Phelps Dodge v. El Paso Corporation – 9/7/2006

September 11, 2006

Arizona Court of Appeals Division One Affirms That Superior Court Lacked Subject Matter Over Lawsuit Indirectly Attacking FERC Decision.

Phelps Dodge filed a complaint in 2001 with the Federal Energy Regulatory Commission (FERC) under the Natural Gas Act (NGA), claiming that El Paso Natural Gas violated the NGA. FERC rejected the claim and the District of Columbia Court of Appeals affirmed FERC’s orders. Phelps Dodge subsequently sued El Paso in Maricopa County Superior Court alleging various claims arising out of state statutes. El Paso moved to dismiss on multiple grounds and the trial court granted the motion on the basis of federal pre-emption. This appeal followed. Judge Portley, writing for a unanimous panel, noted that Section 19(b) of the NGA precludes de novo litigation between the parties of all issues inhering to the controversy. The Court found that that Phelps Dodge’s claims were an impermissible indirect challenge to the earlier FERC decision, depriving the superior court of subject matter jurisdiction to hear Phelps Dodge’s lawsuit.

Judge Portley wrote the opinion, Judges Snow and Winthrop concurred.