U.S. Supreme Court will hear PennEast Pipeline appeal of N.J. eminent-domain dispute

The U.S. Supreme Court on Wednesday agreed to hear a complaint that New Jersey illegally blocked the PennEast natural gas pipeline from acquiring key easements for its $1.2 billion project, thwarting the federally approved pipeline.

The court granted PennEast Pipeline Co. LLC’s request to hear an appeal of New Jersey’s decision to block the pipeline from building on 42 properties in which the state has an interest. The case raises important jurisdictional issues of states rights versus federal law, and attracted the attention of anti-pipeline activists as well as the gas industry, business advocates, and the Trump administration.

PennEast applied to the federal government six years ago to build a 116-mile pipeline from northeastern Pennsylvania to carry fracked natural gas to a location near Trenton. The pipeline venture is owned by five energy companies, including its operator, UGI Energy Services, a subsidiary of UGI Corp. of Valley Forge.

PennEast on Wednesday called the court’s decision “a major step” to upholding the Natural Gas Act, an 82-year-old law that gives the federal government authority to designate certain energy infrastructure to be in the public interest and authorizes the use of eminent domain to acquire rights of way.

“Congress passed the Natural Gas Act specifically to avoid state and local vetoes of interstate projects found by federal regulators to be in the public need and benefit,” Tony Cox, chair of the pipeline’s board of managers, said in a statement. He said a lower-court decision upholding New Jersey was “misguided.” The court agrees to review only about 80 cases a year, or about 1% of the petitions filed.

Pipeline opponents, who had hoped the Supreme Court would not hear the appeal and effectively let a favorable lower court decision stand, were more restrained.

“We remain committed to working with our allies in the community to stop this unneeded pipeline and will be following the Supreme Court’s deliberations closely.” said Tom Gilbert, campaign director, New Jersey Conservation Foundation and ReThink Energy NJ.

The PennEast project ran into roadblocks in New Jersey under Gov. Phil Murphy, whose administration turned sour on the fossil-fuel project and challenged PennEast’s claims to easements on 42 properties in which the state has an interest. The properties include two that New Jersey owns and 40 on which the state granted conservation easements requiring the land be preserved for recreational, conservation, or agricultural use.

PennEast argued that the pipeline would preserve the land as open space.

New Jersey said a state’s sovereign immunity protects it from lawsuits by private parties, even when entities such as PennEast have obtained federal eminent domain authority. PennEast prevailed in district court, but the Third Circuit Court of Appeals in Philadelphia in 2019 sided with New Jersey.

PennEast said the Philadelphia appeals court panel got “an exceptionally important question exceptionally wrong” and sought Supreme Court review.

Gurbir S. Grewal, New Jersey’s attorney general, said that PennEast “greatly overstates the consequences” of the case, saying the decision precludes only private parties from filing condemnation suits against states. The decision does not provide states with a veto over interstate pipeline projects, he said.

About 18 industry, labor and business organizations filed amicus briefs in support of PennEast’s petition. The Federal Energy Regulatory Commission (FERC), the agency that reviews and approves pipelines, said the Third Circuit’s decision would have “profoundly adverse impacts” on the development of the nation’s interstate natural gas transportation system.

The Trump administration’s acting solicitor general, Jeffrey B. Wall, also urged the Supreme Court to take up the case, calling the “erroneous” Third Circuit decision “too significant” to leave undisturbed.

The solicitor general said the appeals court erred by even taking up the case, which it said should have been challenged first through the FERC and then through the appeals court in Washington. The Supreme Court on Wednesday directed lawyers to present arguments on whether the Third Circuit properly exercised jurisdiction over the case.

The court set arguments for April. Even if the Supreme Court rules in PennEast’s favor, the project’s opponents believe numerous other legal and political obstacles await, each of which will cost time and money for the pipeline operator to resolve.