Source: https://case-law.vlex.com/vid/485-u-s-293-605062438
Timestamp: 2019-04-19 03:12:21+00:00

Document:
485 U.S. 293 (1988), 86-986, Schneidewind v. ANR Pipeline Co.
Party Name: Schneidewind v. ANR Pipeline Co.
Under a Michigan statute (Act 144), a public utility transporting natural gas in Michigan for public use must obtain approval of the Michigan Public Service Commission (MPSC) before issuing long-term securities. Act 144 directs the MPSC to approve a proposed security issuance when it is satisfied that the funds derived therefrom are to be applied to lawful purposes and that the issuance is essential to the successful carrying out of the purposes, or represents accumulated and undistributed earnings invested in capital assets and not previously capitalized. Respondent companies, which serve customers in other States as well as in Michigan, are natural gas companies within the meaning of the federal Natural Gas Act of 1938 (NGA), and are subject to the jurisdiction of the Federal Energy Regulatory Commission (FERC). They filed suit against petitioners, members of the MPSC, in Federal District Court, seeking a declaratory judgment that the MPSC lacked jurisdiction over their security issuances because Act 144 was preempted by the NGA and because it violated the Commerce Clause. The court rejected respondents' claims. The Court of Appeals reversed, holding that both the preemptive effect of the federal regulatory scheme and the Commerce Clause barred application of Act 144 to respondents.
Held: The MPSC regulation of respondents through Act 144 impinges on a field that the federal regulatory scheme has occupied to the exclusion of state law, and Act 144 therefore is preempted. Pp. 300-310.
(a) Although FERC is not expressly authorized to regulate natural gas companies' issuance of securities, the NGA is a comprehensive scheme of federal regulation of all wholesales of natural gas in interstate commerce that gives FERC a number of tools -- such as its authority to fix rates and to withhold certificates of public convenience and necessity -- for examining and controlling the issuance of such securities in the exercise of its comprehensive authority. Pp. 300-304.
as petitioners contended, from Congress' subsequent failure to enact proposed legislation that would have given FERC explicit authority to regulate the issuance of natural gas companies' securities. Pp. 304-306.
(c) When applied to natural gas companies, Act 144 amounts to a regulation of rates and facilities used in transportation and sale for resale of natural gas in interstate commerce, a field occupied by federal regulation. Although every state statute that has some indirect effect on natural gas companies' rates and facilities is not preempted, Act l44's effect is not "indirect." Its central purpose is to regulate matters that Congress intended FERC to regulate exclusively. Pp. 305-309.
(d) The conclusion that Act 144 seeks to regulate a field that the NGA has occupied is also supported by the imminent possibility of collision between Act 144 and the NGA. P. 310.
BLACKMUN, J., delivered the opinion of the Court, in which all other Members joined, except KENNEDY, J., who took no [108 S.Ct. 1148] part in the consideration or decision of the case.
This case presents the Court once again with a question concerning a State's ability to regulate the activities of natural gas companies.
purchases its natural gas from producers in Texas, Oklahoma, Kansas, Louisiana, and Wyoming.
Storage, which operates independently from Pipeline, is a Michigan corporation organized by Resources in 1978 to develop and operate gas storage reservoirs for nonaffiliated customers. Storage receives gas from outside Michigan and, on demand, redelivers it for sale outside that State. Storage operates four storage fields in Michigan.
is satisfied that the funds derived . . . are to be applied to lawful purposes and that the issue and amount is essential to the successful carrying out of the purposes, or that the issue of the stock fairly represents accumulated and undistributed earnings invested in capital assets and not previously capitalized.
§ 460.301(3). The MPSC may conduct an investigation, including an appraisal of the company's property at the company's expense, in deciding whether to allow the issue, § 460.301(2), and it "may impose as a condition of the grant reasonable terms and conditions that [it] considers proper." § 460.301(3).
Pipeline and Storage filed in the United States District Court for the Western District of Michigan an amended complaint against petitioners in their official capacities, seeking a declaratory judgment that the MPSC lacks jurisdiction over their security issuances, and thus that they may lawfully issue and market securities without MPSC approval.5 Respondents argued that Act 144 was preempted by the NGA, and that Act 144 violates the Commerce Clause, U.S.Const., Art. I, § 8, cl. 3.
compliance with both federal and state regulations is not a physical impossibility, and Act 144 does not stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.
while serving legitimate local interests. 627 F.Supp. at 933.
the burdens of expense, delay, and administrative hassle of "advance approval" securities regulation far outweigh the benefits, if any, of Michigan's interests in protecting consumers and investors . . . Act 144 unconstitutionally burdens interstate commerce.
Because of a conflict between the views of the Sixth Circuit and those of the Michigan Supreme Court set forth in Michigan Gas Storage Co. v. Michigan Pub. Serv. Comm'n, 405 Mich. 376, 275 N.W.2d 457 (1979), we granted certiorari to decide whether Michigan may require respondents to obtain MPSC approval before issuing and marketing securities.

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