PennEast will scrap pipeline if it loses U.S. Supreme Court appeal

Lawyer tells court that company will halt its plan if it loses current case over its right to sue New Jersey in federal court
Credit: NJ Spotlight News
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The PennEast Pipeline Co. would drop its plans to build a natural-gas pipeline through New Jersey, or substantially alter them, if it loses a current appeal before the U.S. Supreme Court, a lawyer for the company told the court on Wednesday.

Paul Clement was asked by Justice Brett Kavanaugh about what would happen if the high court rules against PennEast in its review of a lower court ruling that the company does not have the right to sue the state to take 49 parcels of public land by eminent domain for construction of the pipeline.

“If we lose this case, this pipeline will not be built, at least at anything like its current configuration, and depending on exactly how we lose this case, I think this pipeline, this federal interstate pipeline, will be at the mercy of New Jersey because I don’t think there is a way to reroute this pipeline in a way that doesn’t implicate a state interest in land,” he said, during oral arguments.

PennEast acting on behalf of FERC?

Clement denied, under questioning by Justice Elena Kagan, that the company’s efforts to take the land represent a private company suing the state — which New Jersey argues is unconstitutional — but is in fact the company acting on the Federal Energy Regulatory Commission’s approval of its plans.

“FERC approved the pipeline route, hearing objections and over 70 route modifications were made,” he said. “That was all done under the auspices of the federal government.”

PennEast is asking the high court to overturn the adverse ruling by the Third Circuit Court of Appeals in 2019, in what may be its final attempt to salvage a $1 billion project that would pump natural gas from Pennsylvania about 120 miles to a terminal in Mercer County. The project has been beset by delays, denial of permits by New Jersey environmental officials and fierce public opposition in some of the New Jersey communities where the pipeline would run.

The company has said it will build the Pennsylvania section of the route first, and then add the New Jersey stretch by 2023.

‘Junior varsity’ eminent domain

Clement said New Jersey’s claim of sovereign immunity from being sued by the company amounted to the federal government’s eminent domain power being reduced to “junior varsity” level. “Where the federal eminent domain authority exists, it is complete, and there can be no sovereign-immunity defense to its implementation,” he said.

New Jersey State Solicitor Jeremy Feigenbaum said during an approximately 90-minute hearing that the federal government has the right to exercise eminent domain but that PennEast’s efforts to take the state lands, even under FERC’s auspices, represent a private company improperly trying to sue the state.

“The United States has a necessary and proper power to file condemnation suits against the state to effectuate all its other enumerated powers,” Feigenbaum said. “But private companies like PennEast do not because private-party suits against the state are never proper. There are important differences between lawsuits by responsible and politically accountable sovereigns and those by private parties.”

Chief Justice John Roberts said the federal government’s eminent domain powers would indeed be reduced to a “junior varsity” level if New Jersey can’t be sued by PennEast even if the company has become a “federal delegee” by implementing FERC policy.

Feigenbaum replied that the federal government’s eminent-domain powers are intact but argued that PennEast’s suit still represents a private company improperly suing the state. “I don’t think the United States is becoming a junior varsity sovereign,” he said. “They still have the complete power of eminent domain. I just don’t think that resolves this case.”

Attorney General Gurbir Grewal underlined Feigenbaum’s arguments before the court.

Gurbir Grewal speaking for NJ

“Private companies do not have the authority to condemn New Jersey’s sovereign land without our consent, and PennEast is no exception. Indeed, every other industry has been able to move forward without the right to take our land in federal court over our objection, and the natural-gas industry is no different,” Grewal said in a statement after the hearing.

Tim Duggan, an attorney representing 40 private-property owners as well as two local government entities, a land trust, and the New Jersey Conservation Foundation, said it was hard to tell which way the court will rule, given questions by the justices that appeared to favor both sides.

While some focused on the 11th Amendment to the U.S. Constitution which restricts the right of individuals to sue states in federal court — a line of questioning that may favor New Jersey’s case — others focused on a history of the federal government “deputizing” private entities to undertake some government actions, and questioned why this case was different, Duggan said.

“The justices were even-handed in grilling the lawyers,” he said.

Tom Gilbert, campaign director for the New Jersey Conservation Foundation, said New Jersey’s Feigenbaum was correct to argue that PennEast has no right to condemn the state’s protected land for the pipeline. “Forcing states to sell critical lands set aside for the public to private parties jeopardizes our essential liberties and undermines state sovereignty,” he said.

Jennifer Danis, senior fellow at Columbia University Law School’s Sabin Center for Climate Change Law, said the justices “expressed clear skepticism” about PennEast’s authority to take the state lands. “We trust the court will hew to its decades of strong sovereign-immunity jurisprudence to uphold New Jersey’s sovereign right to protect state-owned lands from seizure by private entities,” she said.

Pat Kornick, a spokeswoman for PennEast, said the company is confident of winning its case, and is supported by groups representing labor, business and community interests.

If PennEast wins its appeal, it will then have to obtain a federal water-quality certificate and a permit from the Delaware River Basin Commission to allow the pipeline to go under the Delaware River.