Supreme Court Agrees to Hear Pipeline Condemnation Case

Ballard Spahr LLP

Ballard Spahr LLP

On February 3, the U.S. Supreme Court granted certiorari in PennEast Pipeline Company, LLC v. New Jersey, a case that could determine whether private gas companies can condemn state-owned property. In this case, a unanimous panel of the Third Circuit Court of Appeals held that the Natural Gas Act (NGA) does not grant private utilities the power of eminent domain over state-owned property. The case is set for argument in April.

In 2015, PennEast, a private energy company, applied to the Federal Energy Regulatory Commission (FERC) for approval to construct a major natural gas pipeline that would transport gas from Pennsylvania to New Jersey. 

FERC authorized PennEast to exercise eminent domain over properties in the pipeline’s path under the NGA. PennEast later filed condemnation actions against 42 properties in which the state of New Jersey had at least some real property interest. The Third Circuit held that the NGA did not authorize PennEast to condemn those properties.

The Supreme Court granted certiorari to decide whether the NGA authorizes PennEast to condemn state-owned property.

The Court’s decision could have profound implications for the natural gas industry and beyond. If the Court holds that the NGA does not authorize taking state-owned property, it could become more difficult to construct future pipelines. And that ruling might call into question whether other statutes authorize federal condemnation of state-owned property.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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