`
`
`
`
`No. ______
`In the
`Supreme Court of the United States
`________________
`PENNEAST PIPELINE COMPANY, LLC,
`Petitioner,
`
`v.
`STATE OF NEW JERSEY; NEW JERSEY DEPARTMENT OF
`ENVIRONMENTAL PROTECTION; NEW JERSEY STATE
`AGRICULTURE DEVELOPMENT COMMITTEE; DELAWARE
`& RARITAN CANAL COMMISSION; NEW JERSEY WATER
`SUPPLY AUTHORITY; NEW JERSEY DEPARTMENT OF
`TRANSPORTATION; NEW JERSEY DEPARTMENT OF THE
`TREASURY; NEW JERSEY MOTOR VEHICLE COMMISSION,
`Respondents.
`
`________________
`On Petition for Writ of Certiorari to the
`United States Court of Appeals
`for the Third Circuit
`________________
`PETITION FOR WRIT OF CERTIORARI
`________________
`PAUL D. CLEMENT
` Counsel of Record
`ERIN E. MURPHY
`KASDIN M. MITCHELL
`MARIEL A. BROOKINS
`KIRKLAND & ELLIS LLP
`1301 Pennsylvania Ave., NW
`Washington, DC 20004
`(202) 389-5000
`paul.clement@kirkland.com
`Counsel for Petitioner
`
`
`
`
`February 18, 2020
`
`
`
`QUESTION PRESENTED
`The Natural Gas Act authorizes a private gas
`company to exercise the federal government’s power of
`eminent domain to secure necessary rights-of-way for
`the construction of an interstate pipeline if FERC
`grants the company a certificate of public convenience
`and necessity for the project. 15 U.S.C. §717f(h). This
`Court has long recognized that the federal eminent
`domain power may be exercised against state-owned
`property. See, e.g., Kohl v. United States, 91 U.S. 367
`(1875). Consistent with that rule, for the better part
`of a century, certificate holders have invoked §717f(h)
`to secure rights-of-way across private- and state-
`owned property alike. Yet the decision below, issued
`without the benefit of the federal government’s views,
`deemed this long-settled understanding mistaken and
`held that the federal eminent domain power in
`§717f(h) cannot be exercised by certificate holders as
`to property in which a state has an interest. In
`reaching that conclusion, the Third Circuit conceded
`that its decision “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.” App.30. FERC has since
`confirmed that the Third Circuit’s interpretation of
`§717f(h) is mistaken, but that the court’s prediction
`about the dire consequences is correct.
`The question presented is:
`Whether the NGA delegates to FERC certificate
`holders the authority to exercise the
`federal
`government’s eminent domain power to condemn land
`in which a state claims an interest.
`
`
`
`
`
`ii
`
`PARTIES TO THE PROCEEDING
`Petitioner is PennEast Pipeline Company, LLC
`(“PennEast”). It was the plaintiff-appellee below.
`Respondents are the State of New Jersey; the New
`Jersey Department of Environmental Protection; the
`New Jersey Agriculture Development Committee; the
`Delaware & Raritan Canal Commission; the New
`Jersey Water Supply Authority; the New Jersey
`Department of Transportation; the New Jersey
`Department of the Treasury; and the New Jersey
`Motor Vehicle Commission. Respondents were the
`defendant-appellants below.
`
`
`
`
`
`
`
`
`iii
`
`CORPORATE DISCLOSURE STATEMENT
`Pursuant to this Court’s Rule 29.6, petitioner
`states as follows:
`PennEast Pipeline Company is a joint venture
`owned by Red Oak Enterprise Holdings, Inc., an
`indirect subsidiary of The Southern Company (20%
`interest); NJR Midstream Company, an indirect
`subsidiary of New Jersey Resources Corporation (20%
`interest); SJI Midstream, LLC, a subsidiary of South
`Jersey Industries, Inc. (20% interest); UGI PennEast,
`LLC, an indirect subsidiary of UGI Corporation (20%
`interest); and Spectra Energy Partners, LP, an
`indirect subsidiary of Enbridge Inc. (20% interest).
`Publicly
`traded
`companies The Southern
`Company, New Jersey Resources Corporation, South
`Jersey Industries, Inc., UGI Corporation, and
`Enbridge Inc. have a 10% or greater interest in
`PennEast Pipeline Company.
`
`
`
`
`
`
`
`
`iv
`
`STATEMENT OF RELATED PROCEEDINGS
`1. In re: PennEast Pipeline Co. LLC v. Verizon
`New Jersey Inc., et al., No. 19-2596 (3d Cir.)
`(consolidated with Nos. 19-2597, 19-2598, 19-2599, 19-
`2600, 19-2601). On January 28, 2020, the Third
`Circuit vacated the district court’s June 6, 2019 order
`condemning New Jersey’s property
`interests
`in
`separate parcels in light of the decision challenged in
`this petition and remanded to the district court to
`determine whether New Jersey’s conduct with regard
`to those separate parcels constitutes a waiver,
`estoppel, or other relinquishment of its sovereign
`immunity defense.
`2. Delaware Riverkeeper Network, et al. v. FERC,
`No. 18-1128 (D.C. Cir.) (consolidated with Nos. 18-
`1144, 18-1220, 18-1225, 18-1226, 18-1233, 18-1256,
`and 18-1274). The petitioners in that case, including
`New Jersey, seek review of the FERC order granting
`PennEast a certificate of public convenience and
`necessity. On October 1, 2019, the D.C. Circuit held
`the
`consolidated
`cases
`in abeyance pending
`disposition of this case.
`
`
`
`
`v
`
`TABLE OF CONTENTS
`QUESTION PRESENTED .......................................... i
`PARTIES TO THE PROCEEDING ........................... ii
`CORPORATE DISCLOSURE STATEMENT ........... iii
`STATEMENT OF RELATED PROCEEDINGS ....... iv
`TABLE OF CONTENTS ............................................ v
`TABLE OF AUTHORITIES .................................... viii
`PETITION FOR WRIT OF CERTIORARI ................ 1
`OPINIONS BELOW ................................................... 3
`JURISDICTION ......................................................... 3
`STATUTORY PROVISION INVOLVED ................... 3
`STATEMENT OF THE CASE ................................... 4
`A. Statutory Background .................................. 4
`B. Factual Background and Procedural
`History ........................................................ 11
`C. FERC’s Declaratory Order ......................... 15
`REASONS FOR GRANTING THE PETITION ....... 17
`I. The Decision Below Effectively Invalidates
`An Act Of Congress, Out Of A Misguided
`Effort To Avoid Constitutional Concerns That
`Do Not Exist. ..................................................... 19
`A. Statutory Text and Context Make Clear
`That the NGA Delegates the Federal
`Government’s Eminent Domain Power. .... 20
`B. The Decision Below Is the Product of a
`Misguided Effort to Avoid Constitutional
`Concerns That Do Not Exist. ..................... 25
`
`
`
`vi
`
`II. The Decision Below Threatens To Disrupt
`The Development Of Energy Infrastructure
`All Throughout The Nation. .............................. 31
`CONCLUSION ......................................................... 36
`APPENDIX
`Appendix A
`Opinion, United States Court of Appeals for
`the Third Circuit, In re: PennEast Pipeline
`LLC,
`Nos.
`19-1191-
`Company,
`19-1232 (Sept. 10, 2019) .............................. App-1
`Appendix B
`Order, United States Court of Appeals for the
`Third Circuit, In re: PennEast Pipeline
`Company, LLC, Nos. 19-1191-19-1232
`(Nov. 5, 2019) ............................................. App-32
`Appendix C
`Opinion, United States District Court for the
`District of New Jersey, In re: PennEast
`Pipeline Company, LLC, No. 18-1585
`(Dec. 14, 2018) ........................................... App-34
`Appendix D
`Relevant Statutory Provisions ................ App-103
`15 U.S.C. § 717 .................................. App-103
`15 U.S.C. § 717a ................................ App-105
`15 U.S.C. § 717b ................................ App-106
`15 U.S.C. § 717b-1 ............................. App-111
`15 U.S.C. § 717c ................................ App-114
`15 U.S.C. § 717c-1 ............................. App-118
`15 U.S.C. § 717d ................................ App-118
`
`
`
`vii
`
`vii
`
`15 U.S.C. § 717e ................................ App-119
`15 U.S.C. § 717e ................................ App-119
`15 U.S.C. § 717f ................................. App-120
`15 U.S.C. § 717f................................. App-120
`15 U.S.C. § 717g ................................ App-125
`15 U.S.C. § 717g ................................ App-125
`15 U.S.C. § 717h ................................ App-127
`15 U.S.C. § 717h ................................ App-127
`15 U.S.C. § 717i ................................. App-128
`15 U.S.C. § 7171 ................................. App-128
`15 U.S.C. § 717j ................................. App-129
`15 U.S.C. § 7173' ................................. App-129
`15 U.S.C. § 717k ................................ App-130
`15 U.S.C. § 717k ................................ App-130
`15 U.S.C. § 717l ................................. App-131
`15 U.S.C. § 7171 ................................. App-131
`15 U.S.C. § 717m ............................... App-131
`15 U.S.C. § 717m ............................... App-131
`15 U.S.C. § 717n ................................ App-135
`15 U.S.C. § 717n ................................ App-135
`15 U.S.C. § 717o ................................ App-138
`15 U.S.C. § 7170 ................................ App-138
`15 U.S.C. § 717p ................................ App-138
`15 U.S.C. § 717p ................................ App-138
`15 U.S.C. § 717q ................................ App-140
`15 U.S.C. § 717q ................................ App-140
`15 U.S.C. § 717r ................................ App-141
`15 U.S.C. § 7171' ................................ App-141
`15 U.S.C. § 717s ................................ App-145
`15 U.S.C. § 7178 ................................ App-145
`15 U.S.C. § 717t................................. App-147
`15 U.S.C. § 717t................................. App-147
`15 U.S.C. § 717t-1 ............................. App-147
`15 U.S.C. § 717t-1 ............................. App-147
`15 U.S.C. § 717t-2 ............................. App-148
`15 U.S.C. § 717t-2 ............................. App-148
`15 U.S.C. § 717u ................................ App-151
`15 U.S.C. § 717u ................................ App-151
`15 U.S.C. § 717v ................................ App-151
`15 U.S.C. § 717v ................................ App-151
`15 U.S.C. § 717w ............................... App-152
`15 U.S.C. § 717W ............................... App-152
`15 U.S.C. § 717x ................................ App-152
`15 U.S.C. § 717x ................................ App-152
`15 U.S.C. § 717y ................................ App-153
`15 U.S.C. § 717y ................................ App-153
`15 U.S.C. § 717z ................................ App-162
`15 U.S.C. § 7172 ................................ App-162
`
`
`
`
`
`viii
`
`TABLE OF AUTHORITIES
`
`Cases
`Alden v. Maine,
`527 U.S. 706 (1999) ................................................ 27
`Bd. of Tr. of Univ. of Ala. v. Garrett,
`531 U.S. 356 (2001) ................................................ 27
`Berman v. Parker,
`348 U.S. 26 (1954) .................................................... 4
`Blatchford
`v. Native Vill. of Noatak & Circle Vill.,
`501 U.S. 775 (1991) ................................................ 30
`Cent. Va. Cmty. Coll. v. Katz,
`546 U.S. 356 (2006) .......................................... 27, 30
`Chappell v. United States,
`160 U.S. 499 (1896) ............................................ 4, 27
`City of Boerne v. Flores,
`521 U.S. 507 (1997) ................................................ 27
`Curtiss v. Georgetown & Alexandria Tpk. Co.,
`10 U.S. (6 Cranch) 233 (1810) ................................. 5
`E. Tenn. Nat. Gas Co.,
`102 FERC ¶61,225 (2003) ...................................... 24
`FCC v. NextWave Pers. Commc’ns, Inc.,
`537 U.S. 293 (2003) ................................................ 21
`Halecrest Co.,
`60 FERC ¶61,121,
`1992 WL 12567263 (1992) ............................... 13, 24
`Idaho v. Coeur d’Alene Tribe,
`521 U.S. 261 (1997) ................................................ 31
`Jackson v. Metro. Edison Co.,
`419 U.S. 345 (1974) ................................................ 26
`
`
`
`ix
`
`Kimel v. Fla. Bd. of Regents,
`528 U.S. 62 (2000) .................................................. 27
`Kohl v. United States,
`91 U.S. 367 (1875) .................................................... 4
`Luxton v. N. River Bridge Co.,
`153 U.S. 525 (1894) ...................................... 5, 26, 27
`Marx v. Gen. Revenue Corp.,
`568 U.S. 371 (2013) ................................................ 22
`Miss. & Rum River Boom Co. v. Patterson,
`98 U.S. 403 (1878) .............................................. 4, 26
`Nev. Dept. of Human Res. v. Hibbs,
`538 U.S. 721 (2003) ................................................ 26
`Okla. ex rel. Phillips v. Atkinson Co.,
`313 U.S. 508 (1941) ...................................... 5, 22, 27
`Schneidewind v. ANR Pipeline Co.,
`485 U.S. 293 (1988) .................................................. 6
`Sebelius v. Cloer,
`569 U.S. 369 (2013) ................................................ 20
`Shaffer v. Heitner,
`433 U.S. 186 (1977) ................................................ 30
`Tenn. Student Assistance Corp. v. Hood,
`541 U.S. 440 (2004) ................................................ 30
`Tenneco Atl. Pipeline Co.,
`1 FERC ¶63,025 (1977).......................................... 24
`Thatcher v. Tenn. Gas Transmission Co.,
`180 F.2d 644 (5th Cir. 1950) .................................... 6
`Transcon. Gas Pipe Line Co.
`v. 0.607 Acres of Land,
`No. 3:15-cv-00428 (D.N.J. Feb. 23, 2015).......... 9, 24
`
`
`
`x
`
`Transcon. Gas Pipe Line Co.,
`v. 2.163 Acres of Land,
`No. 3:12-cv-07511 (D.N.J. Jan. 10, 2013).............. 24
`United States v. Petty Motor Co.,
`327 U.S. 372 (1946) ................................................ 30
`Wayne Cty. v. United States,
`53 Ct. Cl. 417 (1920) .............................................. 27
`Constitutional Provision
`U.S. Const. art. VI, cl.2 ............................................ 27
`Statutes
`15 U.S.C. §717(a) ........................................................ 6
`15 U.S.C. §717f(e) ....................................................... 8
`15 U.S.C. §717f(h) ............................................. passim
`16 U.S.C. §§791-828 ................................................... 6
`16 U.S.C. §814 .......................................... 9, 10, 21, 22
`16 U.S.C. §824p .................................................... 5, 21
`49 U.S.C. §24311 .................................................. 5, 21
`Pub. L. No. 49-444, 56 Stat. 84 (1942) ....................... 7
`Pub. L. No. 80-245, 61 Stat. 459 (1947) ..................... 8
`Other Authorities
`A. Bell, Private Takings,
`76 U. Chi. L. Rev. 517 (2009) ................................ 26
`Amendments to the Natural Gas Act: Hearing
`on S. 1028 before S. Comm. on Interstate
`and Foreign Commerce (1947) .......................... 8, 23
` “Economic Impact,” PennEast Pipeline,
`available at https://bit.ly/2Uuw1Ee ...................... 34
`H.R. Rep. No. 102-474 (1992) ............................. 10, 22
`
`
`
`xi
`
`“Pipeline Basics,” Pipeline & Hazardous
`Materials Safety Administration, U.S.
`Department of Transportation, available at
`https://bit.ly/36Ztu7L ............................................. 33
`Plaintiff’s Reply in Support of its Motion
`for an Order of Condemnation and for
`Preliminary Injunction, Columbia Gas
`Transmission, LLC v. 0.12 Acres of Land,
`No. 1:19-cv-01444-GLR
`(D.Md. July 8, 2019) .............................................. 32
`S. Rep. No. 80-429 (1947) ........................... 7, 9, 21, 23
`
`
`
`
`PETITION FOR WRIT OF CERTIORARI
`The Natural Gas Act delegates to a gas company
`that obtains the requisite approvals to construct an
`interstate pipeline the power to secure the “necessary
`right[s]-of-way” to construct, operate, and maintain
`the pipeline “by the exercise of the right of eminent
`domain.” 15 U.S.C. §717f(h). Since its inception, that
`provision has been used to secure rights-of-way over
`all manner of property, including property owned by a
`state. That practice is unremarkable. It was settled
`law when §717f(h) was enacted that states have no
`sovereign immunity from the federal eminent domain
`power. Accordingly, when Congress delegates that
`power, it delegates its power to exercise it against
`private- and state-owned property alike. Indeed,
`Congress has made that crystal clear by occasionally
`carving out some or all state-owned land when
`delegating the federal eminent domain power—
`something it conspicuously did not do in the NGA,
`which was specifically designed to overcome state
`efforts to hamstring pipeline development.
`Notwithstanding that long-settled understanding
`and practice, the Third Circuit, without soliciting the
`views of FERC or the United States, held that private
`parties may not exercise the federal eminent domain
`power delegated by §717f(h) to secure rights-of-way
`over property owned by a state—or even over property
`in which a state merely holds a recreational or
`conservation
`easement.
` While
`the
`court
`acknowledged that §717f(h) delegates the federal
`domain eminent domain power, it concluded that
`§717f(h) cannot be read to “delegate” the federal
`government’s “exemption”
`from state sovereign
`
`
`
`2
`
`immunity under the Eleventh Amendment, and hence
`leaves private parties with an eminent domain power
`that cannot be exercised as to state property.
`The court forthrightly acknowledged that its
`construction of §717f(h) “may disrupt how the natural
`gas industry” has operated “for the past eighty years.”
`App.30. FERC has since confirmed as much, issuing
`an order explaining that giving states an effective veto
`over the construction of interstate pipelines will
`resurrect the very same problems that §717f(h) was
`enacted to remedy. As FERC’s order likewise
`explains, the decision below is not just profoundly
`disruptive, but also profoundly wrong, as settled
`principles of statutory construction readily confirm
`that §717f(h) contains no exception for property owned
`by a state. The Third Circuit’s concern that this raises
`some sort of constitutional problem was misplaced, as
`the eminent domain authority certificate holders
`exercise under §717f(h) is the federal government’s
`eminent domain power, as to which the Eleventh
`Amendment is a non sequitur. All manner of
`governments have long delegated eminent domain
`power, and nothing prevents the federal government
`from delegating that authority to certificate holders
`that have satisfied FERC review of their proposals to
`construct interstate pipelines.
`In short, the decision below gets an exceptionally
`important question exceptionally wrong, as the
`federal agency charged with enforcing the NGA has
`confirmed. The Court should grant certiorari and
`restore the tools Congress provided to ensure the
`orderly development of critical interstate natural gas
`infrastructure.
`
`
`
`3
`
`OPINIONS BELOW
`The Third Circuit’s opinion is reported at 938 F.3d
`96 and reproduced at App.1-31. The district court’s
`opinion is unreported but available at 2018 WL
`6584893 and reproduced at App.34-100.
`JURISDICTION
`The Third Circuit
`issued
`its decision on
`September 10, 2019, and denied a timely petition for
`rehearing en banc. App.32-33. Justice Alito extended
`the time to file a petition for writ of certiorari until
`March 4, 2020. This Court has jurisdiction under 28
`U.S.C. §1254(1).
`STATUTORY PROVISION INVOLVED
`The relevant provisions of the NGA, 15 U.S.C.
`§§717-17z, are reproduced at App.103-66.
`15 U.S.C. §717f(h) provides in relevant part:
`When any holder of a certificate of public
`convenience and necessity cannot acquire by
`contract, or is unable to agree with the owner
`of property to the compensation to be paid for,
`the necessary right-of-way to construct,
`operate, and maintain a pipe line or pipe lines
`for the transportation of natural gas, and the
`necessary land or other property, in addition
`to right-of-way, for the location of compressor
`stations, pressure apparatus, or other
`stations or equipment necessary to the proper
`operation of such pipe line or pipe lines, it
`may acquire the same by the exercise of the
`right of eminent domain in the district court
`of the United States for the district in which
`
`
`
`4
`
`such property may be located, or in the State
`courts.
`STATEMENT OF THE CASE
`A. Statutory Background
`1. The right of eminent domain “appertains to
`every independent government” and has long been
`used by the United States to acquire land for public
`use. Miss. & Rum River Boom Co. v. Patterson, 98
`U.S. 403, 406 (1878). While the federal government is
`a government of limited and enumerated powers, the
`proper execution of some of those limited powers
`depends on eminent domain authority. See Berman v.
`Parker, 348 U.S. 26, 33 (1954) (“Once the object is
`within the authority of Congress, the right to realize
`it through the exercise of eminent domain is clear.”).
`That reality is implicit in the Takings Clause, and this
`Court recognized the federal government’s eminent
`domain power as early as Kohl v. United States, 91
`U.S. 367 (1875). In doing so, the Court concluded that
`a state’s interests must give way to the federal
`eminent domain power, for a voluntary condemnation
`power is an oxymoron, and if the federal government
`has such power, “it must be complete in itself.” Id. at
`374. Accordingly, “[t]he consent of a State can never
`be a condition precedent” to the “enjoyment” of the
`condemnation power; “[n]or can any State prescribe
`the manner in which [that power] must be exercised.”
`Id.
`Since Kohl, the federal government’s practice of
`invoking its eminent domain power to take property
`for public use has consistently been upheld, including
`when that property is owned by a state. See Chappell
`v. United States, 160 U.S. 499, 510 (1896); Okla. ex rel.
`
`
`
`5
`
`Phillips v. Atkinson Co., 313 U.S. 508 (1941). The
`federal government has exercised the eminent domain
`power to accomplish everything
`from securing
`adequate water supply to establishing federal parks
`like Rock Creek National Park.
`For more than 200 years, Congress has followed
`the lead of governments at every level by delegating
`the federal eminent domain power to private parties
`through statutes and agency action, with this Court’s
`approval. See, e.g., Luxton v. N. River Bridge Co., 153
`U.S. 525 (1894); Curtiss v. Georgetown & Alexandria
`Tpk. Co., 10 U.S. (6 Cranch) 233 (1810). When private
`parties exercise that power, they are exercising a
`delegated power, and accordingly may take property
`only to the extent the federal government may do so
`itself—i.e., for a public purpose, and in exchange for
`just compensation. See, e.g., Luxton, 153 U.S. at 532-
`34. But within those constraints, Congress has long
`understood that it may authorize a private party to
`take any property the federal government itself could
`take. Sometimes Congress identifies the property that
`may be taken; other times it reserves that right to a
`federal agency; still other times it sets forth in the
`delegating statute constraints to govern the private
`party’s selection of appropriate land to take. And
`when Congress wants to make clear that certain
`property may not be taken, it says so expressly. For
`example, when Congress delegated to Amtrak the
`power to condemn property “necessary for intercity
`rail passenger transportation,” it expressly carved out
`“property of … a State [or] a political subdivision of a
`State, or a governmental authority.” 49 U.S.C.
`§24311; see also 16 U.S.C. §824p (delegating eminent
`domain power for electric transmission facilities, but
`
`
`
`6
`
`only for facilities located “on property other than
`property owned by the United States or a State”).
`2. In the mid-1930s, Congress enacted the Federal
`Power Act (“FPA”) and the NGA. The FPA authorized
`the Federal Power Commission to regulate interstate
`transmission and sales of electric energy and the
`licensing of hydropower facilities. See generally 16
`U.S.C. §§791-828. The NGA, for its part, established
`a
`framework
`for
`regulating
`the
`interstate
`transportation and sale of natural gas, see 15 U.S.C.
`§717(a), and gave the Federal Power Commission (now
`FERC) exclusive jurisdiction over the transportation
`and sale of natural gas for resale in interstate
`commerce. See Schneidewind v. ANR Pipeline Co.,
`485 U.S. 293, 300-01 (1988). Section 814 of the FPA,
`as originally enacted, granted hydropower licensees
`who were unable to acquire necessary rights-of-way to
`transmit electricity by contract “the right of eminent
`domain.” The NGA, by contrast, gave FERC more
`limited powers with respect to the construction of new
`pipelines, and did not in its original form give FERC a
`mechanism to authorize natural gas companies to
`acquire land to develop new infrastructure under
`FERC’s supervision.
`That role was instead largely left to the states,
`which inevitably led to the kinds of complications and
`inefficiencies that arise when instrumentalities of
`interstate commerce are not subject to uniform
`regulation. See Thatcher v. Tenn. Gas Transmission
`Co., 180 F.2d 644, 646 (5th Cir. 1950). To remedy
`those problems, in 1942, Congress amended the NGA
`to give FERC more comprehensive regulatory
`authority over the construction of new interstate
`
`
`
`7
`
`pipelines as well as the use of existing ones. See Pub.
`L. No. 49-444, 56 Stat. 84 (1942). Since 1942, a
`natural gas company that wants to construct a new
`interstate pipeline must obtain FERC’s approval.
`FERC must hold a hearing before granting any such
`approval, and may issue the requisite certificate of
`public convenience and necessity for the construction
`of a new pipeline only if, among other things, it
`determines that the new pipeline “is or will be
`required by the present or future public convenience
`and necessity.” Id.
`federal approval
`Notwithstanding this new
`process, some states continued to frustrate the
`development of interstate pipelines in the wake of the
`1942 amendments, by imposing strict protectionist
`constraints on a natural gas company’s ability to
`exercise eminent domain to secure the necessary
`rights-of-way to build and operate a pipeline. For
`example, the Arkansas constitution prohibited a
`foreign corporation
`from condemning property;
`Wisconsin granted the eminent domain power only to
`Wisconsin-based companies; and Nebraska permitted
`companies to exercise eminent domain only if they
`distributed gas within the state. See S. Rep. No. 80-
`429, 2-3 (1947). Other states provided that “property
`may be taken for public use,” but narrowly defined
`“public use” as “the use of the public of the particular
`State conferring the right of eminent domain.” Id. at
`2. The various state restrictions posed intolerable
`obstacles to the development of a classic channel of
`interstate commerce.
`Congress responded to these state restrictions by
`amending the NGA again in 1947, this time to grant
`
`
`
`8
`
`certificate holders the power as a matter of federal law
`to acquire the “necessary right[s]-of-way” to construct,
`operate, and maintain interstate pipelines “by the
`exercise of the right of eminent domain.” See 15
`U.S.C. §717f(h); Pub. L. No. 80-245, 61 Stat. 459
`(1947). As one of its sponsors explained, this
`delegation of the federal government’s eminent
`domain power was a “necessary tool[] to make effective
`the orders and certificates” of FERC. Amendments to
`the Natural Gas Act: Hearing on S.1028 Before the
`Sen. Comm. on Interstate and Foreign Commerce, 80th
`Cong. 12 (1947) (statement of Sen. Moore).
`To step into the shoes of the federal government
`and exercise its eminent domain power, a natural gas
`company must have a certificate from FERC. 15
`U.S.C. §717f(h). The NGA directs that a certificate
`may issue only if the proposed pipeline “is or will be
`required by the present or future public convenience
`and necessity”; if the applicant fails to establish the
`necessity of the project, its “application shall be
`denied.” Id.; §717f(e). FERC approves not just the
`necessity of the proposed pipeline vel non, but also
`evaluates the proposed route for the pipeline through
`a process in which affected property owners are free to
`appear and object. See, e.g., App.35-43. And to bring
`a condemnation proceeding, the certificate holder
`must show that it “cannot acquire by contract” or was
`“unable to agree with the owner” on the compensation
`to be paid for the property or right-of-way it seeks to
`condemn. 15 U.S.C. §717f(h). If (and only if) all those
`prerequisites are satisfied, the certificate holder may
`“acquire” the necessary property or rights-of-way “by
`the exercise of the right of eminent domain in the
`district court of the United States for the district in
`
`
`
`9
`
`which such property may be located, or in the State
`courts.” Id.1 The provision delegating the federal
`government’s eminent domain power to certificate
`holders in the NGA was modeled after, and tracked
`nearly verbatim, the delegation in §814 of the FPA.
`See 16 U.S.C. §814; S. Rep. No. 80-429 (1947).
`Over the ensuing 70 years, the NGA’s delegation
`of the federal eminent domain power effectively put an
`end
`to
`state efforts
`to
`frustrate
`interstate
`infrastructure development, and provided
`“a
`necessary protection of the free flow of commerce.”
`S. Rep. No. 80-429, at 3. Often, the very existence of
`that power facilitated negotiations and obviated the
`need to invoke it. And when efforts to negotiate
`proved futile, the authority has been critical to
`ensuring that needed natural gas reaches consumers
`(often consumers in a different state). Natural gas
`companies have long deployed that power, moreover,
`with respect both to private property and to property
`in which a state (including New Jersey) claimed an
`interest. See, e.g., Transcon. Gas Pipe Line Co. v.
`0.607 Acres of Land, No. 3:15-cv-00428 (D.N.J. Feb.
`23, 2015). Those efforts rarely drew any objection
`from states, and Congress has never made any effort
`to constrain the use of the §717f(h) eminent domain
`power against state-owned property.
`Congress’ silence on that score in the NGA
`contrasts with its actions concerning the FPA. While
`hydropower licensees continue to enjoy the federal
`eminent domain power under that statutory regime,
`
`1 To proceed in federal rather than state court, the certificate
`holder also must establish that the value of the property at issue
`exceeds $3,000. Id.
`
`
`
`10
`
`in 1992, Congress amended the FPA—but not the
`NGA—to carve out a subset of state-owned properties.
`In particular, the FPA provides that “no licensee may
`use the right of eminent domain under this section to
`acquire any lands or other property that, prior to
`October 24, 1992, were owned by a State or political
`subdivision thereof and were part of or included
`within any public park, recreation area or wildlife
`refuge established under State or local law.” 16 U.S.C.
`§814. For parks, recreation areas, and wildlife refuges
`established after that date, a licensee may still
`exercise the eminent domain power, but only after a
`“public hearing held in the affected community,” and
`only after FERC finds that “the license will not
`interfere or be inconsistent with the purposes for
`which such lands or property are owned.” Id.
`Notably, the legislative history explained that
`this amendment was necessary to grant these lands
`this special status because “[u]nder current law, when
`FERC issues a hydropower license, the licensee is
`granted a Federal power of eminent domain to
`condemn all non-Federal lands required for the
`project. This power includes the power to condemn
`lands owned by States.” H.R. Rep. No. 102-474, 99-
`100 (1992) (emphasis added). Even with that
`recognition, moreover, Congress withdrew
`the
`eminent domain power under the FPA only as to
`certain specified state-owned lands, not as to all lands
`in which a state holds any interest at all. And
`Congress limited the ability of states to block
`development by acquiring new property interests
`along the route of a proposed development. By
`contrast, Congress did not take even those modest
`steps in the NGA, which instead continues to
`
`
`
`11
`
`authorize a certificate holder to exercise the federal
`eminent domain power to obtain the necessary
`property rights to cross any lands that FERC
`authorizes a new interstate pipeline to cross.
`B. Factual Background and Procedural
`History
`1. In 2015, PennEast applied for a certific