The U.S. Court of Appeals for the Third Circuit has dealt another blow to PennEast Pipeline Co. LLC, issuing an opinion on Tuesday that prevents the company from condemning state-owned land in New Jersey that the project needs to move forward.
The appellate court vacated a ruling that would have allowed PennEast to use eminent domain on 42 parcels that the state either owns or has an interest in. The land threatened by condemnation, New Jersey said, is preserved for recreational, conservation and agricultural uses. The ruling does not impact private land condemned for the project.
PennEast obtained Federal Energy Regulatory Commission approval for the project in January 2018 and promptly sued the state to condemn the land. New Jersey sought dismissal of PennEast’s complaint for lack of jurisdiction, citing the Eleventh Amendment of the U.S. Constitution, which recognizes that states have sovereign immunity from lawsuits by private parties in federal court. Last December, the U.S. District Court for the District of New Jersey ruled that PennEast's certificate order from FERC entitled it to survey access on an expedited basis and dismissed efforts by New Jersey Attorney General Gurbir Grewal to block access to the state parcels.
New Jersey filed an appeal earlier this year to overturn the district court’s ruling. Certificates issued by FERC under the Natural Gas Act (NGA) allow private gas companies to exercise the federal government’s power to take property by eminent domain. But the Third Circuit said New Jersey’s sovereign immunity has not been revoked by the project’s certificate, “nor has there been -- as PennEast argues -- a delegation of the federal government’s exemption from the state’s sovereign immunity.”
Instead, the court ruled that the federal government’s power of eminent domain and its power to draw states into federal court are separate and distinct.
“Whether the federal government can delegate its power to override a state’s Eleventh Amendment immunity is, however, another matter entirely,” the court wrote in a 35-page opinion. “While there is reason to doubt that, we need not answer that question definitively since, even if a delegation of that sort could properly be made, nothing in the text of the NGA suggests that Congress intended the statute to have such a result. PennEast’s condemnation suits are thus barred by the state’s Eleventh Amendment immunity.”
The court remanded the matter for dismissal of any claims against New Jersey. While it allowed surveys to continue on the properties, the Third Circuit had stayed construction of the project earlier this year pending outcome of the appeal.
Tuesday’s opinion was the latest setback for the 120-mile pipeline that would move more than 1 Bcf/d of Appalachian natural gas to markets in Pennsylvania and New Jersey.
The company still may not start construction as it has yet to receive a water quality certification and other permits from New Jersey. Earlier this month state officials told the company its application was incomplete, and PennEast had about three weeks to submit additional information for the application review to move forward.
About two years ago, DEP said the same thing, asking PennEast for more information; it eventually closed the environmental review after it denied a request for more time to provide the data. About one-third of the project would be in New Jersey’s Hunterdon and Mercer counties.
PennEast spokesperson Patricia Kornick said the company is reviewing the “opinion in detail” to “determine our next steps.” She added that the project sponsors remain committed to moving forward with the pipeline and made no mention of its timeline when asked. Early last month, when the company finally refiled for the water quality permits, sponsors said they planned to start construction next year, which is expected to take seven months.
The project has been in the works for about five years as it’s battled through delays. The New Jersey Sierra Club called the Third Circuit’s opinion “a giant win for the environment and a victory in the battle to stop” PennEast. New Jersey has also appeared opposed to the project as it’s stepped up resistance to other natural gas infrastructure projects as well. The state had previously asked FERC to scrap its approval for the pipeline.