Supreme Court Confirms Powers Of Prominent Area Of Interstate Pipeline On State Immunity | Holland & Knight LLP
In a 5-4 decision issued on June 29, 2021, the United States Supreme Court in PennEast Pipeline Co. LLC v. New Jersey et al. asserted the rights of pipelines certified by the Federal Energy Regulatory Commission (FERC) seeking to use the eminent domain powers granted under the Natural Gas Act (NGA) to seize state-owned land for private development . In its ruling, the Supreme Court rejected claims by the state of New Jersey that the 11th Amendment to the U.S. Constitution prevented PennEast from condemning land owned by the state or held in conservation easements. While the move is a loss for New Jersey and anti-pipeline advocates, the ruling reaffirms the status quo in interstate pipeline development by ruling out the possibility of states preemptively acquiring land interests to block out interstate pipeline projects. Beyond the practical implications of the ruling, the Supreme Court clarified important distinctions regarding the scope of the 11th Amendment’s grant of state immunity from private prosecution, the sentencing powers of the NGA and the measure in which the federal government can delegate these powers to private parties.
A fair balance between owner rights and the need for pipelines
Since Congress passed the NGA in 1938, Congress and the courts have strived to balance the rights of landowners with the needs of interstate pipelines to secure the property rights necessary for the construction of interstate pipeline infrastructure. Under the framework established by the NGA, a pipeline company must first obtain a certificate from FERC that such construction is in “public convenience and necessity” (See 15 USC §717f (e)). As originally enacted, the NGA did not provide a mechanism for certificate holders to secure the property rights necessary for the construction of interstate pipelines. Without such federal sentencing power, natural gas companies were either unable to use procedures in the state’s eminent domain or blocked by local restrictions seeking to obtain public benefits in exchange for land rights. Congress sought to remedy this flaw in 1947 by amending the NGA to allow certificate holders to exercise federal eminent domain power, thereby ensuring that certificates issued by the FERC under the NGA could be enforced (see § 717f (h)). While FERC and the courts have already ruled that private landowners are subject to NGA sentencing proceedings, it remains unresolved whether the NGA has granted private pipeline developers the power to sentence them. state-owned land.
State immunity from prosecution under the 11th Amendment
After receiving a certificate from FERC, PennEast filed various complaints with the United States District Court for the District Court of New Jersey, seeking to exercise eminent federal domain power under Section 717f (h ) to obtain rights of way along an FERC approved 116. mile pipeline route from Pennsylvania to New Jersey. PennEast has sought to condemn several parcels owned by the state of New Jersey as well as several parcels owned by the New Jersey Conservation Foundation located in the route of the proposed pipeline. The state of New Jersey, citing the 11th Amendment, decided to dismiss PennEast’s complaints, arguing that sovereign immunity prohibited private parties such as PennEast from seizing land owned or controlled by the state.
In its analysis, the Supreme Court first considered whether states had consented to waiver of the action under one of the few limited exceptions to the granting of sovereign immunity to states by the Constitution. The Supreme Court ruled that while no specific exemptions from sovereign immunity applied, states had waived their rights to retain “the highest dominance over lands within their boundaries” by joining the federal system. By joining the federal system, the states had consented in the plan of the convention to the exercise of federal power of eminent domain, including in the proceedings of condemnation brought by private delegates. The court further determined that this fundamental and inherent right was based on ratification of the Constitution and did not require additional state consent or abrogation by the federal government.
Scope of the NGA’s eminent domain authority
After rejecting New Jersey’s basic claim to preserve its sovereign immunity from private prosecution, the court then considered whether the language of the NGA appropriately delegated such powers to private parties. In its analysis of the history of eminent domain power of the federal government, a narrow majority of the Supreme Court rejected New Jersey’s argument, concluding in a 5-4 decision that the federal government has a long history of exercise. of eminent domain authority through its own officers and private delegates in various public works projects, including highways, tunnels and bridges. The court found no distinction between the delegation of eminent domain federal authority for these historic public works projects and the delegation of eminent domain federal authority to the PennEast pipeline under the NGA. The court particularly emphasized the importance of interstate pipelines to the public, drawing analogies between federal revenues for telecommunications, railways and highways. The tribunal further noted that section 717f (h) of the NGA was enacted specifically to address the issue of states preventing the development of interstate pipelines by denying access to their own eminent domain procedures.
A broad decision with limited practical impacts
The court’s decision in PennEast addresses fundamental legal issues regarding the scope of federal power and the 11th Amendment, and maintains the existing powers of FERC-certified pipelines to condemn property for development. The move could also help interstate pipeline projects elsewhere that face growing community opposition to expanding pipeline infrastructure. Had the court sided with the state of New Jersey, the development of interstate pipelines would have been turned upside down, as states would have effectively obtained veto rights over pipeline development within their borders. . The court rejected this finding and reaffirmed the importance of the ability of the NGA and FERC to authorize private pipeline developers to acquire the land necessary to develop essential interstate pipelines required by the public. The court ruling takes on renewed significance today, as states and conservationists redouble their efforts to block the development of interstate pipelines nationwide.