PennEast Pipeline Project Clears Hurdle with Supreme Court Ruling

Researched by Industrial Info Resources (Sugar Land, Texas)--In a win for the 116-mile PennEast Pipeline, the U.S. Supreme Court ruled 5-4 on Tuesday that developers of federally-approved natural-gas pipeline projects can use eminent domain powers to seize state-owned land. With an estimated cost of about $1 billion, the 36-inch-wide pipeline would deliver more than 1 billion cubic feet (Bcf) per day of Marcellus shale gas from Luzerne County, in northeastern Pennsylvania, to Transco's pipeline interconnection near Pennington, New Jersey.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Pipeline Project Database can click here for detailed reports on the PennEast project.

The project's member companies include UGI Energy Services, a subsidiary of UGI Corporation (NYSE:UGI) (King of Prussia, Pennsylvania). Other backers include Southern Company (NYSE:SO) (Atlanta, Georgia) and Enbridge Incorporated (NYSE:ENB) (Calgary, Alberta).

At issue was whether PennEast could use eminent domain to take 49 state-owned and state-controlled parcels of land in New Jersey that are needed for the project. New Jersey officials sought to block the pipeline by stopping PennEast from acquiring those parcels.

The Federal Energy Regulatory Commission (FERC) approved the project in 2018.

PennEast won the first round in a lower court, but in 2019, the U.S. Court of Appeals for the Third Circuit said PennEast couldn't use eminent domain to take New Jersey state lands because the condemnation would interfere with the state's sovereign immunity, as set in place by the 11th Amendment of the U.S. Constitution. New Jersey maintains the Constitution prohibits private entities such as PennEast Pipeline from using eminent domain powers to condemn state property, even though those powers are delegated by FERC.

For more information, see June 7, 2021, article - Supreme Court Decision Imminent in Eminent Domain Pipeline Case.

In the Supreme Court ruling, Chief Justice John Roberts said use of eminent domain condemnation by companies like PennEast "do not offend state sovereignty, because the states consented at the founding to the exercise of the federal eminent domain power, whether by public officials or private delegatees."

Anthony Cox, chair of the PennEast Board of Managers, said: "We are pleased that the Supreme Court kept intact more than seven decades of legal precedent for the families and businesses who benefit from more affordable, reliable energy."

Despite the victory for pipelines in general, the PennEast project is likely to encounter more state-level permitting hurdles in New Jersey.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.