US Supreme Court Hands Gas Pipeline Industry a Win

Copyright © 2021 Energy Intelligence Group

The US Supreme Court last week handed a victory to PennEast Pipeline developers, allowing the New Jersey leg of the 116 mile project to proceed in the Northeast and clearing legal obstacles for pipelines to condemn state-held land. The ruling removes a significant obstacle for the 1.1 billion cubic foot per day line, with the high court majority affirming that state-vested land can be seized by pipeline developers via eminent domain authority under the Natural Gas Act (NGA). The pipeline, a joint venture between Enbridge, South Jersey Industries, New Jersey Resources Corp., Southern Co. and UGI Corp., would run from Luzerne County, Pennsylvania, to Mercer County, New Jersey. In a 5-4 ruling that avoided a split along ideological divides, Chief Justice John Roberts held in a Jun. 29 opinion that any party that has a pipeline project certified by the US Federal Energy Regulatory Commission (FERC) may "condemn all necessary rights-of-way, whether owned by private parties or States." The ruling should ease fears from pipeline developers that the 2019 appeals court decision gave blue states opposed to gas development a major new tool to block any projects that crossed state-owned land (NGW Oct.21'19). "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 ruling held. At issue before the court was a US Court of Appeals for the 3rd Circuit decision that held PennEast’s seizure action of 42 parcels of New Jersey conservation land is unlawful because the US Constitution immunizes states from suits brought by private companies (NGW May3'21). Under the NGA, FERC may seize state land, but the appeals court held that private pipeline companies did not share that authority because of state sovereignty doctrine. Writing for the majority, Roberts, joined by Justices Stephen Breyer, Samuel Alito, Brett Kavanaugh and Sonia Sotomayor, said that delegated authority from FERC under the NGA is "categorial," allowing pipeline developers to condemn any parcel under eminent domain once the FERC has approved the project. The majority further held that the NGA expressly was crafted "specifically to solve the problem of states impeding interstate pipeline development by withholding access to their own eminent domain procedures." Barring a pipeline developer acting on the delegated authority from condemning a property would "diminish the eminent domain power of the federal sovereign, which the State may not do," the ruling says. Dissenting Opinion A dissent authored by Justice Amy Coney Barrett and joined by Justice Elena Kagan, Clarence Thomas, and Neil Gorsuch backs the court’s long-standing defense that interstate commerce doctrine does not allow Congress to "strip the states of their sovereign immunity." Yet, Coney Barrett writes, "Recognizing that barrier, the court insists that eminent domain is a special case," an argument the dissent insists lacks "textual, structural, or historical support." In a separate dissent, Gorsuch and Thomas also raised the issue of a possible jurisdictional bar that may block PennEast’s ability to sue New Jersey over condemnation -- adding a possible wrinkle for the project on remand to the lower court. Bridget DiCosmo, Washington

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