A federal appeals court has rebuffed Penneast Pipeline Co. LLC’s efforts to overturn an adverse ruling issued in September that prevents the developer from condemning state-owned lands in New Jersey.
The U.S. Court of Appeals for the Third Circuit on Tuesday denied a petition for rehearing filed by PennEast, upholding an earlier decision that rejected the pipeline’s use of eminent domain on 42 parcels under state ownership, or in which the state has an interest.
The decision creates a major roadblock for the embattled PennEast project, a 120-mile pipeline designed to move more than 1 Bcf/d of Appalachian natural gas to markets in Pennsylvania and New Jersey.
PennEast received a certificate from FERC early in 2018, but it has struggled to make progress amid pushback at the state level. New Jersey’s Department of Environmental Protection, which has resisted PennEast’s efforts to secure necessary state-level approvals, recently cited the Third Circuit’s decision when it denied a water quality certification and other key permits for the project.
The case before the Third Circuit centered around whether the Eleventh Amendment prevents pipeline developers from using federal eminent domain authority granted by the Federal Energy Regulatory Commission under the Natural Gas Act (NGA), could have broader implications for an industry already facing political and regulatory headwinds.
In the developer’s petition, PennEast’s counsel argued that the Third Circuit decision “upends 70 years of well-established practice and threatens immediate disruption of the natural gas industry.”
The ruling “categorically immunizes states from NGA condemnation actions” and “rests on a profoundly mistaken view of the NGA and state sovereign immunity.”
Asked about the latest legal setback, PennEast spokesperson Patricia Kornick said the developers “remain committed to the project.”
“PennEast is evaluating all of its options in light of this recent development,” Kornick said.