local regulators. The Act
does not give the Commission the power to aim at particular
effects; it gives it the power to regulate particular activities.
When the Commission regulates those activities, it may consider
their effects on all parts of the gas trade, not just on
wholesale sales. It may, for example, set wholesale rates with the
aim of encouraging producers to conserve gas supplies—even though
production is a state-regulated activity. See Colorado
Interstate Gas Co. v. FPC,324 U. S. 581–603 (1945);
id., at 609–610 (Jackson, J., concurring). Or it may
regulate wholesale sales with an eye toward blunting the sales’
anticompetitive effects in the retail market—even though retail
prices are controlled by the States. See FPC v. Conway
Corp.,426 U. S. 271–280 (1976). The Court’s ad hoc
partition of authority over index manipulation—leaving it to the
Commission to control the practice’s consequences for wholesale
sales, but allowing the States to target its consequences for
retail sales—thus clashes with the design of the Act.
To justify its fixation on aims, the Court stresses that this
case involves regulation of “background marketplace conditions”
rather than regulation of wholesale rates or sales themselves.
Ante, at 15. But the Natural Gas Act empowers the Commission
to regulate wholesale rates and “background” practices
affecting such rates. It grants both powers in the same clause:
“Whenever the Commission . . . find[s] that a [wholesale]
rate, charge, or classification . . . [or] any rule,
regulation, practice, or contract affecting such rate,
charge, or classification is unjust [or] unreasonable,
. . . the Commission shall determine the just and
reasonable rate, charge, classification, rule, regulation,
practice, or contract to be thereafter observed.” §717d(a)
(emphasis added). Nothing in this provision, and for that matter
nothing in the Act, suggests that federal authority over practices
is a second-class power, somehow less exclusive than the authority
over rates.
The Court persists that the background conditions in this case
affect both wholesale and retail sales. Ante, at 15.
This observation adds atmosphere, but nothing more. The Court
concedes that index manipulation’s dual effect does not weaken the
Commission’s power to regulate it. Ante, at 10. So too
should the Court have seen that this simultaneous effect does not
strengthen the claims of the States. It is not at all unusual for
an activity controlled by the Commission to have effects in the
States’ field; production, wholesale, and retail are after all
interdependent stages of a single trade. We have never suggested
that the rules of field preemption change in such situations. For
example, producers’ ability to pass production taxes on to
pipelines no doubt affects both producers and pipelines. Yet we had
no trouble concluding that a state law restricting producers’
ability to pass these taxes impermissibly attempted to manage “a
matter within the sphere of FERC’s regulatory authority.”
Exxon, supra, at 185–186.
The Court’s approach makes a snarl of our precedents. In
Northern Natural, the Court held that the Act preempts state
regulations requiring pipelines to buy gas ratably from gas wells.
372 U. S., at 90. The regulations in that case shared each of
the principal features emphasized by the Court today. They governed
background market conditions, not wholesale prices. Id., at
90–91. The background conditions in question, pipelines’ purchases
from gas wells, affected both the federal field of wholesale sales
and the state field of gas production. Id., at 92–93. And
the regulations took aim at the purchases’ effects on production;
they sought to promote conservation of natural resources by
limiting how much gas pipelines could take from each well.
Id., at 93. No matter; the Court still concluded that the
regulations “invade[d] the federal agency’s exclusive domain.”
Id., at 92. The factors that made no difference in
Northern Natural should make no difference today.
Contrast Northern Natural with Northwest Central
Pipeline Corp. v. State Corporation Comm’n of Kan.,489
U. S. 493 (1989), which involved state regulations that
restricted the times when producers could take gas from wells. On
this occasion the Court upheld the regulations—not because the law
aimed at the objective of gas conservation, but because the State
pursued this end by regulating “ ‘the physical ac[t] of
drawing gas from the earth.’ ” Id., at 510. Our
precedents demand, in other words, that the Court focus in the
present case upon what the State seeks to regulate (a
pipeline practice that is subject to regulation by the Commission),
not why the State seeks to regulate it (to curb the
practice’s effects on retail rates).
Trying to turn liabilities into assets, the Court brandishes
statements from Northern Natural and Northwest
Central that (in its view) discuss where state law was “aimed”
or “directed.” Ante, at 11. But read in context, these
statements refer to the entity or activity that the state law
regulates, not to which of the activity’s effects the law seeks to
control by regulating it. See, e.g., Northern Natural,
supra, at 94 (“[O]ur cases have consistently recognized a
significant distinction . . . between conservation
measures aimed directly at interstate purchasers and wholesales
. . . , and those aimed at producers and
production”); Northwest Central, supra, at 512
(“[This regulation] is directed to the behavior of gas producers”).
The lawsuits at hand target pipelines (entities regulated by the
Commission) for their manipulation of indices (behavior regulated
by the Commission). That should have sufficed to establish
preemption.
B
The Court also tallies several features of state antitrust law
that, it believes, weigh against preemption. Ante, at 13–14.
Once again the Court seems to have forgotten its precedents. We
have said before that “ ‘Congress meant to draw a bright line
easily ascertained, between state and federal jurisdiction’ ”
over the gas trade. Nantahala Power & Light Co. v.
Thornburg,476 U. S. 953,966 (1986) (quoting FPC
v. Southern Cal. Edison Co.,376 U. S. 205–216 (1964)).
Our decisions have therefore “ ‘squarely rejected’ ” the
theory, endorsed by the Court today, that the boundary between
national and local authority turns on “ ‘a case-by-case
analysis of the impact of state regulation upon the national
interest.’ ” Ibid.
State antitrust law, the Court begins, applies to “all
businesses in the marketplace” rather than just “natural-gas
companies in particular.” Ante, at 13. So what? No principle
of our natural-gas preemption jurisprudence distinguishes
particularized state laws from state laws of general applicability.
We have never suggested, for example, that a State may use general
price-gouging laws to fix wholesale rates, or general laws about
unfair trade practices to control wholesale contracts, or general
common-carrier laws to administer interstate pipelines. The Court
in any event could not have chosen a worse setting in which to
attempt a distinction between general and particular laws. Like
their federal counterpart, state antitrust laws tend to use the
rule of reason to judge the lawfulness of challenged practices.
Legal Aspects of Buying and Selling §10:12 (P. Zeidman ed.
2014–2015). This amorphous standard requires the reviewing court to
consider “a variety of factors, including specific information
about the relevant business, its condition before and after the
restraint was imposed, and the restraint’s history, nature, and
effect.” State Oil Co. v. Khan,522 U. S. 3,10
(1997). Far from authorizing across-the-board application of a
uniform requirement, therefore, the Court’s decision will invite
state antitrust courts to engage in targeted regulation of the
natural-gas industry.
The Court also stresses the “ ‘long history’ ” of
state antitrust regulation. Ante, at 14. Again, quite
beside the point. States have long regulated public utilities, yet
the Natural Gas Act precludes them from using that established
power to fix gas wholesale prices. United Fuel, 317
U. S., at 468. States also have long enacted laws to conserve
natural resources, yet the Act precludes them from deploying that
power to control purchases made by gas pipelines. Northern
Natural, 372 U. S., at 93–94. The Court’s invocation of
the pedigree of state antitrust law rests on air.
One need not launch this unbounded inquiry into the features of
state law in order to preserve the States’ authority to apply “tax
laws,” “disclosure laws,” and “blue sky laws” to natural-gas
companies, ante, at 12. One need only stand by the principle
that if the Commission has authority over a subject, the States
lack authority over that subject. The Commission’s authority to
regulate gas pipelines “in the public interest,” §717a, is a power
to address matters that are traditionally the concern of utility
regulators, not “a broad license to promote the general public
welfare,” NAACP v. FPC,425 U. S. 662,669 (1976).
We have explained that the Commission does not, for example, have
power to superintend “employment discrimination” or “unfair labor
practices.” Id., at 670–671. So the Act does not preempt
state employment discrimination or labor laws. But the Commission
does have power to consider, say, “conservation, environmental, and
antitrust questions.” Id., at 670, n. 6
(emphasis added). So the Act does preempt state antitrust laws.
C
At bottom, the Court’s decision turns on its perception that the
Natural Gas Act “ ‘was drawn with meticulous regard for the
continued exercise of state power.’ ” Ante, at 10. No
doubt the Act protects state authority in a variety of ways. It
gives the Commission authority over only some parts of the gas
trade. §717(b). It establishes procedures under which the
Commission may consult, collaborate, or share information with
States. §717p. It even provides that the Commission may regulate
practices affecting wholesale rates “upon its own motion or upon
complaint of any State.” §717d(a) (emphasis added). It should
have gone without saying, however, that no law pursues its purposes
at all costs. Nothing in the Act and nothing in our cases suggests
that Congress protected state power in the way imagined by today’s
decision: by licensing state sorties into the Commission’s domain
whenever judges conclude that an incursion would not be too
disruptive.
The Court’s preoccupation with the purpose of preserving state
authority is all the more inexpiable because that is not the Act’s
only purpose. The Act also has competing purposes, the most
important of which is promoting “uniformity of regulation.”
Northern Natural, supra, at 91. The Court’s decision
impairs that objective. Before today, interstate pipelines
knew that their practices relating to price indices had to comply
with one set of regulations promulgated by the Commission. From now
on, however, pipelines will have to ensure that their behavior
conforms to the discordant regulations of 50 States—or more
accurately, to the discordant verdicts of untold state antitrust
juries. The Court’s reassurance that pipelines may still invoke
conflict preemption, see ante, at 15–16, provides little
comfort on this front. Conflict preemption will resolve only
discrepancies between state and federal regulations, not the
discrepancies among differing state regulations to which today’s
opinion subjects the industry.
* * *
“The Natural Gas Act was designed . . . to produce a harmonious
and comprehensive regulation of the industry. Neither state nor
federal regulatory body was to encroach upon the jurisdiction of
the other.” FPC v. Panhandle Eastern Pipe Line
Co.,337 U. S. 498,513 (1949) (footnote omitted). Today,
however, the Court allows the States to encroach. Worse still, it
leaves pipelines guessing about when States will be allowed to
encroach again. May States aim at retail rates under laws that
share none of the features of antitrust law advertised today? Under
laws that share only some of those features? May States apply their
antitrust laws to pipelines without aiming at retail rates?
But that is just the start. Who knows what other “considerations
that weigh against a finding of pre-emption” remain to be unearthed
in future cases? The Court’s all-things-considered test does not
make for a stable background against which to carry on the natural
gas trade.
I would stand by the more principled and more workable line
traced by our precedents. The Commission may regulate the practices
alleged in this case; the States therefore may not. I respectfully
dissent.