Supreme Court to Decide Eminent Domain Case

The U.S. Supreme Court has agreed to review a case that will have far-reaching consequences for interstate pipeline projects.

The case, PennEast Pipeline Co. v. New Jersey, involves a FERC-approved natural gas pipeline that would pass through New Jersey and Pennsylvania. PennEast invoked the federal government’s eminent domain power under the Natural Gas Act to claim easements over New Jersey-owned lands. This power is routinely used by energy companies to seize private lands for interstate pipeline projects. But New Jersey has argued that its sovereign immunity under the Eleventh Amendment prevents the federal government from approving seizures of state property by private actors. The Court of Appeals for the Third Circuit sided with New Jersey in 2019, and PennEast petitioned the Supreme Court to review the case.

In addition to considering the question presented by PennEast, the Supreme Court has directed the parties to brief and argue a second question: “Did the Court of Appeals properly exercise jurisdiction over this case?” In December 2020, then-Acting Solicitor General Jeffrey Wall submitted a “friend of the court” brief on behalf of the United States, arguing that the Third Circuit lacked jurisdiction. The Natural Gas Act “provides for direct review of a certificate . . . issued by FERC in the D.C. Circuit or the circuit in which the natural-gas company has its principal place of business.” And thus, according to Wall, the Third Circuit should’ve dismissed the case. (The Biden Administration so far has not indicated any intent to reverse the federal government’s position.) This additional question may provide a path for the Supreme Court to remand the case on narrow jurisdictional grounds, rather than ruling on the merits.

The Court will hear oral arguments for the case in April. Pipeline developers subject to the Natural Gas Act’s provisions should keep watch.

It’s worth noting that PennEast likely will not affect the development of interstate transmission lines: The permitting and siting of such lines primarily occurs at the state level. And while federal eminent domain authority may be invoked in the siting of some transmission line projects, it cannot be used against a state by a private actor alone. Still, lawmakers previously have called for the expansion of federal siting authority over transmission lines. The outcome in PennEast may shape—or thwart—any similar proposals in the future.

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