WASHINGTON (CN) — A law that has been the key to the development of natural gas pipelines for 80 years was challenged by New Jersey at the nation’s highest court Wednesday.
The founding fathers’ understanding of federal land takes and the role private companies have in executing those seizures were central themes during the virtual U.S. Supreme Court hearing.
“This court has said repeatedly that taking land is under common law, why doesn’t this fall within the 11th Amendment itself?” asked Justice Neal Gorsuch, a Donald Trump appointee, who appeared concerned at the idea of the private gas company PennEast being allowed to bring a lawsuit against the state of New Jersey, which might otherwise be shielded by sovereign immunity granted by the constitution despite powers given to companies under the Natural Gas Act of 1938.
“PennEast is suing as an agent [of the federal government], or however you want to describe it,” responded Deputy U.S. Solicitor General Edwin Kneedler. The Justice Department joined in on the suit to defend the authority of the Federal Energy Regulatory Commission’s, or FERC.
Kneedler and Kirkland Ellis attorney Paul Clement, who argued on behalf of the energy company, often got stuck on the question of what to call a third party suing a state over FERC-certified eminent domain and whether that should be allowed.
“Help me with that; a suit against the state is a suit in equity, and that’s a taking,” Gorsuch said, noting conditions when a lawsuit may be blocked by 11th Amendment immunity. “The state is entitled to compensation? How is it not a suit against the state under common law?”
“It is a suit against the state but the point is this is a proceeding of a distinct character,” Kneedler responded, stressing the unique nature of a land take granted under federal authority, something both the DOJ and PennEast argue should be allowed on other constitutional grounds like the supremacy clause, which says federal law takes precedent over state law.
The heart of the dispute is the fate of a 116-mile natural gas pipeline project that would link Pennsylvania’s resource-rich hills to New Jersey’s processing operations.
PennEast applied for a certificate to build the project in 2015. After review by the FERC, it was approved and the company was given certification to take land along the planned route. But it didn’t take long for New Jersey to push back. The state's refusal turn over land via the Natural Gas Act’s eminent domain powers led the pipeline company to bring federal claims over 42 of 49 properties.
“Eventually, PennEast was forced to bring a series of condemnation actions as to those properties in federal court,” Clement wrote in PennEast’s petition asking the U.S. Supreme Court to take the case.
New Jersey argues companies like PennEast are barred under the 11th Amendment from condemning property through eminent domain if a state holds any type of interest in that property. In its response to PennEast’s petition, the state said the land at issue holds “recreational, conservation, and/or agricultural uses.” It also claimed the company failed to try to negotiate the land taking and instead went straight to federal court.
Though the state lost in district court, the Third Circuit reversed — a decision the three-judge panel conceded “may disrupt how the natural gas industry” has operated for the past 80 years.
“New Jersey’s sovereign immunity has not been abrogated by the NGA, nor has there been – as PennEast argues – a delegation of the federal government’s exemption from the state’s sovereign immunity,” wrote U.S. Circuit Judge Kent Jordan, a George W. Bush appointee, in the September 2019 ruling.