Oneok, Inc. v. Learjet, Inc.

• Decision Date: 21 April 2015
• Docket Number: No. 13–271.,13–271.
• Citation: 135 S.Ct. 1591,191 L.Ed.2d 511,575 U.S. 373
• Parties: ONEOK, INC., et al., Petitioners v. LEARJET, INC., et al.
• Court: U.S. Supreme Court

575 U.S. 373

135 S.Ct. 1591

191 L.Ed.2d 511

ONEOK, INC., et al., Petitioners

v.LEARJET, INC., et al.

No. 13–271.

Supreme Court of the United States

Argued Jan. 12, 2015.

Decided April 21, 2015.

Neal K. Katyal, Washington, DC, for Petitioners.

Anthony A. Yang, for the United States as amicus curiae, by special leave of the Court, supporting the petitioners.

Jeffrey L. Fisher, Stanford, CA, for Respondents.

Stephen R. McAllister, Solicitor General, for Kansas, et al. as amici curiae, by special leave of the Court, supporting the respondents.

Neal Kumar Katyal, Counsel of Record, Robert B. Wolinsky, Dominic F. Perella, Frederick Liu, Sean Marotta, Hogan Lovells US LLP, Washington, DC, for Petitioners.

Douglas R. Tribble, Kevin M. Fong, Pillsbury Winthrop, Shaw Pittman LLP, San Francisco, CA, Michael J. Kass, VLP Law Group LLP, Oakland, CA, for the defendant Dynegy entities.

Joshua D. Lichtman, Fulbright & Jaworski L.L.P., Los Angeles, CA, Roxanna A. Manuel, Quinn Emanuel Urquhart & Sullivan, LLP, Los Angeles, CA, for Shell Energy North America (U.S.), L.P.

Mark E. Haddad, Michelle B. Goodman, Nitin Reddy, Sidley Austin LLP, Los Angeles, CA, for the defendant CMS entities.

Aaron M. Streett, Baker Botts LLP, Houston, TX, for GenOn Energy, Inc. Oliver S. Howard, Amelia A. Fogleman, Craig A. Fitzgerald, Gable Gotwals, Tulsa, OK, for the defendant ONEOK entities.

Brent A. Benoit, Stacy Williams, Locke Lord LLP, Houston, TX, for El Paso LLC.

Sarah Jane Gillett, Hall, Estill, Hardwick, Gable, Golden, & Nelson, P.C., Tulsa, OK, for the defendant Williams and WPX entities.

Michael John Miguel, Kasowitz Benson Torres & Friedman LLP, Los Angeles, CA, for e prime, Inc.

Steven J. Routh, Orrick, Herrington, & Sutcliffe, L.L.P., Washington, DC, for the defendant AEP entities.

Joel B. Kleinman, Adam Proujansky, Lisa M. Kaas, Dickstein Shapiro LLP, Washington, DC, for Duke Energy Trading and Marketing, L.L.C.

Jennifer Gille Bacon, counsel of record, William E. Quirk, Gregory M. Bentz, Anthony Bonuchi, Andrew J. Ennis, Polsinelli PC, Kansas City, MO, Donald D. Barry, Barry Law Offices, LLC, Donald D. Barry, Chartered, Topeka, KS, for Respondents Learjet, Inc., et al., Heartland Regional Medical Center, et al., Breckenridge Brewery of Colorado, LLC, et al., and Reorganized FLI, Inc.

Eric I. Unrein, Frieden, Unrein & Forbes, LLP, Topeka, KS, Gary D. McCallister, Gary D. McAllister & Associates, LLC, Chicago, IL, for Respondents Learjet, Inc., et al., and Reorganized FLI, Inc.

Isaac L. Diel, Sharp McQueen, P.A., Overland Park, KS, Thomas J.H. Brill, Law Offices of Thomas H. Brill, Leawood, KS, for Respondent Reorganized FLI, Inc.

Melvin Goldstein, Matthew A. Corcoran, Goldstein & Associates, PC, Washington, DC, Philip M. Ballif, Durham Jones & Pinegar, Salt Lake City, UT, for Respondent Sinclair Oil Corporation.

Robert L. Gegios, Counsel of Record, Ryan M. Billings, Stephen D.R. Taylor, Melinda A. Bialzik, Amy Irene Washburn, Kohner, Mann & Kailas, S.C., Milwaukee, WI, for The Wisconsin Respondents (Arandell Corporation, ATI Ladish LLC, Briggs & Stratton Corporation, Carthage College, Merrick's, Inc., NewPage Wisconsin System Inc., and Sargento Foods, Inc.)

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, 108 S.Ct. 1145, 99 L.Ed.2d 316 (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, 123 S.Ct. 518, 154 L.Ed.2d 466 (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. ––––, ––––, 132 S.Ct. 2492, 2502, 183 L.Ed.2d 351 (2012) (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, 109 S.Ct. 1661, 104 L.Ed.2d 86 (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 implicitly " ‘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, 108 S.Ct. 1145 (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

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, 117 S.Ct. 811, 136 L.Ed.2d 761 (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, 89–90, 47 S.Ct. 294, 71 L.Ed. 549 (1927) ; Missouri ex rel. Barrett v. Kansas Natural Gas Co., 265 U.S. 298, 307–308, 44 S.Ct. 544, 68 L.Ed. 1027 (1924). These holdings left a regulatory gap. Congress enacted the Natural Gas Act, 52 Stat. 821, to fill it. See Phillips Petroleum Co. v. Wisconsin, 347 U.S. 672, 682–684, n. 13, 74 S.Ct. 794, 98 L.Ed. 1035 (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. (emphasis added). 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, 109 S.Ct. 1262, 103 L.Ed.2d 509 (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...