In an amicus brief filed today in the Supreme Court, the American Antitrust Institute (AAI) urged the Court to uphold a Ninth Circuit ruling that state antitrust claims in the natural gas market are not preempted by regulation of the market by the Federal Energy Regulatory Commission (FERC). The case involves claims by industrial, commercial and other direct purchasers of natural gas alleging that natural gas suppliers engaged in a price-fixing conspiracy by artificially inflating prices reported to trade-market indices to which the purchasers¹ contracts were pegged. The market manipulation contributed to the California energy crisis of 2000 and 2001.
The gas companies' theory of preemption, supported by the Solicitor General, is that because FERC had jurisdiction to address the companies' index-reporting practices under the Natural Gas Act, state antitrust claims were preempted, notwithstanding that the claims did not conflict with any FERC policies or that plaintiffs could not have obtained any monetary relief from FERC.
The AAI argued in its brief that the gas companies' "field preemption" argument made no sense because, unlike state utility regulation, state antitrust law is not directed at the natural gas market. Rather, antitrust laws are basic to the operation of the free market in all industries. The brief argued that antitrust law complemented FERC oversight, and was particularly important in markets like natural gas that have been significantly deregulated.
The AAI also argued that state antitrust law is an important component of the United States antitrust regime and, contrary to the contention of the gas companies, posed no risks of "balkanized" standards, particularly when it comes to price fixing. Several states also filed an amicus brief arguing against preemption.
The AAI's amicus brief was written by AAI General Counsel Richard Brunell with AAI Special Counsel Sandeep Vaheesan. Research Fellow Geoff Kozen provided valuable assistance, as did several Advisory Board members.