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NJ tells high court not to bite on 'overstated' impacts in pitch from PennEast

Highlights

Sees no circuit split warranting Supreme Court review

Says 'sky has not fallen' despite industry, FERC warnings

Wants further 'percolation' of impacts before review

Washington — The State of New Jersey has told the US Supreme Court that PennEast Pipeline exaggerated the industrywide harms likely to result from a federal appeals court decision blocking condemnation of property in which the state holds an interest.

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The June 2 brief from the state comes as PennEast has asked the national's high court to overturn a 3rd US Circuit Court of Appeals decision it contends would enable states to block interstate gas pipelines, threatening the nation's energy markets and likely chilling investments in infrastructure across the country.

Oil and gas trade groups and the Federal Energy Regulatory Commission have also warned of far-reaching consequences of the September 2019 3rd Circuit ruling. That decision found state sovereign immunity blocked PennEast from pulling New Jersey into federal court to condemn more than 40 properties in which the state held an interest.

The ruling threw into question the route for the 116-mile, 1.1 Bcf/d natural gas project linking Marcellus Shale dry gas production to markets in Pennsylvania, New Jersey, and New York.

New Jersey in its brief filed June 2 argued the Supreme Court should not take up the case because there was no circuit court split to resolve and the 3rd Circuit ruling was unanimously decided, reflecting proper application of sovereign immunity and statutory interpretation rules.

DEBATE OVER WARNINGS

As such, it said the petition for Supreme Court review rested heavily on overstated warnings of dire consequences.

"PennEast is wrong" in asserting the 3rd Circuit created a state veto of interstate natural gas pipelines that will prevent development across the country, New Jersey argued. The decision only identifies which parties can file appropriate condemnation suits, it said. "That is why this question has arisen so infrequently, and why it is not likely to arise frequently in the future," New Jersey said.

"The sky has not fallen," since a district court upheld Texas' analogous assertions of sovereign immunity in a condemnation action involving Sabine Pipe Line in 2017, New Jersey argued in the brief. Rather, FERC has received 53 applications for major new natural gas projects and approved 34 with 19 pending and no denials. And, parties have only identified two cases, including PennEast, since the Texas ruling in which states asserted immunity, it said.

FURTHER 'PERCOLATION'

"This court should allow further percolation to see whether the problems that PennEast decries really arise — rather than grant review of the first decision on point, especially one based on traditional immunity and statutory interpretation analyses," New Jersey argued.

And it insisted the impacts for PennEast, in particular, are overstated. The pipeline faces other legal obstacles raising doubt about whether it will be built, such as an outstanding Clean Water Act certification from New Jersey and litigation challenging the FERC certificate, New Jersey said. The impacts may be further diminished because PennEast has reconceived the project to be built in two phases, including a first phase with no land in which New Jersey has a real property interest, New Jersey continued.

"[I]t is notable that PennEast has a plan in place to achieve so much of the financial value it seeks," the state said.

FERC ROLE

Responding to a PennEast request, FERC has already weighed in by issuing a declaratory order stating its view that the Natural Gas Act empowers pipeline companies to use eminent domain powers to acquire state lands and warning of profoundly adverse impacts to the development of the nation's interstate gas transportation should the 3rd Circuit ruling stand. However, FERC said it lacked the ability to weigh in on the constitutional questions raised in the case.

Even though FERC did not issue all the findings PennEast requested, ClearView Energy Partners said in a research note, "[W]e think that FERC's response may help support the Supreme Court accepting the case for review, although it may not necessarily tip a final ruling toward PennEast's preferred outcome."

The case has been distributed for conference allowing the justices shortly to decide whether to consider it, although PennEast notionally has 10 days to reply to New Jersey's objections, ClearView noted.

"PennEast looks forward to providing the court with its response to the state's brief while keeping the petition on track for consideration in the current Court term," said project spokeswoman Pat Kornick in an email June 3. In the meantime, PennEast continues to work with regulators to secure approval for the "two-phased approach that will deliver clean, reliable, and low-cost natural gas by next year," she said.