Is sovereign immunity out of gas in pipeline condemnation case?

Is sovereign immunity out of gas in pipeline condemnation case?

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OPINION ANALYSIS

The Supreme Court held 5-4 in PennEast Pipeline Co. v. New Jersey that sovereign immunity does not shield New Jersey from condemnation proceedings instituted by a private company in federal court to obtain properties for a pipeline. Chief Justice John Roberts wrote the majority opinion, joined by Justices Stephen Breyer, Samuel Alito, Sonia Sotomayor and Brett Kavanaugh. Justice Amy Coney Barrett dissented and was joined by Justices Clarence Thomas, Elena Kagan and Neil Gorsuch. Gorsuch also separately wrote a dissent joined by Thomas.

Background

The dispute arose when PennEast obtained under the Natural Gas Act a certificate of public convenience and necessity from the Federal Energy Regulatory Commission to construct a 116-mile pipeline from northeast Pennsylvania to western New Jersey. To facilitate pipeline projects, the NGA delegates federal eminent domain power to private parties that have FERC-issued certificates of public convenience and necessity.

Shortly after receiving its certificate, PennEast instituted condemnation proceedings in federal district court against properties along the pipeline route in which New Jersey held interests. New Jersey, which opposes the pipeline, contended that it was immune from the suits under the 11th Amendment. The court rejected the sovereign immunity defense. New Jersey appealed, and the U.S. Court of Appeals for the 3rd Circuit reversed. It found that, while Congress could delegate the federal power of eminent domain to a private party, waiving a state’s 11th Amendment sovereign immunity was a distinctly different matter. To abrogate state sovereign immunity, the 3rd Circuit determined that Congress was required to do so clearly in the text of the statute, which the court found lacking in the NGA.

PennEast sought review by the Supreme Court, which was granted. The court also requested that the United States weigh in on the issues presented. Oral argument took place in April.

The majority opinion

In writing for the majority, Roberts framed the question presented as “whether the Federal Government can constitutionally confer on pipeline companies the authority to condemn necessary rights-of-way in which a State has an interest,” noting that “[s]ince the founding, the United States has used its eminent domain authority to build a variety of infrastructure projects.” In summarizing the NGA, he pointed out that, as originally adopted, the statute did not provide certificate holders with any mechanism to obtain properties if the owners objected, leaving certificate holders with only “an illusory right to build.” Eventually, however, Congress amended the NGA to delegate federal eminent domain power to certificate holders.

The first issue that Roberts addressed was whether the 3rd Circuit had jurisdiction over New Jersey’s appeal. The United States argued that jurisdiction was lacking because the NGA confers exclusive jurisdiction on the U.S. Court of Appeals for the District of Columbia Circuit to “affirm, modify, or set aside” orders issued by FERC. Roberts quickly resolved this issue by concluding that, in the proceedings before the 3rd Circuit, New Jersey sought to neither modify nor set aside FERC’s order authorizing PennEast’s pipeline. Therefore, the NGA’s exclusive jurisdiction provision was not triggered.

Next, Roberts considered the merits of whether sovereign immunity was an available defense for New Jersey to resist PennEast’s condemnation proceedings. Beginning with a discussion of the scope of federal eminent domain power, Roberts noted that “[s]ince the founding, the Federal Government has exercised its eminent domain authority through both its own officers and private delegatees.” While initially limited to “areas subject to exclusive federal jurisdiction,” the federal eminent domain power evolved, and by the late 19th century, the Supreme Court confirmed that it “extended to properties within state boundaries as well.” Moreover, the states had no control over the scope or the manner in which federal eminent domain was exercised.

Roberts then considered whether the federal government could delegate its eminent domain authority to private parties. Here, he first stressed that there is a long history of delegation, remarking that it “was commonplace before and after the founding for the Colonies and then the States to authorize the private condemnation of land for a variety of public purposes.” Roberts then concluded that by its express terms the NGA authorizes private certificate holders to institute condemnation proceedings against private parties, as well as states.

He then addressed the crux of New Jersey’s argument, which was that, absent the state’s consent, the 11th Amendment barred PennEast’s suit. Here Roberts initially recognized that there are only a few circumstances under which a state can be sued. First, a state can be sued if it consented. Second, a state can be sued if Congress abrogated its sovereign immunity to enforce the 14th Amendment. Lastly, a state can be sued if “it has agreed to suit in the ‘plan of the Convention,’” which is “shorthand for ‘the structure of the original Constitution itself’” and “incudes certain waivers of sovereign immunity to which all States implicitly consented to at the founding.”

The majority then tackled Seminole Tribe of Florida v. Florida, which bolstered state sovereign immunity by restricting federal judicial power over states and recognized that “Article I cannot be used to circumvent the constitutional limitations placed upon federal jurisdiction.” Otherwise, states’ “inherent immunity from suit would be ‘eviscerated’ if Congress were allowed to abrogate States’ immunity pursuant to its Article I powers.” Roberts then sidestepped application of Seminole Tribe of Florida by asserting that “congressional abrogation is not the only means of subjecting States to suit. … States can also be sued if they have consented to suit in the plan of the Convention.” Hence Roberts determined that “the States consented in the plan of the Convention to the exercise of federal eminent domain power, including condemnation proceedings brought by private delegatees.”

The final argument asserted by New Jersey was that the NGA lacked the clarity required to authorize condemnation proceedings by federal delegatees. Roberts quickly dispensed with this contention by finding that New Jersey “misconstrued the issue in this case as whether Congress can delegate its ability to sue states.” According to Roberts, the proper issue before the court was “instead whether Congress could delegate federal eminent domain power to private parties.” As such, there was simply no requirement that Congress must speak with “unmistakable clarity” when it empowers a private party to exercise federal eminent domain power.

Barrett’s dissent

In her dissent, Barrett took issue with the majority’s overall analytical framework and the contention that the states surrendered their sovereign immunity in the plan of the Convention. According to Barrett, while the majority “casts the inquiry as one about the scope of the Federal Government’s ‘eminent-domain power,’ that is the wrong way to think about the problem.” Rather, in the absence of a stand-alone eminent domain power in the Constitution, “[a]ny taking of property provided for by Congress is thus an exercise of another constitutional power — in the case of the Natural Gas Act, the Commerce Clause — augmented by the Necessary and Proper Clause.”

Barrett argued, therefore, that the appropriate analysis starts with the commerce clause. Under her approach, Congress enacted the NGA by reliance on its power to regulate interstate commerce, and “we have repeatedly held that the Commerce Clause does not strip the States of their sovereign immunity.” Moreover, in Seminole Tribe of Florida, the court recognized that Congress may not abrogate state sovereign immunity and authorize private suits against nonconsenting states. Accordingly, she concluded that “Congress cannot enable a private party like PennEast to institute a condemnation action against a nonconsenting State like New Jersey.”

Gorsuch’s dissent

Gorsuch, while joining Barrett’s dissent in full, wrote a very curious separate dissent, where he noted that states enjoy two distinct types of federal immunities from suit. The first type of immunity he described as “structural immunity,” which is based on the structure of the Constitution. This first type of immunity “is a constitutional entitlement of a sovereign State.” It applies in “both federal tribunals and state tribunals,” and it applies “regardless of whether the plaintiff is a citizen of the same State, a citizen of a different State, or a non-citizen.” Structural immunity, Gorsuch wrote, “sounds in personal jurisdiction,” so it can be waived.

The other type of sovereign immunity derives from the text of the 11th Amendment. According to Gorsuch, it “provides an ironclad rule for a particular category of diversity suits,” and the “text means what it says. It eliminates federal judicial power over one set of cases: suits filed against states, in law or equity, by diverse plaintiffs.” He concluded by noting that neither the majority opinion nor the parties expressly addressed this issue. In a footnote, he remarked that “[w]hat the Court does say, in a drive-by rumination on the waivability of ‘the Eleventh Amendment,’ pertains to structural immunity” and not 11th Amendment immunity, which he argued should bar PennEast’s suit.

Gorsuch further noted that all the cases cited by the majority “fall outside of the Eleventh Amendment’s text.” He concluded his dissent by stating that while the majority and the parties may not have explicitly considered the immunity granted by the 11th Amendment, “[t]he lower courts, however, have an obligation to consider this issue on remand before proceeding to the merits.”

Whether Gorsuch’s dissent gives rise to another opportunity for New Jersey to fend off PennEast’s condemnation suits on remand remains to be seen. Moreover, the fight over the pipeline is not quite over yet because New Jersey had previously filed a separate challenge in the D.C. Circuit, which was stayed pending the Supreme Court’s decision.

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