The U.S. Supreme Court on Wednesday agreed to review a case with major ramifications for the nation’s natural gas infrastructure when pipeline companies seek to develop gas lines crossing state-owned land.
The case is PennEast Pipeline Company, LLC v. New Jersey, and will be scheduled for argument in April – an accelerated schedule that suggests the court wants to rule on the case quickly, before the end of the current term in June or July.
At issue is the Natural Gas Act, which authorizes private gas companies to exercise the federal government’s power of eminent domain to gain rights-of-way for the construction of interstate pipelines. But the U.S. Court of Appeals for the Third Circuit ruled in 2019 that the eminent domain power cannot be used on property in which a state has an interest.
The appeals court invoked the seldom-noted Eleventh Amendment to the U.S. Constitution, which gives states sovereign immunity from suits by private parties in federal court. The Third Circuit acknowledged that its ruling “may disrupt how the natural gas industry, which has used the NGA to construct interstate pipelines over State-owned land for the past eighty years, operates.”
PennEast appealed to the Supreme Court in hopes that it will reject the circuit decision and allow its 116-mile pipeline project from Pennsylvania to New Jersey to go forward. New Jersey fought the pipeline project, which would cross 42 parcels of state land.
Aaron Streett, partner and chair of Baker Botts’ Supreme Court and appellate practice, said Wednesday, “The court’s decision to grant review in PennEast is enormously important to the energy industry. If the Third Circuit’s decision stands, each of the 50 states would be able to nullify federally approved pipeline-construction plans any time the proposed pipelines cross state property.”
Kirkland & Ellis partner Paul Clement, a former U.S. solicitor general, is representing PennEast in the litigation. “The NGA has supported the energy needs of this country for nearly a century, but it cannot continue to do so with the effective veto power of a state lurking in every corner,” Clement wrote in his petition.
The Trump administration Justice Department sided with PennEast, asserting in a brief that the Third Circuit court is “the first appellate court to discover an unwritten exception for state-owned property.”
The Interstate Natural Gas Association of America and other industry groups including the American Petroleum Institute filed a friend of the court brief in the case, asserting that the Third Circuit ruling “gravely threatens the continued development of federally approved interstate natural gas infrastructure as well as the ability of the natural gas industry to ensure reliable access to a supply of natural gas adequate to meet the nation’s energy requirements.”
Adding context, the brief also told the court that the case is “increasingly important because interstate natural gas pipelines have become the arteries of the Nation’s energy infrastructure.” It continued, “Demand for natural gas continues to increase because it is abundant, clean, and affordable, so additional interstate infrastructure will be needed for the foreseeable future.” Lela Hollabaugh, partner at Bradley Arant Boult Cummings in Nashville was counsel of record on the brief.
New Jersey’s counter brief asserts that “the Third Circuit’s decision does not establish … a veto, instead only identifying which parties can file appropriate condemnation suits against states for their real property.” State Solicitor Jeremy Feigenbaum is counsel of record for New Jersey.