Yesterday, the nation’s high court agreed to take up the dispute between PennEast Pipeline Company, LLC (PennEast) and the State of New Jersey concerning whether the state lawfully blocked the PennEast natural gas pipeline from acquiring easements crucial to its $1.2 billion pipeline, foiling the federally approved project. In granting certiorari, the Supreme Court asked the parties to brief not only the aforementioned question, but also whether the Third Circuit properly exercised jurisdiction over the case.
According to PennEast’s Feb. 18, 2020, petition for a writ of certiorari, PennEast applied for a certificate to construct and operate a 116-mile natural gas pipeline to transport gas from Pennsylvania to New Jersey in 2015. PennEast engaged in an extensive Federal Energy Regulatory Commission (FERC) certificate-approval process during which stakeholders, including New Jersey, commented on PennEast’s plan and in particular the pipeline’s route. Though PennEast obtained FERC approval, New Jersey refused to grant it the requisite rights to nearly 50 properties over which the state asserted an interest.
PennEast then initiated a legal challenge in an effort to undo the blockade. The district court held in its favor, finding that “‘PennEast has been vested with the federal government’s eminent domain powers and stands in the shoes of the sovereign,’ and it is undisputed that the federal government could exercise that power as to property in which a state has an interest.”
In 2019, the Third Circuit reversed, holding that New Jersey was within its rights to refuse PennEast’s easement requests. The appellate court denied rehearing and turned down the pipeline company’s request that it allow FERC to weigh-in on the matter.
On Jan. 30, 2020, after PennEast petitioned FERC for a declaratory order, the federal regulatory agency issued its opinion that the provision of the Natural Gas Act (NGA) at issue “does not limit a certificate holder’s right to exercise eminent domain authority over state-owned land,” in contrast to the appellate court’s view. FERC further explained that the Third Circuit’s inapposite conclusion will have “profoundly adverse impacts on the development of the nation’s interstate natural gas transportation system, and will significantly undermine how the natural gas transportation industry has operated for decades.”
Numerous amici have filed briefs including oil and gas industry players and lobbyists, environmental groups, and the federal government. The Supreme Court will hear the case during the April 2021 argument session.
