As a battle with New Jersey over state-owned land and key permits persists, PennEast Pipeline Co. LLC is pursuing a plan to bring the 120-mile project online in two phases.

In an amendment filed with FERC requesting authorization to divide the project, PennEast highlighted a plan to bring 68 miles of the system online by November 2021 entirely within Pennsylvania. The pipeline would originate at a point near shale fields in the northeast part of the state to a terminus in Northampton County. The second phase would include the remaining route that would stretch into New Jersey, which is now being targeted for completion in 2023.

For years the project has battled through various setbacks, including regulatory delays and issues with private landowners. But it has been stymied by New Jersey, which has prevented PennEast from condemning state-owned land in a court battle. Without those properties, state regulators have also claimed they can’t issue water quality approvals necessary for the project to move forward.

Precedent agreements for 338,000 Dth/d were filed with the Federal Energy Regulatory Commission as part of the Phase One request. The company said additional negotiations are underway to bring the total capacity in Phase One to 600,000 Dth/d. The original design capacity of more than 1 million Dth/d remains unchanged. 

The first phase in Pennsylvania would include three delivery points, including one with project affiliate UGI Utilities Inc. to serve a ski resort, another with Columbia Gas and one with the proposed Adelphia Gateway Project. PennEast also stressed that there are no new private property owners impacted by the first phase.

Given the setbacks it’s faced, the project in early January filed at FERC for a two-year extension to finish the system by 2022.

PennEast got a lift from FERC on Thursday, which granted a petition for declaratory order by finding the project may condemn state-owned land as a certificate holder with the power of eminent domain.

PennEast, which filed the petition in October, called the order “encouraging news.” The decision would better position the project to petition the U.S. Supreme Court for review of an adverse ruling from the U.S. Court of Appeals for the Third Circuit that stopped it from seizing land in New Jersey, said PennEast spokesperson Patricia Kornick.

FERC found that eminent domain authority under the Natural Gas Act (NGA) applies to state land. FERC also ruled that Congress delegated such authority to certificate holders and not the Commission itself. 

PennEast obtained FERC approval and received a certificate of public convenience and necessity in 2018. However, New Jersey has prevented the pipeline’s sponsors from seizing 42 parcels of state-owned land that it claims are preserved for recreational, conservation and agricultural uses. The project’s backers sued to condemn the land.

The Third Circuit concluded that the Eleventh Amendment of the U.S. Constitution bars a certificate holder from bringing an action in federal court under the NGA to seize property in which a state or its agencies hold an interest. The court ruled that New Jersey’s sovereign immunity wasn’t revoked by the project’s certificate and also found that the federal government’s exemption from sovereign immunity was not delegated to PennEast.

While FERC did not address the broader Constitutional issue of sovereign immunity, ClearView Energy Partners LLC said the order is at least likely to expedite the Supreme Court’s review if it chooses to hear the case.

PennEast requested an extension last week to file its Supreme Court petition pending FERC’s order.

“In agreeing with PennEast, the Commission reiterated that vital infrastructure should not be disrupted by parochial interests after having been found by expert federal regulators to be in the broad public interest and environmentally safe,” Kornick said on Thursday.

About one-third of the pipeline would be in New Jersey’s Hunterdon and Mercer counties. Environmental groups have backed New Jersey’s opposition to the system. New Jersey Sierra Club director Jeff Tittel called FERC’s decision “an outrageous interference in the legal process.”