Wednesday, April 22, 2015

U.S. Supreme Court sides with Kansas in natural gas price-fixing case

TOPEKA, KAN. – The U.S. Supreme Court today sided with Kansas and decided states may continue to enforce antitrust laws to protect consumers from retail price fixing in the natural gas market, Kansas Attorney General Derek Schmidt announced. In doing so, the court, in a 7-2 decision, rejected the federal government's assertion that federal law preempts state enforcement.

“This is a major victory for Kansas consumers and all purchasers of natural gas,” Schmidt said. “The Supreme Court has sided with our view that those who illegally fix the price of natural gas cannot hide behind federal law to avoid state liability.”

The underlying lawsuit involved accusations by the plaintiffs, which included both Kansas-based Learjet, Inc., and Topeka Unified School District No. 501, that the defendants illegally drove up the retail price of natural gas, costing gas purchasers millions of dollars.

Similar cases from around the country were consolidated into multi-district litigation in Nevada, and the San Francisco-based 9th Circuit Court of Appeals eventually allowed the plaintiffs to proceed with their state-law claims.

The defendants, backed by the federal government, asked the Supreme Court to reject the lawsuit by concluding that federal law preempts state laws that combat price-fixing in the natural gas retail market when the challenged industry practices also affect the wholesale gas market.

In November 2014, Schmidt led a bipartisan group of 21 state attorneys general in filing an amicus curiae brief asking the Supreme Court to allow continued enforcement of state anti-price fixing laws against retail sellers of natural gas who illegally rig prices.

The federal government, which was opposite Kansas in this lawsuit, argued that state antitrust laws are preempted by the federal Natural Gas Act. The defendants and the Obama Administration argued the preemption extends to the retail market when the challenged practice is engaged in by a federally regulated seller and affects a federally regulated wholesale rate.

Oral arguments in the case, ONEOK, Inc. v. Learjet, Inc., were heard in January. Kansas Solicitor General Stephen McAllister argued on behalf of Kansas and the amici states when the case was heard in January at the Court.