Supreme Court Backs $1B Pipeline in New Jersey Land Dispute

The U.S. Supreme Court has removed a major obstacle for the $1 billion PennEast gas pipeline project, siding with a consortium of energy companies in a move that reverses a Third Circuit ruling that project developers couldn’t seize the New Jersey-owned land for the pipeline.

PennEast pipelinePhoto Credit: Shutterstock

PennEast, which has already gained Federal Energy Regulatory Commission approval, asked the high court to overturn a Third Circuit ruling stating that eminent domain provisions in the Natural Gas Act don’t eclipse New Jersey’s 11th Amendment sovereign immunity from condemnation suits by private companies.

New Jersey argued the Third Circuit got it right in their first verdict and the NGA doesn’t clearly give companies the authority to sue states.

The justices decided in favor of PennEast in a close, 5-4 ruling, appearing to struggle in weighing the dueling positions during oral arguments in April. They questioned PennEast’s assertions that it has the right to seize New Jersey-owned land for the project against the state’s wishes, but they also acknowledged that siding with the state could let New Jersey effectively veto a federally approved pipeline.

Addressing PennEast’s attorney Paul Clement, Chief Justice John Roberts said, “It’s really quite extraordinary to have private parties overriding state immunity.”

When later questioning New Jersey state solicitor Jeremy Feigenbaum, Justice Roberts said the state’s opposition to the PennEast project “seems to present a significant practical problem.”

“I’m not suggesting it’s enough to eliminate the immunity, but it does strike me as a concern,” Justice Roberts said. “The state is blocking the NGA certificate issued by the federal sovereign.”

Clement claimed there should be no sovereign immunity issue because PennEast is essentially taking the place of the federal government for the eminent domain process — which implicates the takings clause of the Fifth Amendment — because the government has delegated that authority in the NGA. That position was backed by the federal government.

The Third Circuit said in September 2019 that there’s nothing in the NGA suggesting the federal government can delegate its authority to override a state’s sovereign immunity for private eminent domain purposes. However, today’s ruling is a boost for the pipeline that would carry as much as 1 billion cubic feet of natural gas per day from northern Pennsylvania to New Jersey.

With backing from business and labor groups as well as the energy industry, PennEast argued that the Third Circuit gave states a blanket veto over federally approved projects including pipelines and routes.

But New Jersey argued that allowing the federal government to delegate its authority would allow Congress to “easily evade” limits the high court has placed on the ability to annul states’ sovereign immunity.

The justices took the case in April and were split along unusual lines in the latest decision, with Justices Amy Coney Barrett, Clarence Thomas, Elena Kagan and Neil Gorsuch dissenting.

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