Ballard Spahr LLP

On Tuesday, the U.S. Supreme Court ruled 5-4 that private utilities may exercise eminent domain to take state-owned property under the Natural Gas Act (NGA). The decision resolved an issue that could have blocked construction of pipelines and other public-private infrastructure projects.

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 condemn properties in the pipeline’s path under the NGA. PennEast later condemned 42 properties in which the State of New Jersey had at least some ownership interest. The Third Circuit held that sovereign immunity barred PennEast from condemning state land.

The Supreme Court disagreed, holding that states “surrendered” their sovereign immunity to condemnations filed by private parties exercising the Federal government’s power of eminent domain “when they ratified the Constitution.” The Court found that the NGA’s authorization of condemnation by private entities was an “unexceptional instance” of an “established practice.” “Since its inception, the Federal Government has wielded the power of eminent domain, and it has delegated that power to private parties. We have observed and approved of that practice. The eminent domain power may be exercised—whether by the Government or its delegatees—within state boundaries, including against state property.” Chief Justice Roberts authored the Court’s opinion, joined by Justices Breyer, Alito, Sotomayor, and Kavanaugh.

Four dissenters—Justices Thomas, Kagan, Gorsuch and Barrett—claimed the Majority’s interpretation of the constitution had “no textual, structural, or historical support.” They suggested that the Majority was instead “animated by pragmatic concerns.”

The case is PennEast Pipeline Company, LLC v. New Jersey, No. 19-1039. The opinion is here.

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