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After eminent domain snag, New Jersey DEP denies PennEast gas line's water application

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After eminent domain snag, New Jersey DEP denies PennEast gas line's water application

Highlights

State points to 3rd Circuit ruling stopping property condemnation

PennEast looking to FERC to help restore path

Challenging regulatory climate for project in New Jersey

Washington — Adding to PennEast Pipeline's regulatory obstacles, the New Jersey Department of Environmental Protection again rejected the wetlands and water-quality application for the 116-mile, 1.1 Bcf/d pipeline project that would connect natural gas from the Marcellus Shale to markets in Pennsylvania, New Jersey, and New York.

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The action comes after a legal setback for the project September 10, when the 3rd US Circuit Court of Appeals found that because of state sovereign immunity, the pipeline could not go forward with lower court condemnation proceedings against more than 40 properties owned at least in part by New Jersey.

In a letter dated Tuesday, the New Jersey Department of Environmental Protection said the application can no longer be deemed administratively complete because the pipeline no longer has authority to carry out all requirements under the state's Freshwater Wetlands Protection Act and Flood Hazard Control Act for the full length of the project right-of-way.

LACKING AUTHORITY

PennEast has not demonstrated it has authority to submit the application, the state regulatory said, explaining its decision to reject and close the application, without prejudice. The state previously denied a water permit for the project, citing missing environmental survey data. With some landowners denying survey access to their properties, PennEast had difficulty collecting all the necessary information for the application.

In response to the new state denial, PennEast Friday continued to express confidence that legal actions will be resolved favorably and that the legal precedent under which the Federal Energy Regulatory Commission has operated will be upheld.

"The PennEast member companies remain fully committed to the PennEast Pipeline Project and the affordable, reliable service it will bring to the region, including 9 million Garden State residents," said PennEast spokeswoman Patricia Kornick. PennEast is a joint venture of Enbridge, Southern Gas Company, South Jersey Industries, New Jersey Resources and UGI.

BIGGER HURDLE

Gary Kruse of LawIQ said the bigger problem for PennEast is that New Jersey is opposing the project at every turn. "Overcoming one hurdle by New Jersey doesn't mean there isn't going to be another one in your way," he said. In this case, New Jersey said PennEast's September 11 information submittal satisfied a prior deficiency letter, but the new denial once again set the process back.

The new denial would extend the time period for review, he noted.

PennEast recently pressed FERC to help it overcome the 3rd Circuit ruling. It asked FERC to quickly provide its own "authoritative interpretation" that Natural Gas Act condemnation authority applies to a property in which a state holds an interest, as well as that Congress delegated the federal government's exemptions from claims of state sovereign immunity.

The effort is expected to draw support from pipeline companies, but face strong pushback from environmental groups and property rights advocates.

-- Maya Weber, maya.weber@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com