Three State Agencies Challenge PennEast’s Effort to Overturn Adverse Court Ruling on Pipeline

Tom Johnson | October 22, 2019 | Energy & Environment
At issue is PennEast’s right of eminent domain over state lands; the company continues to argue that the National Gas Act gives it that right
Credit: Twenty20
Federal court last month blocked PennEast’s bid to condemn state-owned properties as part of its plan to build a pipeline.

New Jersey is opposing efforts by the PennEast Pipeline Company to have a federal agency reverse a court ruling blocking the developer’s $1 billion, 116-mile natural gas pipeline project through parts of the state and Pennsylvania.

In protest petitions filed with the Federal Energy Regulatory Commission on Friday, a trio of state agencies and the Delaware and Raritan Canal Commission challenged PennEast’s decision to ask the agency to overturn a ruling by the U.S. Court of Appeals for the Third Circuit.

Essentially, the state is characterizing PennEast’s request as an attempt to relitigate an issue decided authoritatively by a federal court, a course of action two state agencies (the Department of Environmental Protection and Board of Public Utilities) described as unprecedented.

The federal court last month blocked the company’s bid to condemn state-owned properties as part of its plan to build a pipeline from Luzerne County, Pa., across the Delaware River, and ending in Mercer County. The court found that a private company lacked legal authority to seize or condemn state lands under the 11th Amendment of the U.S. Constitution.

“PennEast, by its own terms, is pursuing an action that is wholly inappropriate after losing a question of statutory interpretation before the Third Circuit (a loss informed by the court’s view of the relevant constitutional law), the company has come to FERC for a do-over,’’  the state argued in its brief.

Legal doctrine of sovereign immunity

New Jersey’s Division of Rate Counsel agreed, calling PennEast’s petition both procedurally unsound and substantively meritless. “The determination PennEast seeks is squarely contrary to the Third Circuit’s decision, which held that the National Gas Act had not abrogated states’ sovereign immunity,’’ according to Rate Counsel.

Under the legal doctrine of sovereign immunity, a state cannot be sued by a private company without its consent.

PennEast defended seeking relief from FERC.

“PennEast strongly believes the National Gas Act confers eminent domain authority on a holder of a valid Certificate of Convenience & Public Necessity to obtain the easements or rights of way needed to construct a project along a FERC-approved route, including properties where state claims an interest,’’ said Pat Kornick, a spokeswoman for PennEast.

“FERC is the agency that Congress charged with administering the National Gas Act, as such, it is important that FERC provide its considered views on that issue,’’ Kornick said.

Without a reversal of the court’s decision, the project faces an uncertain future. The state-owned properties are along the route in Hunterdon and Mercer counties where the pipeline would run. It is unclear whether the company could continue the project without rerouting the pipeline without those properties. Many of those lands had been preserved as open space or farmland with taxpayers’ funds.

PennEast may still appeal the Third Circuit Court’s decision. Meanwhile, New Jersey also is seeking to set aside FERC’s original decision approving the pipeline project in federal courts.