SCOTUS hears arguments in eminent domain case involving PennEast pipeline project

N.J. says company shouldn't be allowed to seize state-controlled land

  • Susan Phillips

The U.S. Supreme Court will decide an eminent domain case pitting the State of New Jersey against the PennEast Pipeline Co. after hearing oral arguments on Wednesday.

The 116-mile pipeline would ship Marcellus Shale gas from Luzerne County in Northeast Pennsylvania across the Delaware River to Mercer County, New Jersey, to provide what the company says is much needed, affordable natural gas to residents.

But New Jersey seeks to block the project from state-owned and state-controlled conservation land, and argues that seizing the land through court action is unconstitutional.

The Federal Energy Regulatory Commission first approved the project in 2015, drawing objections from residents, environmentalists and the State of New Jersey. As a result of the FERC rule-making and public comment process, the company changed the route in at least 33 instances.

A number of parties challenged the pipeline in court, including the environmental group Delaware Riverkeeper Network and New Jersey. In 2019, a three-judge panel of the Third Circuit Court of Appeals in Philadelphia reversed a lower court’s decision, saying that condemning public land violates the 11th Amendment. The amendment gives sovereign immunity to states, shielding them from private lawsuits.

PennEast Pipeline Co. appealed the decision. It wants to build part of its natural gas pipeline through 49 state-owned and state-controlled parcels of land in New Jersey. The Federal Energy Regulatory Commission had granted the company eminent domain authority, which allows it to seize land from uncooperative property owners.

The 49 parcels at issue in the case include public state-owned land as well as private land with conservation easements. The project would cross dozens of waterways and wetlands, as well as the main stem of the Delaware River. 

In a brief filed by PennEast Pipeline, company lawyers argued the case was of “immense national importance,” and could disrupt how the natural gas industry has operated for 80 years, including providing “a road map for converting state lands — including beds of rivers that form state boundaries — into barriers to pipeline development.”

The Natural Gas Act, passed in the 1930s, authorizes the federal government, through the Federal Energy Regulatory Commission, to deputize private companies building gas pipelines so they have eminent domain authority to seize land from unwilling property owners. But the two sides disagree over whether Congress meant to allow private entities to sue states for eminent domain takings.

Company attorney Paul Clement told the court that if the appeals court ruling stands, the PennEast Pipeline project would be at the mercy of New Jersey.

“If we lose this case, this pipeline will not be built at anything like its current configuration,” he said in answer to a question from Justice Brett Kavanaugh. “This pipeline has to cross the Delaware River somewhere, and half of the Delaware River belongs to New Jersey. So there’s just no way for this pipeline to exist under the current law.”

New Jersey has withheld from the project the necessary permits to cross waterways. The state says that it spent about $1 billion to acquire and control the parcels for open space and to preserve the land for recreation, conservation and agriculture, and that it should not be used to ship natural gas.

Jeremy Feigenbaum, a New Jersey assistant attorney general who argued the case for the state, said maintaining the appeals court decision would not have an impact on other interstate pipeline projects. 

“Other industries expressly lack the power to file condemnation suits against non-consenting states in federal court,” he said. “Yet oil pipelines and electric transmission, like other infrastructure projects, proceed apace.”

President Joe Biden’s Department of Justice maintained the position taken by the Trump administration and sided with the pipeline company, which disappointed environmentalists who were optimistic he would reverse course. Biden has withdrawn federal approval for the Keystone XL Pipeline project and put a moratorium on oil and gas production in the Arctic National Wildlife Refuge.

Since the Third Circuit’s ruling, PennEast sought FERC’s approval to build the pipeline in two stages, starting on the Pennsylvania side, where it has already gained most of the necessary permits. If approved, the line would have interconnections with Adelphia Gateway and Columbia Gas transmission pipelines in Northampton County. The company plans to have the Pennsylvania section of the route completed and in service in 2022, while the New Jersey section would be operational in 2024.

Disclosure: William J. Marrazzo, president & CEO of WHYY, is a member of the board of directors of UGI Corp., which is listed as a member company of PennEast Pipeline. WHYY is a partner of StateImpact Pennsylvania.  

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