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Environment & Energy Report

High Court Wants White House View on PennEast Pipeline Case (2)

June 29, 2020, 1:45 PMUpdated: June 29, 2020, 3:46 PM

The U.S. Supreme Court wants the Trump administration’s views on a major energy case that could decide the fate of the proposed PennEast pipeline.

At issue is whether developers can seize state-owned land in New Jersey to build the $1 billion natural gas project, which is backed by Enbridge Inc., Southern Co., and other companies.

The justices on Monday asked the solicitor general to file a brief expressing the U.S. views on the question—a sign of interest in the case. The move comes as pipeline opponents increasingly ask judges to halt development, and industry lawyers look to the high court to intercede.

The justices did just that two weeks ago when they resolved a separate pipeline dispute, siding with the natural gas industry and the Trump administration in a case involving the Atlantic Coast project.

PennEast supporters say the industry will face severe disruptions—giving states a new tool to block projects—if the Supreme Court leaves a lower court’s decision in place.

The project is slated to move natural gas 116 miles across Pennsylvania and New Jersey, and is part of a broader buildout of gas infrastructure across the East Coast.

‘Incrementally Negative’

PennEast pipeline spokeswoman Patricia Kornick said the project backers are pleased the Supreme Court requested the administration’s views on the case.

“PennEast remains hopeful that the U.S. Supreme Court will grant the petition,” she said in an email.

The Interstate Natural Gas Association of America likewise said it welcomed the development.

“We remain optimistic that the Court will ultimately grant the petition in the fall and hear it next Term,” Joan Dreskin, general counsel for the industry group, said in a statement.

But the justices’ decision to get the federal government’s views before deciding whether to review the case draws out the project’s timeline, ClearView Energy Partners analyst Christine Tezak wrote Monday.

“We view this as incrementally negative from a timing perspective for PennEast because a decision on whether the Supreme Court will consider the case looks likely to be delayed for months,” she said in a client note.

The Federal Energy Regulatory Commission, an independent agency, has already weighed in on PennEast’s flap with New Jersey, backing the pipeline company in January.

The office of New Jersey Attorney General Gurbir S. Grewal (D) didn’t immediately respond to a request for comment.

Maya van Rossum, head of the Delaware Riverkeeper Network, an environmental group aligned with New Jersey in the case, called the Supreme Court’s move disappointing. She said in a statement that her group is “still hopeful for an outcome that will uphold the right of New Jersey to protect its property rights, and the safety and sanctity of the state and its environment.”

‘Veto Power’

At issue is PennEast Pipeline Co. LLC’s attempt to seize state-owned land and conservation easements in New Jersey for the project’s route.

Interstate pipeline builders that have secured a permit from the Federal Energy Regulatory Commission routinely use eminent domain authority delegated under the Natural Gas Act to take property.

But the U.S. Court of Appeals for the Third Circuit last year ruled that companies can’t use that authority for state-owned lands. Eminent domain is carried out through federal courts, and New Jersey’s sovereign immunity blocks PennEast from starting such proceedings against the state, the Third Circuit said.

PennEast asked the Supreme Court to step in, saying the ruling disrupts longstanding legal precedent allowing state land takings, and gives states improper “veto power” over pipelines.

Other developers and allies from across the energy industry lodged support for PennEast’s petition, arguing that the Third Circuit’s decision could stymie critical infrastructure development because most interstate pipelines cross some type of state-managed land.

Lawyers for New Jersey countered that the appeals court’s decision doesn’t establish state veto power because pipeline companies have other options to legally access state lands, including through voluntary agreements or a federal government seizure of property.

The case is PennEast Pipeline Co. v. New Jersey, U.S., No. 19-1039, 6/29/20.

(Updates INGAA statement, adds comment from Delaware Riverkeeper Network in second section.)

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloombergindustry.com

To contact the editor responsible for this story: Gregory Henderson at ghenderson@bloombergindustry.com

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