Federal Regulator Supports Gas Pipeline Builder in Appeal to SCOTUS

Tom Johnson | January 31, 2020 | Energy & Environment
PennEast’s plans had suffered a severe setback when a federal appeals court ruled the company lacked authority to seize state lands
Credit: Twenty20
PennEast’s bid to condemn state-owned properties as part of its plan to build a pipeline was blocked by a lower court.

In a step viewed as bolstering the PennEast natural gas pipeline, the Federal Energy Regulatory Commission on Thursday sided with the builder in seeking to overturn an adverse federal appeals court ruling halting the proposal from moving forward.

In a narrow 2-1 vote, FERC, in a rare special meeting devoted to only one issue, issued a declaratory order saying a ruling by the United States Court of Appeals for the Third Circuit threatens to disrupt the natural gas industry’s ability to construct interstate gas pipelines.

The action was denounced as a transparent attempt by the agency to back PennEast’s efforts to have the U.S. Supreme Court review the Third Circuit’s ruling by the lone commissioner to vote against the order, James Glick and other pipeline opponents.

Later in the day, PennEast filed amendments to its pipeline project — already approved by FERC — proposing to build it in two phases. The first phase would consist of 68 miles entirely within Pennsylvania and ready to deliver gas by November of next year. The other portion of the route in Pennsylvania and New Jersey would be targeted for completion in 2023.

“Building the project in phases allows PennEast to meet the clear public need in the short term in Pennsylvania, and in New Jersey by affording sufficient time for permit and legal issues to be resolved,’’ said Anthony Cox, chairman of the PennEast Pipeline Company Board of Managers.

That petition comes at a time when environmentalists, particularly in New Jersey, have been lobbying hard against new fossil-fuel projects, saying new pipelines will only stall efforts to wean the economy from fossil fuels that contribute to climate change.

“The only thing FERC’s view clarified was that the commission is willing to go to bat for private pipeline companies over the public interest,’’ said Jennifer Danis, senior staff attorney at Columbia University Law School’s Environmental Law Clinic, representing the New Jersey Conservation Foundation in the case.

Commissioner Glick agreed, saying it is irresponsible to help a private litigant try to persuade the Supreme Court to review and strike down a ruling that turns on constitutional and not technical issues. “The outcome is both deeply troubling and frankly a discredit to this agency,’’ he said.

SCOTUS appeal expected next week

PennEast has said it will appeal the Third Circuit’s decision to the Supreme Court and is expected to formally do so next week.

The FERC order is the latest twist in long litigation over PennEast’s $1 billion pipeline, which would bring fracked natural gas from Luzerne County, Pa. to Mercer County. Through its route in New Jersey, PennEast sought to condemn 40 state-owned lands in New Jersey. Initially, a district court approved giving the company eminent domain authority to acquire the lands, but the Third Circuit ruling reversed that decision.

In a decision issued in September, the federal appeals court agreed with arguments by the New Jersey attorney general that a private company lacked legal authority to seize or condemn state lands under the 11th Amendment of the U.S. Constitution.

In approving the order in quick fashion, commissioners argued its importance was to provide guidance to the courts for how the agency interprets the text and intent of the Natural Gas Act, which gives them oversight over the natural gas industry. FERC chairman Neil Chatterjee described the issue of whether private parties can exercise eminent domain as an essential element of the act’s complex scheme for regulating the natural-gas sector.

Others disagreed. “FERC went out of its way to help PennEast in its court case on taking of public lands,’’ said Jeff Tittel director of the New Jersey Sierra Club, adding that the ruling sets a dangerous precedent.

Maya van Rossum of the Delaware Riverkeeper environmental group agreed. “This is yet another example of why we need Congress to step in with legislative reforms that will prevent FERC’s ongoing abuses of power,’’ she said.

But Pat Kornick, a spokeswoman for PennEast, argued that allowing the Third Circuit ruling to stand would have far-reaching implications for all interstate projects, resulting in higher customer bills, increased carbon emissions, and greater risks of energy disruption in the marketplace.