U.S. Supreme Court Rules that Natural Gas Companies can Condemn State-Owned Property
On June 29, 2021, the U.S. Supreme Court issued its opinion regarding natural gas companies’ ability to condemn state-owned rights-of-way. In PennEast Pipeline Company, LLC v. New Jersey (2021) — S.Ct. —, Case No. 19-1039 (“PennEast”), PennEast, a natural gas company, sought to condemn land in which the State of New Jersey asserted a property interest. PennEast asserted its right to condemn the property pursuant to the Natural Gas Act, which authorizes a natural gas company to exercise federal eminent domain power if the company has obtained a certificate from the Federal Energy Regulatory Commission (“FERC”). New Jersey moved to dismiss PennEast’s condemnation action on sovereign immunity grounds; however, the district court denied the motion and instead granted PennEast’s request for a condemnation order. On appeal, the Third Circuit vacated the district court’s decision, and found that the Natural Gas Act did not authorize natural gas companies to sue nonconsenting states.
The Supreme Court reversed the Third Circuit’s decision and held that the Natural Gas Act authorizes FERC certificate holders to condemn all necessary rights-of-way – even those owned by states. The Supreme Court noted that the federal government is authorized to condemn private and state-owned property. Further, the Court noted that the federal government is authorized to delegate its condemnation power to private parties. On these grounds, the Court found that the Natural Gas Act effectively delegated the federal government’s authority to condemn state-owned property to natural gas companies. In addition, the Court held that states do not enjoy sovereign immunity in such condemnation suits. Notably, the Court found that a contrary holding would require the consent of states in virtually every infrastructure project authorized by the federal government.
A copy of the PennEast decision can be accessed here.