U.S. District Court Finds Filed Rate Doctrine also Applies to Market-Based Rates in Natural Gas Markets

On April 8, 2005, the U.S. District Court for the District of Nevada found that the filed rate doctrine prohibited federal and state antitrust and unfair competition claims against sellers of natural gas.  In In Re W. States Wholesale Natural Gas Antitrust Litig., the Court affirmed FERC's exclusive authority to determine the reasonableness of wholesale natural gas prices under the Natural Gas Act, even in the context of a price-deregulated natural gas market.  The court's decision joins other recent legal decisions protecting the price expectations of market-based sellers of both natural gas and electricity.   As a result of the California energy crisis of 2000-2001, Texas-Ohio, Inc. sued several sellers of natural gas, claiming that they violated federal and state antitrust laws and unfair competition laws by engaging in false reporting of natural gas prices, facilitating wash trades, entering into illegal netting agreements, and conspiring not to compete in the natural gas markets. The natural gas sellers asked the court to dismiss the complaint on the ground (among others) that the court was barred by the filed rate doctrine from calculating hypothetical rates for what would have been charged in the natural gas markets absent the defendants' alleged misconduct.  The court agreed, explaining that Congress gave FERC the exclusive authority over wholesale natural gas prices under the Natural Gas Act, and that the filed rate doctrine applied "even though FERC, in exercising its authority, chose to move toward a market-based system."  The Court also found that the natural gas market should be treated no differently than electricity markets, noting the Ninth Circuit's finding in Public Utility District No. 1 of Grays Harbor County Wash. v. Idacorp, 379 F.3d 641 (9th Cir. 2004) that FERC retains statutory authority over wholesale power sales under the Federal Power Act, and that the filed rate doctrine protection applies even in the context of market-based rates.  (D. Nev., J.P.M.L. Docket No. MDL 1566) [NEW MATTER]