Without violating the Eleventh Amendment, can a private party exercise the federal government’s eminent-domain power to seize land that belongs to a State, and can a federal court properly hear the case?
This case asks the Supreme Court to consider whether a private company can exercise the federal government’s eminent-domain power and also considers the scope of a federal court’s jurisdiction. Once the Federal Energy Regulatory Commission has issued a certificate of public convenience and necessity, the Natural Gas Act authorizes private parties to exercise the federal government’s eminent-domain power to secure rights-of-way and compensation to the landowner. Petitioner PennEast Pipeline Company, LLC argues that the Natural Gas Act’s delegation is necessary and ministerial, and there is no insult to state sovereignty in suits such as this. By contrast, Respondent New Jersey et al. contends that this delegation violates the Eleventh Amendment’s guarantee of sovereign immunity to the States. Both PennEast and New Jersey argue that the Third Circuit properly exercised its jurisdiction over the case. The outcome of this case has implications for siting new natural gas pipelines, eminent domain, and states’ rights.
Questions as Framed for the Court by the Parties
(1) Whether the Natural Gas Act delegates to Federal Energy Regulatory Commission certificate-holders the authority to exercise the federal government’s eminent-domain power to condemn land in which a state claims an interest; and
(2) whether the U.S. Court of Appeals for the 3rd Circuit properly exercised jurisdiction over this case.
PennEast Pipeline Co. (“PennEast”) plans to construct a pipeline that will pass through Pennsylvania and New Jersey. In re Penneast Pipeline Co. at 99. To receive approval for building a pipeline through land owned by other individuals, the Natural Gas Act (“NGA”) requires three specific conditions to be met: 1) that the gas company obtain a Certificate of Public Convenience and Necessity; 2) that the gas company was unable to obtain the property through mutual agreement with the owner of the property; and 3) that the property must be valued at more than $3,000. Id. at 100. PennEast applied for federal approval via the Certificate of Public Convenience and Necessity (“Certificate”) from the Federal Energy Regulatory Commission (“FERC”) in the fall of 2015. Id. FERC took several years to approve the pipeline, and finally did so on the condition that PennEast meets all of the requirements for a Certificate. Id. The proposed project for which it was seeking approval was a 116-mile-long pipeline. Id. When PennEast received federal approval for the pipeline, it sued pursuant to the NGA to gain access to the properties the pipeline would pass through. Id. at 99.
PennEast filed complaints in the United States District Court for the District of New Jersey. Id. at 100. In total, PennEast asked for orders of condemnation of 131 properties through which the pipeline would run through. Id. PennEast also sought permanent and preliminary injunctive relief so as to immediately state the construction of the pipeline. Id. Over forty of these properties are owned by the state government of New Jersey. Id. at 99. The state has a possessory interest in two of the properties, and then non-possessory interests in the remaining properties. Id. at 101. The most common non-possessory interests were that the land be held by the state for “recreational, conservation, or agricultural” uses. Id.
PennEast requested injunctive relief in order to begin the construction of its pipeline. Id. at 102. The District Court held that PennEast had satisfied the standard for preliminary injunctive relief. Id. New Jersey appealed to the United States Court of Appeals for the Third Circuit. Id. at 102-03. The Third Circuit vacated the District Court’s condemnation of New Jersey’s property interests and granting of injunctive relief. Id. at 113.
PennEast appealed the decision, claiming that the condemnation suits are authorized by the NGA, and that the suits do not violate the Eleventh Amendment to the United States Constitution. Petition for Writ of Certiorari at 1–2. The Supreme Court of the United States granted certiorari on February 3, 2021, with arguments set to be heard on April 28, 2021.
DOES THE NGA AUTHORIZE THE LAWSUIT?
PennEast Pipeline Co. (PennEast) argues that 15 U.S.C. § 717f(h) ( “NGA”) expressly authorizes a FERC certificate holder to construct an interstate pipeline by acquiring the property it cannot contract or negotiate for “by the exercise of the right of eminent domain in the district court of the United States,” regardless of who owns the property. Brief for Petitioner, PennEast Pipeline Co. at 25. PennEast contrasts this expansive grant of authority with the more narrow eminent-domain power delegated in other statutes, and congressional amendments to other statutes that exempt state-owned land from the delegation. Id. at 26–27. Further, quoting the Senate Report, PennEast contends that the entire purpose behind enacting § 717f(h) was to prevent states from blocking preferred routes for interstate pipelines by preventing the use of eminent domain by pipeline developers. Id. at 28. PennEast emphasizes that NGA provides many opportunities for states to participate in FERC’s certificate-granting process, and to challenge the certificate after it is granted. Id. at 29.
State of New Jersey et al. (“New Jersey”) responds that the NGA is silent about “filing actions against States over sovereign property,” which is “insufficient to justify nonconsensual private lawsuits against a sovereign in federal court.” Brief for Respondents, New Jersey et al. at 31. New Jersey cites to language from former Court cases that require Congress to use “unequivocal statutory language” before allowing a federal court to “entertain a suit against a nonconsenting state.” Id. at 32. The NGA, New Jersey argues, allows parties like PennEast to file condemnation actions for “necessary” real property, but does not mention suits brought against states for state lands. Id. New Jersey addresses PennEast’s contention that other statutes have been limited to prevent the exercise of eminent domain against states and their land by contending that Congress would be equally clear before authorizing the exercise of eminent domain over state-owned land. Id. at 36. Next, New Jersey argues that Congress’s purpose in enacting the NGA is too imprecise to resolve the issue before the Court. Id. at 39.
DOES THE EXERCISE OF EMINENT DOMAIN VIOLATE STATE SOVEREIGN IMMUNITY?
PennEast argues that it is unnecessary for Congress to explicitly abrogate sovereign immunity here because the states surrendered immunity for the federal government’s exercise of eminent domain when the Constitution was drafted. Brief for Petitioner at 31–32. Otherwise, PennEast contends that state interference with the federal government’s attempts to condemn land using its eminent-domain power would subordinate Congressional authority and violate the Supremacy Clause. Id. at 32. PennEast cites to the immovable-property exception as further evidence of this, under which the states have “no immunity from jurisdiction with respect to actions relating to immovable [i.e., real] property.” Id. Therefore, PennEast attests, New Jersey has no immunity from a suit over real property, where, as here, the supreme sovereign authorized the suit. Id. at 33. PennEast also insists that at the Founding, it was understood that the eminent-domain power could be delegated to private parties, especially when overseeing public improvements. Id. at 33–34. PennEast points to the Fifth Amendment as evidence that people were more concerned about ensuring adequate compensation for the owners of condemned property than totally precluding the seizure of property. Id. at 34. Regardless, PennEast argues that there is no threat to sovereign dignity or the state’s treasury here because only FERC certificate holders can bring suit, and the states will be adequately compensated for their land. Id. at 37–39.
Moreover, PennEast maintains the federal government is not delegating broad condemnation power to private parties. Id. at 38. PennEast states that when Congress, through an agency like FERC, permits specific land takings and thereafter delegates “the essentially ministerial duties” to a private party, which then obtains the land and compensates the prior landowner fairly, there is neither a delegation issue nor an Eleventh Amendment violation should the land belong the states. Id. at 40. Further, PennEast asserts that in rem suits do not drag nonconsenting states into court in contravention of the Eleventh Amendment because they are directed at the property, not the state. Id. at 41. Therefore, PennEast contends that in rem suits do not threaten state sovereignty as other kinds of exercises of jurisdiction do. Id. Despite the State’s clear interest in its own property, PennEast attests that any intrusion on the New Jersey’s sovereign interest took place in the proceedings regarding the grant of a certificate before FERC, rather than in the present suit. Id. at 42–43. PennEast avers that New Jersey is not being forced into court because the State could refuse to appear and still be entitled to fair market value for its property, and that this money is sufficient to make New Jersey whole for its loss. Id. at 42–43.
New Jersey argues that the Eleventh Amendment, which prevents federal courts from hearing suits against states brought by citizens of other states, bars the suit because PennEast is a private citizen of Delaware that is suing New Jersey in federal court. Brief for Respondents at 12. New Jersey contends it has immunity over land within its borders, and thus doctrines like the immovable-property doctrine do not apply here because the State’s land is not within the territory of a different sovereign. Id. at 31. New Jersey states that the Framers of the Eleventh Amendment understood that a central aspect of state sovereignty and dignity was the states’ immunity from being “dragged before a court.” Id. at 13. New Jersey claims that there is no basis for an exception to this immunity for condemnation actions by private parties in the legislative history of the amendment’s ratification. Id. at 14. New Jersey insists that private condemnation actions were unheard of for many years after the amendment’s ratification, so there is no evidence of the States’ consent to private suit at the Founding. Id. at 14–16. Further, New Jersey contends that at the time of the Founding, the condemnation of state land was controversial and it was believed that the federal government could not condemn state land; by contrast, it was understood that the federal government “could condemn land within territories and the District of Columbia.” Id. at 17.
While New Jersey acknowledges that states are not immune from suit by the federal government because they are dual sovereigns, New Jersey argues that this logic cannot be extended to suits by private parties like PennEast. Id. at 20. New Jersey explains that the federal government is unable to “select” private parties to bring claims against the States; therefore, PennEast cannot be “selected” to bring suit against New Jersey. Id. at 20–21. New Jersey further dismisses the idea that an in rem suit over the State’s property would not offend the State’s sovereignty, because “an adverse judgment in rem directly affects the property owner by divesting him of his rights in the property before the court.” Id. at 27. New Jersey argues that this proceeding is different than in rem admiralty or bankruptcy proceedings, where the courts have long recognized where states are not immune from such suits, because of the “[f]ounding-era material indicating state consent” that do not exist in the present case. Id. at 29–30. New Jersey also rejects the idea that the suit is “ministerial,” because, even though it is a condemnation suit, it is an adversarial proceeding that implicates New Jersey’s interests. Id. at 22–23.
WHETHER THE THIRD CIRCUIT PROPERLY EXERCISED JURISDICTION OVER THE SUIT
PennEast asserts that the Third Circuit Court of Appeals rightly exercised its jurisdiction over the case because of the bases on which New Jersey challenges PennEast’s claim. Brief for Petitioner at 44. PennEast acknowledges that the NGA vests exclusive jurisdiction in specific to “affirm, modify, or set aside” the certificates that FERC issues, and that if New Jersey was contesting the validity of the certificate, the lower court’s jurisdiction would be improper. Id. at 44–45. Instead, PennEast emphasizes that New Jersey only challenges PennEast’s assertion of the federal government’s eminent-domain power. Id. at 46. PennEast suggests that the district court had jurisdiction because the proceeding was in rem, and the court of appeals had jurisdiction because of the collateral-order doctrine and the interlocutory appeals provision of 28 U.S.C. § 1292(a). Id. at 47.
Likewise, New Jersey argues that the circuit court had jurisdiction over the present suit. Brief for Respondents at 40. New Jersey contends that the Constitution asks courts to decide whether Eleventh Amendment sovereign immunity applies to the suit when it is raised by the defendant, in this case, New Jersey, “to ensure its actions remain consistent with the ‘judicial authority in Article III.’” Id. Otherwise, New Jersey cautions that the claim would have to be asserted against an Article I tribunal under the relevant Act provision, which requires rehearing before FERC—no less an affront to the State’s dignity. Id. New Jersey agrees with PennEast that it is not challenging the FERC-issued certificate order, which would require rehearing before the agency, therefore, the lower court properly exercised its jurisdiction. Id. at 41–42.
The Interstate Natural Gas Association of America, et al. (“Interstate Natural Association”), in support of PennEast Pipeline, argue that allowing the Third Circuit’s decisions to stand would have significant economic implications. Brief of Amici Curiae the Interstate Natural Gas Association of America et al., in Support of Petitioner at 4. The Interstate Natural Association claims that allowing a “state veto” would throw energy infrastructure development into disarray. Id. at 4. Interstate Natural Association further explains that the nation desperately requires a robust and expansive natural gas pipeline industry, given consumer reliance on natural gas to power their homes. Id. at 5–7. The United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, AFL-CIO et al. (“Plumbing Associations”), in support of PennEast Pipeline, additionally contend that the pipeline construction stimulates the economy by providing “skilled work for blue collar, highly-trained workers,” badly needed in recent years. Brief of Amici Curiae Plumbing Associations, in Support of Petitioner at 8–9. The Consumer Energy Alliance (“Energy Alliance”), in support of PennEast Pipeline, further argues that already higher energy prices have a disparate impact on the working poor in the United States. Brief of Amicus Curiae Consumer Energy Alliance, in Support of Petitioner at 9. An increase in energy prices, and an increase in areas that have less energy-efficient living situations will be borne on those with the fewest financial resources. Id. at 10.
New Jersey argues that the economic line of reasoning has no place in the sovereign immunity analysis. Brief for Respondents, New Jersey et al. at 44. The states of Oregon et. al (“States”), in support of New Jersey, claims that the most important consideration here is that the federal government is giving a private party the power to sue nonconsenting states. Brief of Amici Curiae States, in Support of Respondents at 4. States claim that there can be no true federalist system without sovereign immunity. Id. at 5–10. States also explain further the economic consequences that states will face if the Court finds in favor of Penneast. Id. at 21. Specifically, States notes that since states do not just consider a property’s potential profit, but also the preservation of the benefits to the public that are derived from that property. Id. Therefore, States contends financial compensation cannot make the individual state “whole.” Id. Additionally, States notes that since states might value the land for other reasons besides financial ones, there may be no way to compensate the state to make it whole. Id.
The Industrial Energy Consumers of America (Energy Consumers), in support of PennEast Pipeline, argues cogeneration, or the generate of electricity and other forms of energy, which it claims would be negatively affected by the Third Circuit’s decision, increases the reliability of the electric grid and the efficiency of transmission lines, thus lowering greenhouse gas emissions. Brief of Amicus Curiae the Industrial Energy Consumers of America, in Support of Petitioner at 11. Further, Energy Consumers argue that the alternative to natural gas is using coal or fuel oil, which produce even more greenhouse gas emissions. Id. at 12. Energy Consumers also note that as states make the transition to renewable energy resources, natural gas is usually relied upon as a back-up source. Id. at 14. Therefore, Energy Consumers posits that if natural gas was to become more difficult to transport, then coal or fuel oil would again be used as the back-up source for renewable energy. Id. The Consumer Energy Alliance further argues that the United States, partly because of its reliance on natural gas, is leading the world in its reduction of greenhouse gas pollution. Brief of Consumer Energy Alliance at 17. Consumer Energy Alliance further notes that cutting natural gas production will hinder the ability of states to reach their renewable energy goals. Id. at 19.
The Council of State Governments, et. al (the Council) in support of New Jersey, claim that individual states have fundamental rights and interests to their own land. Brief of the Amici Curiae the Council of State Governments et. al, in Support of Respondents at 6. The Council explains that resource management is so fundamental to many states, that over 30 states and some territories have added in constitutional provisions that govern the resources of the states’ land. Id. The Council goes on to clarify that environmental considerations vary between states, which emphasizes how different states have different environmental considerations that they think are important. Id. at 6–7. The Council also states that when the issue at stake is environmental conservation, there is no way to make a State Government whole after a taking. Id. at 12.
- Susan Phillips, U.S. Supreme Court to Hear PennEast Pipeline Eminent Domain Case, NPR StateImpact Pennsylvania (Feb. 3, 2021).
- Anthony Carna, Andrew Gann, Miles Indest, J. Brian Jackson, Christina Lepore Hinton, & Yasser Madriz, Pipeline Progeny: The Bounds of Eminent-Domain Power and FERC Certificates, JD Supra (Mar. 23, 2021).