SCOTUS Decision on PennEast Pipeline Major Victory for American Energy

Wednesday’s U.S. Supreme Court decision in favor of a planned Pennsylvania-to-New Jersey natural gas pipeline has far greater consequences than the installation of this pipeline alone.

PennEast, a consortium of five energy companies, brought suit against New Jersey over the state’s refusal to comply with the pipeline company’s authorized use of federal eminent domain power to acquire state land needed to complete the project. A New Jersey victory in the case could have weaponized other states to thwart pipelines and other needed interstate infrastructure projects, not only impacting homeowners and businesses but suffocating an energy industry that has the potential to make Pennsylvania the energy and manufacturing capital of the world.

“The Pennsylvania Manufacturers’ Association is deeply pleased that the intransigence of the state of New Jersey has been properly dismissed by the Supreme Court of the United States,” said PMA President & CEO David N. Taylor. “American energy production makes possible our very high and ever-rising quality of life. PMA looks forward to maximizing Pennsylvania’s energy opportunity, bringing to market untold trillions of cubic feet of natural gas to fuel American homes, generate affordable electricity, power America’s industrial economy, and re-shore petrochemical manufacturing jobs.”

“We are especially grateful to our friends at the New Jersey Business & Industry Association for standing with us to petition the Court to take the case and in making our arguments to the Court on the merits,” Taylor added.

PMA and NJBIA filed a joint amicus brief on behalf of PennEast.

The proposed $1.1 billion, 116-mile pipeline would extend from Luzerne County, PA to Transco’s trans-continental pipeline near Pennington in Mercer County, NJ. The pipeline would carry 1 billion cubic feet of gas per day from the Marcellus Shale. PennEast needed to acquire easements across 40 parcels of land owned by New Jersey to complete the project. After Federal Energy Regulatory Commission (FERC) approved the pipeline in 2018, PennEast, with the strength of the Natural Gas Act (NGA) behind it, sued to gain access to the land. Since Congress passed the NGA 70 yeas ago, FERC has delegated its federal eminent domain power dozens of times to pipeline companies, and federal authority supersedes state authority, the company argued.

But the Third Circuit Court of Appeals in Philadelphia ruled that, while the law gives companies eminent domain powers, the 11th amendment of the U.S. Constitution prevents companies from suing states to enforce those rights. In a 5-4 decision, SCOTUS overturned.

“This case involves one of the ways the federal eminent domain power can be exercised: through legal proceedings initiated by private delegatees against state-owned property,” Chief Justice John Roberts said in the decision. “Specifically, we are asked to decide 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. We hold that it can.”

The amicus filed by PMA and NJBIA illustrates the immensity of the decision.

“According to the United States Energy Information Administration, two thirds of the lower 48 States are almost totally dependent upon the interstate pipeline system for their supplies of natural gas, much of which must be routed through several interstate pipeline systems before it reaches its final destination. Almost every major metropolitan area in the United States is supplied by, or is the final destination of, one or more of the major interstate pipeline companies or their affiliates.”

It continued: “In the Natural Gas Act, Congress created a comprehensive scheme of federal regulation of all wholesales of natural gas in interstate commerce. Fundamental to this regulatory framework is Congress’s delegation of the federal government’s eminent domain power to the holder of a certificate of public convenience and necessity issued by the Federal Energy and Regulatory Review Commission to enable the holder to acquire the land necessary to construct an interstate pipeline. The federal eminent domain power derives from the federal government’s sovereignty and is complete in itself.”

In a statement issued after the ruling, Chairman of the PennEast Board of Managers, Anthony Cox said, “we are pleased that the Supreme Court kept intact more than seven decades of legal precedent for the families and businesses who benefit from more affordable, reliable energy. This decision is about more than just the PennEast Pipeline Project; it protects consumers who rely on infrastructure projects – found to be in the public benefit after thorough scientific and environmental reviews – from being denied access to much-needed energy by narrow State political interests.”