Source: http://openjurist.org/print/33025
Timestamp: 2014-07-25 01:32:45
Document Index: 330293061

Matched Legal Cases: ['§ 717', '§ 1', '§ 717', '§ 460', '§ 460', '§ 460', '§ 460', '§ 8']

485 US 293 Schneidewind v. Anr Pipeline Company Anr
485 US 293 Schneidewind v. Anr Pipeline Company Anr 485 U.S. 293
108 S.Ct. 1145
99 L.Ed.2d 316
Eric J. SCHNEIDEWIND, et al., Petitionersv.ANR PIPELINE COMPANY and ANR Storage Company.
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 pre-empted. 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.
(b) Congressional intent to pre-empt state regulation of securities issuances to finance the interstate transportation and sale of natural gas cannot be inferred, as respondents contended, from the mere fact that States might have been precluded from such regulation under "dormant" Commerce Clause principles at the time of the NGA's enactment in 1938. Nor can any inferences as to the States' authority to regulate be drawn, 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.
Don L. Keskey, Lansing, Mich., for petitioners.
Howard J. Trienens, Chicago, Ill., for respondents.
* Respondents ANR Pipeline Company (Pipeline) and ANR Storage Company (Storage) are wholly owned subsidiaries of American Natural Resources Company (Resources), a Delaware corporation which, like Pipeline and Storage, has its principal place of business in Michigan. Both Pipeline and Storage are natural gas companies, within the meaning of the Natural Gas Act of 1938 (NGA or Act), ch. 556, 52 Stat. 821, as amended, 15 U.S.C. § 717 et seq.1 Thus, both are subject to the jurisdiction of the Federal Energy Regulatory Commission (FERC), the regulatory body charged with implementation of the NGA. See § 1(b) of the Act, 15 U.S.C. § 717(b).2
Pipeline is a Delaware corporation that owns and operates an interstate natural gas pipeline system transporting gas, exclusively for resale, to 51 gas distribution centers in Michigan and eight other States, where the gas is either delivered to customers of Pipeline or stored for future delivery. Pipeline purchases its natural gas from producers in Texas, Oklahoma, Kansas, Louisiana, and Wyoming.
Petitioners are members of the Michigan Public Service Commission (MPSC). Under Michigan's Public Utilities Securities Act, 1909 Mich.Pub.Acts No. 144, as amended (Act 144), Mich.Comp.Laws Ann. § 460.301 et seq. (1967 and Supp.1987),3 a public utility exercising or claiming the right to transport natural gas in Michigan for public use4 must obtain MPSC approval before issuing long-term securities. Act 144 directs the MPSC to approve a security issuance when it "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 pre-empted by the NGA and that Act 144 violates the Commerce Clause, U.S. Const., Art. I, § 8, cl. 3.
The District Court concluded that Act 144 was neither pre-empted by the federal regulatory scheme nor in violation of the Commerce Clause. 627 F.Supp. 923 (WD Mich.1985). On the pre-emption issue, the court concluded that "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." Id., at 930. As to the Commerce Clause, the court concluded that Act 144 was "an evenhanded and relatively limited state regulation which, as applied to [respondents], has historically had an indirect and minimal effect on interstate commerce," while serving legitimate local interests. 627 F.Supp., at 933.
The United States Court of Appeals for the Sixth Circuit reversed, holding that both the pre-emptive effect of the federal regulatory scheme and the Commerce Clause bar application of Act 144 to respondents. 801 F.2d 228 (1986). The Court of Appeals concluded that Act 144 was pre-empted because, by omitting any requirement of advance approval of the issuance of securities "in an otherwise 'comprehensive' regulatory scheme, Congress has implicitly determined that the States should not impose such regulations," 801 F.2d, at 233-234, and because of the possibility of a conflict between federal and state regulation of natural gas company projects and financing plans, id., at 235-236. Furthermore, the court reasoned, inasmuch as "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." Id., at 238.
The circumstances in which federal law pre-empts state regulation are familiar. See Arkansas Elec. Coop. Corp. v. Arkansas Public Serv. Comm'n, 461 U.S. 375, 383, 103 S.Ct. 1905, 76 L.Ed.2d 1 (1983). See also Fidelity Federal Savings & Loan Assn. v. De la Cuesta, 458 U.S. 141, 152-154, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664 (1982). A pre-emption question requires an examination of congressional intent. Id., at 152, 102 S.Ct., at 3022. Of course, Congress explicitly may define the extent to which its enactments pre-empt state law. See, e.g., Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 95-96, 103 S.Ct. 2890, 2898-2900, 77 L.Ed.2d 490 (1983). In the absence of explicit statutory language, however, Congress implicitly may indicate an intent to occupy a given field to the exclusion of state law. Such a purpose properly may be inferred where the pervasiveness of the federal regulation precludes supplementation by the States, where the federal interest in the field is sufficiently dominant, or where "the object sought to be obtained by the federal law and the character of obligations imposed by it . . . reveal the same purpose." Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947). Finally, even where Congress has not entirely displaced state regulation in a particular field, state law is pre-empted when it actually conflicts with federal law. Such a conflict will be found " 'when it is impossible to comply with both state and federal law, Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-143 [83 S.Ct. 1210, 1217-1218, 10 L.Ed.2d 248] (1963), or where the state law stands as an obstacle to the accomplishment of the full purposes and objectives of Congress, Hines v. Davidowitz, 312 U.S. 52, 67 [61 S.Ct. 399, 404, 85 L.Ed. 581] (1941).' " California Coastal Comm'n v. Granite Rock Co., 480 U.S. 572, 581, 107 S.Ct. 1419, 1425, 94 L.Ed.2d 577 (1987), quoting Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248, 104 S.Ct. 615, 621, 78 L.Ed.2d 443 (1984).