US Supreme Court scraps 'veto' of pipeline: Update 2

Adds comment from New Jersey governor Phil Murphy

The US Supreme Court, in a win for the gas industry, ruled a lower court erred when it blocked the proposed $1.1bn PennEast natural gas pipeline from using its federal authorization to condemn 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, because New Jersey refused to sell dozens of parcels of state-controlled land along the project's federally approved route. The court held the US Congress, through the Natural Gas Act, 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.

New Jersey governor Phil Murphy (D) said he was disappointed with the ruling but indicated the state would continue its legal fight against the 116-mile (187km) pipeline, which would increase shale gas deliveries to the eastern US. Even with the ruling, PennEast cannot start construction until it gets a "section 401" water permit from New Jersey, which the state declined to provide in 2019.

"We have got a lot of other tools in the toolkit, and we will not hesitate to use them," said Murphy, who is running for re-election in November.

The court decision offers broad relief to the gas industry, which worried a decision in favor of New Jersey would empower states to use their land holdings to "veto" any gas pipeline they opposed. PennEast, which is managed by US utility UGI, applauded the decision. Enbridge, AGL Resources, New Jersey Resources and South Jersey Industries are also developing the pipeline.

"This decision is about more than just the PennEast pipeline project," PennEast said. "It protects consumers who rely on infrastructure projects — found to be in the public benefit after thorough scientific and environmental reviews — from being denied access to much-needed energy by narrow state political interests."

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 pipeline by refusing to sell PennEast dozens of parcels 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.

The court decision comes as federal regulators consider overhauling the permitting process for new natural gas pipelines, after a decade-long construction boom fueled by increasing shale gas production. 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