The U.S. Supreme Court seemed to give credence to both sides of the issue during oral arguments held April 28 over whether PennEast as a private company can condemn state land to build a natural gas pipeline. The court is expected to rule in mid-summer.
The question at issue is whether a federal agency can delegate its eminent domain authority to someone else. New Jersey says it cannot. The U.S. government says it can.
The Federal Energy Regulatory Commission delegated its eminent domain authority authorized by the 1938 Natural Gas Act to PennEast Pipeline Co. in 2018 when it approved the $1-billion, 116-mile, 36-in. pipeline proposed from the Marcellus Shale region in Pennsylvania to New Jersey.
PennEast filed lawsuits to condemn 42 New Jersey properties including those in state forests and land preserved for agricultural, recreational and conservation use. New Jersey challenged the company’s attempt to condemn the state land in federal court.
One observer gave the high court’s decision 70% odds in PennEast’s favor, noting that Justice Stephen Breyer said there is decades-long history of gas pipelines built across state-owned lands and wondered if a ruling for New Jersey would disrupt existing infrastructure.
But Chief Justice John Roberts added a conflicting view, saying that the high court had previously ruled that corporations are people, which gives credibility to the argument that PennEast’s attempt to condemn state property violates the 11th Amendment of the Constitution. The amendment prohibits federal courts from hearing lawsuits against states brought by citizens from another state. PennEast is a Delaware corporation.
The U.S. Court of Appeals in Philadelphia ruled in 2019 that that the proceedings would infringe on New Jersey’s sovereign immunity and expressing “deep doubt” that PennEast could “hale” the state into court without its consent. That decision was appeal to the Supreme Court.
Justice Elena Kagan asked whether something is lost by giving the eminent domain to private parties who have their own interests separate from that of the government’s.
Another court observer who asked not to be quoted by name, gave better odds to the state saying the justices were a lot more skeptical of the pipeline company’s arguments. “They understood it was an affront to the state’s sovereign dignity,” while also noting that justices do not often betray their thinking.
Justice Brett Kavanaugh asked what would happen if the court rules against PennEast. Paul Clement, the company’s attorney said, “If we lose this case, then this pipeline will not be built, at least at anything like its current configuration, and depending on how exactly we lose this case, I think this federal interstate pipeline, until the law is changed, will be at the mercy of New Jersey, because I don’t think there is a way to reroute this pipeline in a way that doesn’t implicate a state interest in land.”
A PennEast spokeswoman told ENR that PennEast is confident in the arguments presented during oral arguments and its briefs filed with the Court.
“PennEast’s position has received support from diverse groups representing labor, the business community and other consumer interests, in addition to bipartisan support across two administrations representing the official position of the U.S Government,” the spokeswoman said.
Jeff Tittel, the executive director of the New Jersey Chapter of the Sierra Club, told ENR if the court rules in PennEast’s favor, the company still must obtain water quality permits from the Army Corps of Engineers and the Delaware River Commission. “Unfortunately, if it is built, a lot of taxpayer money will be used for a pipeline that is not needed,” he said. The Sierra Club was not a party to the lawsuit.
The consequence of the state winning could give other states the power to stop other pipelines, but also the power to stop clean energy projects.
PennEast is a consortium that includes Southern Company, New Jersey Resources Corp., South Jersey Industries, Spectra Energy Partners and UGI Corp.
Justices will rule on the case by early July.