June 29, 2021

Supreme Court Decides PennEast Pipeline Co. v. New Jersey

On June 29, 2021, the U.S. Supreme Court decided PennEast Pipeline Co. v. New Jersey, No. 19-1039, holding 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 (“NGA”) regulates the transportation and sale of natural gas in interstate commerce. The NGA 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. § 717f(e). Since 1947, the NGA has authorized certificate holders to exercise federal eminent domain power to obtain property rights necessary to construct a pipeline. See 15 U.S.C. § 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 and preliminary injunctive relief. The Third Circuit reversed the relief granted against New Jersey, concluding that § 717f(h) 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 proceedings by a 5–4 vote. First, the Court rejected a challenge by the United States as amicus curiae to the Third Circuit’s jurisdiction. Though 15 U.S.C. § 717r(b) gives the court of appeals reviewing FERC’s certificate order “exclusive” jurisdiction to “affirm, modify, or set aside such order,” New Jersey was not seeking to modify or set aside the certificate; rather, it was defending against the condemnation suit by asserting sovereign immunity. This was not a collateral attack on FERC’s order.

On the merits, the Court concluded that established precedent authorized federal eminent domain power over State-owned property and the exercise of that power through delegated private parties, as authorized by section 717f(h).

The majority held that sovereign immunity does not bar condemnation actions by private party delegatees against nonconsenting States. The States had implicitly consented to suit by the Federal Government when they ratified the Constitution. The lack of evidence of “founding era” private condemnation proceedings against States did not suggest otherwise. Accordingly, no congressional abrogation of state sovereign immunity was needed, because “there was no immunity left to waive or abrogate when it comes to condemnation suits by the Federal Government and its delegatees.”

Chief Justice Roberts delivered the opinion of the Court, in which Justices Breyer, Alito Sotomayor, and Kavanaugh joined. Justice Gorsuch filed a dissenting opinion, in which Justice Thomas joined. Justice Barrett filed a dissenting opinion, in which Justices Thomas, Kagan, and Gorsuch joined.

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