SCOTUS: Authorized Pipeline Developers Can Exercise Federal Eminent Domain Over State, Municipal Land – Energy and Natural Resources

SCOTUS: Authorized Pipeline Developers Can Exercise Federal Eminent Domain Over State, Municipal Land – Energy and Natural Resources

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United States:

SCOTUS: Authorized Pipeline Developers Can Exercise Federal Eminent Domain Over State, Municipal Land


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On Tuesday, June 29, 2021, the U.S. Supreme Court voted 5-4
to reverse the Third Circuit and affirm that
authorized natural gas pipeline developers have the ability to
exercise federal eminent domain over state and municipal lands.

As a basis for the dispute between the PennEast Pipeline Company
(PennEast) and the State of New Jersey, §717f(c) of the
Natural Gas Act (NGA) directs the Federal Energy Regulatory
Commission (FERC) to issue a Certificate of Public Convenience and
Necessity (Certificate) to pipeline developers whose interstate
projects are or will be “…required by the present or future
public convenience and necessity…”. 

§717f(h) of the NGA further grants Certificate holders who
cannot obtain all property necessary to construct a project the
authority to exercise “…the right of eminent domain in the
district court of the United States…”.

PennEast first proposed the 116-mile PennEast Pipeline (Project)
in 2014 to carry natural gas from its origination point in Luzerne
County, Pennsylvania to its termination point near Trenton, New
Jersey.

In 2018, FERC issued a Certificate for the Project because it
found a clear need and public benefit for a natural gas pipeline in
capacity-constrained New Jersey.

PennEast sought to obtain rights-of-way along the FERC approved
Project route by filing complaints in the District of New Jersey to
condemn parcels of land within the state.

New Jersey’s motion to dismiss PennEast’s condemnation
complaints were based on the state’s 11th Amendment sovereign
immunity rights but were denied and the District Court granted
PennEast’s request for a condemnation order and a preliminary
injunction.

The Third Circuit vacated the District Court’s order because
it did not find that §717f(h) of the NGA plainly delegated its
eminent domain authorities to Certificate holders, nor did it find
that the NGA allows Certificate holders to sue nonconsenting states
in condemnation proceedings.

Because the Third Circuit’s opinion seemed to break with
nearly 80 years of industry practice and jurisprudence, the Court
granted PennEast’s petition for writ of certiorari and heard
the case in April 2021. 

In his majority opinion, Chief Justice Roberts reversed the
Third Circuit’s ruling by finding that, on its face, the NGA
gives the federal government the authority to delegate its
condemnation powers to pipeline developers seeking to procure
rights-of-way on state and private land. The Court quickly
dismissed the state’s sovereign immunity claims by determining
that New Jersey surrendered its 11th Amendment immunity from
federal eminent domain proceedings when it ratified the
Constitution.

Writing on behalf of the minority, Justice Barrett disagreed
with the majority’s opinion by asserting that Congress cannot
bless private actions against states without their consent pursuant
to the Constitution’s Commerce Clause because the Commerce
Clause does not “…abrogate state sovereign
immunity.”.

The closing words in Justice Robert’s opinion invoked images
of the constitutional framers meeting in 1787 to “…create a
cohesive national sovereign…” wherein the “…the
Federal Government and its delegatees have exercised the eminent
domain power to give effect to that vision, connecting our country
through turnpikes, bridges, and railroads—and more recently
pipelines, telecommunications infrastructure, and electric
transmission facilities.”

He further writes that “…we have repeatedly upheld these
exercises of the federal eminent domain power— whether by the
Government or a private corporation, whether through an upfront
taking or a direct condemnation proceeding, and whether against
private property or state-owned land…” and that the
“…NGA fits well within this tradition.”

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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