Kansas v. UtiliCorp United Inc.

PETITIONER: Kansas
RESPONDENT: UtiliCorp United Inc.
LOCATION: Oregon Department of Human Resources

DOCKET NO.: 88-2109
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Tenth Circuit

CITATION: 497 US 199 (1990)
ARGUED: Apr 16, 1990
DECIDED: Jun 21, 1990

ADVOCATES:
Floyd R. Finch, Jr. - on behalf of the Respondent
Lawrence S. Robbins - on behalf of United States, as amicus curiae, supporting Respondent
Thomas J. Greenan - on behalf of the Petitioners

Facts of the case

Question

Media for Kansas v. UtiliCorp United Inc.

Audio Transcription for Oral Argument - April 16, 1990 in Kansas v. UtiliCorp United Inc.

William H. Rehnquist:

We'll hear argument next in Number 88-2109, Kansas and Missouri v. UtiliCorp United, Inc.--

Mr. Greenan.

Thomas J. Greenan:

Mr. Chief Justice, and may it please the Court:

The principal question before the Court this morning is whether or not the rule that has been set forth in Hanover Shoe v. United Shoe Machinery, and in Illinois Brick v. Illinois, that gives the claim for overcharges in an antitrust case to the direct purchaser is entirely without exception.

In this instance we are talking about an antitrust case involving the sale of natural gas by regulated utilities from the wellheads in Wyoming to residential consumers in the states of Kansas and Missouri.

We have a situation where formal cost-plus pricing is the rule.

We have an extensive system of Federal and state regulation that requires a 100 percent pass-on of any increase or decrease in the cost of natural gas from the wellhead to the burner tip.

We have in place a contract in the form of a purchased-gas adjustment mechanism, which provides that that pass-on shall be complete and that it shall be immediate.

William H. Rehnquist:

Mr. Greenan, you say the 100 percent pass-on is required from the wellhead to the burner.

You're saying, then, I take it, the utility corp... utility commission in the state must require that a utility pass on all of the cost?

Thomas J. Greenan:

Yes, Your Honor.

The purchased-gas adjustment mechanism is set forth at Tab 3 of the Addendum to the Joint Brief that was filed in the Tenth Circuit, and it does... it is... does mandate that it shall be passed on.

William H. Rehnquist:

And is that a Federal rule?

Thomas J. Greenan:

That is a state rule.

It is also contained in the purchased-gas adjustment mechanism promulgated by the Federal Energy Regulatory Commission, yes, Your Honor.

William H. Rehnquist:

Well, if it were just a state rule, I suppose some states might have it and some states might not.

Thomas J. Greenan:

No.

In this instance the... the interstate pipeline is regulated by the Federal Energy Regulatory Commission.

Their purchased-gas adjustment mechanism requires a pass through.

In this particular instance the states of Kansas and Missouri are... the local utility distributors are regulated by their state commissions, and there are purchased-gas adjustment mechanisms on the state level that have that same requirement.

William H. Rehnquist:

So what you are speaking then is... from wellhead to burner, is true of residential consumers in Kansas and Missouri?

Thomas J. Greenan:

I believe that it is established in the brief of the amicus, the State of Illinois, Your Honor, that those are present in 40 states.

William H. Rehnquist:

40 states--

Thomas J. Greenan:

40 states.

William H. Rehnquist:

--by virtue of the rulings of public utility commissions?

Thomas J. Greenan:

That is correct, Your Honor.

One particular item of interest in this case is that the states are proceeding parens patriae pursuant to 15 U.S.C. 15(c), and in that instance that they are representing residential consumers who are natural persons in their non-business capacity.

These residential consumers, the record is clear, do not have the ability to switch to alternative fuels, at least in the short term.

They have in place their heating plants, their natural gas furnaces.

And in order for them to make a switch to an alternative type of fuel it would be necessary to change to some other type of heating and to go through--