Image courtesy of Daderot/Wikimedia Commons.

The U.S. Supreme Court ruled Tuesday that federal laws governing the natural gas market do not protect firms from state level antitrust suits.

In a 7-2 vote the court ruled against a group of energy companies who argued the federal Natural Gas Act shields them from antitrust suits filed at the state level, Reuters said.

The group of companies includes American Electric Power Company, Dynegy and ONEOK.

The companies are being sued by a group of industrial and commercial natural gas users, including Learjet Inc, for alleged price manipulation during the 2000 to 2002 western U.S. energy crisis.

The plaintiffs claim the companies manipulated published price indexes and violated state antitrust laws, a move that sent natural gas prices skyrocketing and led to rolling outages in California, Reuters said.

The Natural Gas Act grants the Federal Energy Regulatory Commission (FERC) power over portions of the natural gas market including wholesale pricing.

A 2012 ruling by the Ninth Circuit Court of Appeals found that FERC’s regulatory power does not extend to retail transactions, an opinion upheld in Tuesday’s high court ruling.

Supreme Court Justice Stephen Breyer said that while the energy companies made a “forceful” argument the Natural Gas Act allows states to maintain a regulatory role in the natural gas market.

The suit will move back to the lower courts although more litigation could be needed to sort out additional conflicts between state and federal law.


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