Supreme Court sides with PennEast in dispute over powers to condemn state land

Siding with PennEast Pipeline, the US Supreme Court found that the federal government can delegate to private pipeline companies the authority to condemn rights-of-way on land in which a state has an interest.

The decision marks an advance for the stalled 116-mile, 1.1 Bcf/d PennEast Pipeline project, which would link Marcellus Shale dry gas production with markets in Pennsylvania, New Jersey and New York, although the project still faces significant hurdles. In addition to freeing PennEast from one obstacle that it faces, the decision also helps interstate pipelines, which had feared a broad precedent enabling states to exercise a veto on gas pipeline construction.

A September 2019 decision by the 3rd Circuit Court of Appeals had put the future of the route into question by blocking PennEast Pipeline from condemning lands which New Jersey held interests. The 3rd Circuit found that nothing in the Natural Gas Act suggested Congress intended to delegate to private companies the federal government's exemption from state sovereign immunity that would allow the companies to bring states into federal court for condemnation proceedings.

The Supreme Court disagreed in its 5-4 decision. In an opinion for the majority, Chief Justice John Roberts wrote that while nonconsenting states are generally immune from suit, they surrendered their immunity from the exercise of federal eminent domain when they ratified the Constitution.

"Since the founding, the federal government has exercised its eminent domain authority through both its own officers and private delegates," Roberts wrote in the opinion joined by justices Stephen Breyer, Samuel Alito, Sonia Sotomayor and Brett Kavanaugh. Two separate dissents were filed.

"Because the Natural Gas Act delegates the federal eminent domain power to private parties, those parties can initiate condemnation proceedings, including against state-owned property," the majority opinion said.

The decision refers to the history of the NGA, concluding that Congress amended the act in 1947 to solve the problem of states impeding interstate pipeline development by withholding access to their own eminent domain procedures.

The court reversed the 3rd Circuit decision and remanded it for further proceedings.

FUTURE HURDLES FOR PENNEAST

Despite the victory, the project still faces other legal and regulatory hurdles, including difficulties gaining key permits in New Jersey, and ongoing challenges to the Federal Energy Regulatory Commission certificate.

New Jersey Attorney General Gurbir Grewal on Twitter expressed disappointment with the decision but said "our fight is far from over. I'm proud to continue standing up for our residents and championing environmental protection." He urged the federal government "to take another look at this harmful proposal."

House Energy and Commerce Chairman Frank Pallone, Democrat-New Jersey, also criticized the ruling as interfering with states' rights to do what they wish with the lands they own, adding he was "determined to work with my colleagues to do everything in our power to preserve this important state right."

PennEast, by contrast, cheered the ruling, saying it "protects consumers who rely on infrastructure projects -- found to be in the public benefit after thorough scientific and environmental reviews -- from being denied access to much-needed energy by narrow state political interests."

Christi Tezak of ClearView Energy Partners said that notwithstanding the dissents, "we see today's ruling as a clear decision for the industry that rejects the possibility that states would be able to try to 'veto' access to state lands." ClearView also saw PennEast facing potential obstacles in its "phase in" proposal pending before FERC related to greenhouse gas issues and affiliate contract issues, as well as in the FERC certificate challenges ready to go to oral argument in the DC Circuit this fall.

'NOT FINAL SAY'

Faced with the adverse 3rd Circuit ruling affecting the route in New Jersey, PennEast, has sought an amendment to its certificate from FERC to allow it to build the project in two phases (CP20-47), with the first in the friendlier regulatory terrain of Pennsylvania.

Other litigants also promised further battles.

"Today's ruling will not be the final say for the PennEast Pipeline," said Maya van Rossum of Delaware Riverkeeper Network. "The company still has a pending application before [FERC], and faces several legal challenges from the Delaware Riverkeeper Network which will now be able to proceed."

Justice Amy Coney Barrett penned the main dissent, joined by Clarence Thomas, Elena Kagan and Neil Gorsuch, disputing the majority's view that states surrendered to private condemnation suits in the plan of the Constitutional Convention.

"This argument has no textual, structural or historical support," she wrote. "Because there is no reason to treat private condemnation suits differently from any other cause of action created pursuant to the Commerce Clause, I respectfully dissent." Instead, she argued that Congress cannot authorize private suits against a nonconsenting state pursuant to its Commerce Clause powers, and that the Commerce Clause does not itself abrogate state sovereign immunity.