US Supreme Court scraps state 'veto' of pipeline

The US Supreme Court, in a win for the gas industry, said a lower court erred when it blocked the proposed $1.1bn PennEast natural gas pipeline from using its federal authorization to seize land owned by the state of New Jersey.

The court's 5-4 ruling today clears one of the permitting obstacles for the 1 Bcf/d (28mn m³/d) pipeline project, since New Jersey refused to sell dozens of parcels of state-controlled land along the project's federally approved route. The court held that the US Congress, through the Natural Gas Act, clearly delegated the ability of pipeline companies to condemn needed rights-of-way, whether or not they are owned by states.

"An eminent domain power that is incapable of being exercised amounts to no eminent domain power at all," chief justice John Roberts wrote on behalf of the majority.

The Supreme Court decision offers relief across the gas industry, which worried states could use their considerable land holdings to "veto" any natural gas pipeline they opposed. But even with the favorable court decision, PennEast cannot immediately start construction and still needs a "section 401" water permit from New Jersey, which the state declined to provide in 2019.

PennEast, which is being managed by US utility UGI, did not immediately respond to a request for comment. Enbridge, AGL Resources, New Jersey Resources and South Jersey Industries are also developing the pipeline.

At issue in the Supreme Court case was whether private pipeline companies can use the US Federal Energy Regulatory Commission's (FERC) authorization of a new pipeline to bring eminent domain lawsuits against states to take their land. Pipeline developers often use that power against private landowners, but the question has been relatively untested in court because states historically agreed to sell their land after pipelines won federal approval.

New Jersey has been able to block construction of the proposed 116-mile (187km) pipeline by refusing to sell PennEast dozens of parcels of land it controls. The US 3rd Circuit Court of Appeals in 2019 agreed with the state that, under the protections of the 11th amendment to the US Constitution, private companies are unable haul states to federal court, even if they hold FERC approval.

President Joe Biden's administration is not a direct party to the lawsuit, but it had agreed with the gas industry in seeking to reverse the 3rd Circuit ruling. The Biden administration said it was "implausible" that Congress meant to allow states to unilaterally block projects through the eminent domain process when it enacted the Natural Gas Act.

The court decision comes as regulators consider overhauling the permitting process for new pipelines, after a decade-long construction boom fueled by shale gas. FERC is preparing to propose changes to a 1999 policy that could offer more weight to landowner concerns during its pipeline permitting process. The White House is separately considering changes to the environmental review process for all federally reviewed infrastructure projects.

By Chris Knight