PennEast Pulls Plug Despite Legal Victory

Copyright © 2021 Energy Intelligence Group

The developers of the PennEast Pipeline announced Monday that they are halting further development on the 116-mile line in the US Northeast despite winning a legal battle over condemning state-held land for the project earlier this year.

The PennEast Pipeline, a joint venture between Enbridge, South Jersey Industries, New Jersey Resources Corp., Southern Co. and UGI Corp., had already received some federal authorizations but was still waiting on water quality certifications and other permits from New Jersey, PennEast spokeswoman Pat Kornick said Monday.

Developers determined after extensive evaluation that “further development of the project no longer is supported,” said Kornick.

The decision to halt development of PennEast comes after a protracted legal battle resulting in a 5-4 ruling in June that upheld the company’s condemnation of New Jersey-held lands via eminent domain authority.

The ruling eased some fears from pipeline developers by reversing an appeals court decision that many said would give states opposed to oil and gas development a new route to block projects crossing state-owned land.

But the PennEast announcement shows that there are still avenues for states to use Clean Water Act authorizations and other permitting to stall major energy projects they oppose.

Under the CWA Section 401, companies must obtain authorization from a state to build a federally approved pipeline or related project. State regulators can reject those licenses if they deem a project to be harmful to water quality, but some states, including New York and Oregon, have used the process to stall or block pipelines they oppose.

The US Environmental Protection Agency earlier this year reversed course on a Trump-era rule aimed at making it more difficult for states to use the CWA permitting to block pipelines, which may have fed into the PennEast decision.

So far, pipelines have been more of a grey area for the Biden administration than upstream oil and gas decisions. For example, the administration refused to weigh in on the Dakota Access and Line 5 oil pipeline disputes.

But the PennEast decision might reflect a growing concern about some of the tangential policies, such as the CWA rulemaking, that could add to hurdles for projects.

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