New Challenge to Takings for Natural Gas Pipelines

An article published by the E&E News written by Niina H. Farah on December 16, 2021 reported an argument before the U.S. Court of Appeals for the District of Columbia.  The lawsuit was brought by homeowners located along the route of the Mountain Valley Pipeline alleging that it is unconstitutional for the Federal Energy Regulation Commission (FERC) to delegate it eminent domain authority to pipeline developers.

The legislation at issue in the case is the Natural Gas Act, which extends the federal government’s authority to condemn private land for public use to private entities that have secured from FERC certificates of public convenience and necessity.  FERC has in recent years issued a spate of certificates to natural gas pipelines like Mountain Valley.  Opponents of those projects have argued that building a large network of gas pipelines is neither necessary nor in the public’s interest.

If this case sounds familiar, it is because the United States Supreme Court decided the issue in PennEast Pipeline Co. LLC v New Jersey.

On June 29, 2021, the Court decided PennEast Pipeline Co. v New Jersey, 594 U.S. __ (2021).  The Court held that the Federal Government had properly delegated to private companies’ federal authority to condemn necessary rights-of-way in state owned property.

The Natural Gas Act regulates the transportation and sale of natural gas in interstate commerce.  The Act requires natural gas companies to obtain from the Federal Energy Regulatory Commission (“FERC”) a certificate recognizing that an interstate pipeline “is or will be required by the present or future public convenience and necessity.”  15 U.S.C. Sec. 717f(e).  The Natural Gas Act has authorized certificate holders to exercise federal eminent domain power to obtain property rights necessary to construct a pipeline.  15 U. S. C. Sec. 717f(h).

FERC granted PennEast a certificate of public convenience and necessity to construct a 116-mile pipeline from Pennsylvania to New Jersey.  After receiving the certificate, PennEast filed eminent domain suits in the Federal District Court in New Jersey to secure rights-of-way in property owned by New Jersey.  The District Court denied New Jersey’s motions to dismiss based on sovereign immunity and granted PennEast a condemnation order.  The Third Circuit Court of Appeals reversed concluding that the law did not clearly delegate to certificate holders the Federal Government’s authority to sue nonconsenting States, and therefore did not abrogate sovereign immunity.

The Supreme Court reversed the Judgment and remanded for further proceeding by a 5 to 4 vote.  On the merits, the Court concluded that established precedent authorized federal eminent domain over State-owned property and the exercise of that power through delegated private parties, as authorized by the law.  The majority held that sovereign immunity does not bar condemnation actions by private party delegatees against nonconsenting states.  Chief Justice John Roberts wrote, “although nonconsenting States are generally immune from suit, they surrendered their immunity from the exercise of the federal eminent domain power when they ratified the Constitution.  That power carries with it the ability to condemn property in court.  Because the Natural Gas Act delegates the federal eminent domain power to private parties, those parties can initiate condemnation proceedings, including against state-owned property.”

Robert Solomon, an Attorney for FERC, said the PennEast fight was different because it dealt not with the constitutionality of pipeline eminent domain, but with the question of whether New Jersey’s sovereign immunity under the 11th Amendment protected it from being forced into condemnation proceedings in federal district court.


Posted in FERC, PennEast Pipeline, Pipelines
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