Schneidewind v. ANR Pipeline Company

PETITIONER: Schneidewind
RESPONDENT: ANR Pipeline Company
LOCATION: Dickinson School District Superintendent's Office

DOCKET NO.: 86-986
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT:

CITATION: 485 US 293 (1988)
ARGUED: Nov 02, 1987
DECIDED: Mar 22, 1988

Facts of the case

Question

Media for Schneidewind v. ANR Pipeline Company

Audio Transcription for Oral Argument - November 02, 1987 in Schneidewind v. ANR Pipeline Company

William H. Rehnquist:

We'll hear argument this morning in Case No. 86-986, Eric Schneiderwind versus ANR Pipeline Company.

Mr. Keskey, you may proceed whenever you're ready.

Don L. Keskey:

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

This case involves a review of two major holdings of the Court of Appeals of the Sixth Circuit.

The first that Michigan Act 144, which regulates the securities of utilities and natural gas companies, is implicitly preempted by the Natural Gas Act because Congress had the purpose to deregulate securities of natural gas companies.

Secondly, for the opposite purpose that FERC was sufficiently regulating securities under its Section 7 certificate powers and thirdly because of what the Court viewed as an imminent possibility of conflict between Michigan Act 144 Securities Regulation and the Natural Gas Act.

In addition, the Court of Appeals found that Michigan Act 144 represented an unconstitutional burden on interstate commerce on all tests, the per se of discrimination test, the balancing test of Pike v. Bruce Church and also on the basis of a need for national uniformity with respect to Securities regulation of natural gas companies.

In reaching these holdings, the Sixth Circuit Court of Appeals failed to follow this Court's preemption test, and failed to follow Congressional intent in the Natural Gas Act.

Congress, in the Natural Gas Act, did not occupy the whole field of natural gas regulation, it did not speak to Securities regulation whatsoever, it did not preempt the States from regulating securities by its silence in the NGA regarding this subject.

This Court has held extensively in Panhandle Eastern that the purpose of the NGA was to close regulatory gaps brought about by the prior decisions of this Court in a specific area, interstate transportation of gas and sales for resales.

It did not involve the area of Securities regulation of natural gas companies.

Sandra Day O'Connor:

Mr. Keskey, what is the purpose exactly of the Michigan State statutes in this regard?

Don L. Keskey:

The purpose of the Michigan statutes is to protect the public interest, the public health safety and welfare.

Sandra Day O'Connor:

Be a little more specific.

That doesn't tell me much.

Don L. Keskey:

One of the major purposes is to ensure that the extensive pipeline facilities and storage facilities, the property located within the State does not become over collateralized, the company doesn't become over capitalized so that the maintenance and the safety and environmental concerns regarding those facilities are not harmed.

Secondly, that there is reliable service to the public.

In large part, these are still monopoly companies, or at least oligopolies.

The service of natural gas the captive markets substantial markets in Michigan are very integral to the livelihood, the existence of the people in Michigan and to the economic development of the State.

Sandra Day O'Connor:

Is it intended at all to make available gas to Michigan consumers at reasonable rates?

Don L. Keskey:

It can protect the rate payers by ensuring that over capitalization does not result, to ensure that there are not abuses in financings.

Sandra Day O'Connor:

Well, is an effect on rates one of the purposes of the legislation?

Don L. Keskey:

No.

It's not designed to regulate rates or interstate rates.

Sandra Day O'Connor:

Did your State Court ever find that one of the purposes was to ensure reasonable utility rates?

Don L. Keskey:

The State Court indicates that's one of the purposes.

Sandra Day O'Connor:

But you disavow that as a purpose?

Don L. Keskey:

No, no, not whatsoever.

By protecting against financing abuses, and by protecting against over collateralization, you can ensure that service will be available at reasonable rates, that you will not get financing that will eventually end up being a burden on the company and would eventually harm service to Michigan at reasonable rates.

It's not an attempt to address rate making because we recognize fully that that is a function of FERC, and we intervene in rate cases at FERC, but it is to ensure that there is not an affect from financing actions which results in damage to the financial viability of both the natural gas assets and to the companies themselves.