In a 5 to 4 decision, the United States Supreme Court ruled that PennEast Pipeline (“PennEast”) can use the power of eminent domain to take property rights from the State of New Jersey. The case in question involves a 113-mile natural gas pipeline project proposed by PennEast that requires the company to acquire real estate from private and public property owners in order to install the pipeline. Once the Federal Energy Regulatory Commission (FERC) granted its approval for the project, PennEast either negotiated the purchase of the necessary property rights or filed complaints in the United States District Court seeking to take the property rights using the power of eminent domain. The State of New Jersey opposed PennEast’s efforts to use federal courts to take property in which the State of New Jersey has an interest. The United States Third Circuit Court of Appeals ruled in 2019 that PennEast could not use federal courts to exercise the power of eminent domain to seize land from the State of New Jersey for the construction of the pipeline relying on language from the Eleventh Amendment of the United States Constitution. The Eleventh Amendment provides states with certain immunity protections barring private parties from suing states in federal court. The PennEast case raises important issues of state rights versus federal law, and implicates states’ rights of sovereign immunity.
The United States Supreme Court held that states surrendered their immunity to private condemnation lawsuits when they joined the union since they were consenting to the eminent domain power as it was known at the time. Four justices disagreed with this conclusion in a well-reasoned dissent authored by Justice Barrett who took issue with this conclusion.
What does this mean to property owners along the proposed route of the pipeline? A battle is lost, but the war is far from over. PennEast has many other hurdles to overcome, including obtaining approvals and permits from the New Jersey Department of Environmental Protection and Delaware River Basin (as well as other authorities).