In re Penneast Pipeline Co.

• Decision Date: 10 September 2019
• Docket Number: Nos. 19-1191 thru 19-1232,s. 19-1191 thru 19-1232
• Citation: 938 F.3d 96
• Parties: IN RE: PENNEAST PIPELINE COMPANY, LLC 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, Appellants
• Court: U.S. Court of Appeals — Third Circuit

938 F.3d 96

IN RE: PENNEAST PIPELINE COMPANY, LLC

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, Appellants

Nos. 19-1191 thru 19-1232

United States Court of Appeals, Third Circuit.

Argued June 10, 2019

Filed: September 10, 2019

Amended: September 11, 2019

Amended: September 19, 2019

Mark A. Collier, Jeremy Feigenbaum [ARGUED], Office of Attorney General of New Jersey, Division of Law, 25 Market Street, Richard J. Hughes Justice Complex, Trenton, NJ 08625, Counsel for Appellants, State of New Jersey, New Jersey Dept. of Environmental Protection, New Jersey State Agriculture Dev. Committee, New Jersey Motor Vehicle Commission, Delaware & Raritan Canal Commission, New Jersey Water Supply Authority, New Jersey Department of Transportation, New Jersey Department of Treasury

Jennifer Selendy, Selendy & Gay, 1290 Avenue of the Americas – 17th Floor, New York, NY 10104, Counsel for Amicus Appellant Niskanen Center

Marueen T. Coghlan, James M. Graziano [ARGUED], Archer & Greiner, One Centennial Square, 33 East Euclid Avenue, Haddonfield, NJ 08033, Counsel for Appellee PennEast Pipeline Co, LLC

Anna M. Manasco, Lela Hollabaugh, Bradley Arant Boult Cummings, 1819 Fifth Avenue North, One Federal Place, Birmingham AL 35203, Counsel for Amicus Appellees American Gas Association, Interstate Natural Gas Association of America, American Petroleum Institute, Chamber of Commerce of the United States of America, National Association of Manufacturers

Before: JORDAN, BIBAS, and NYGAARD, Circuit Judges.

OPINION OF THE COURT

JORDAN, Circuit Judge.

The Natural Gas Act ("NGA"), 15 U.S.C. §§ 717 – 717z, allows private gas companies to exercise the federal government’s power to take property by eminent domain, provided certain jurisdictional requirements are met. This appeal calls on us to decide whether that delegation of power allows gas companies to hale unconsenting States into federal court to condemn State property interests.

PennEast Pipeline Company ("PennEast") is scheduled to build a pipeline through Pennsylvania and New Jersey. The company obtained federal approval for the project and promptly sued pursuant to the NGA to condemn and gain immediate access to properties along the pipeline route. Forty-two of those properties are owned, at least in part, by the State of New Jersey or various arms of the State. New Jersey sought dismissal of PennEast’s condemnation suits for lack of jurisdiction, citing the Eleventh Amendment to the United States Constitution, and, separately, arguing that PennEast failed to satisfy the jurisdictional requirements of the NGA. Broadly speaking, the Eleventh Amendment recognizes that States enjoy sovereign immunity from suits by private parties in federal court. New Jersey has not consented to PennEast’s condemnation suits, so those legal proceedings can go forward only if they are not barred by the State’s immunity. The District Court held that they are not barred and granted PennEast orders of condemnation and preliminary injunctive relief for immediate access to the properties. New Jersey has appealed.

We will vacate because New Jersey’s sovereign immunity has not been abrogated by the NGA, nor has there been – as PennEast argues – a delegation of the federal government’s exemption from the State’s sovereign immunity. The federal government’s power of eminent domain and its power to hale sovereign States into federal court are separate and distinct. In the NGA, Congress has delegated the former. Whether the federal government can delegate its power to override a State’s Eleventh Amendment immunity is, however, another matter entirely. While there is reason to doubt that, we need not answer that question definitively since, even if a delegation of that sort could properly be made, nothing in the text of the NGA suggests that Congress intended the statute to have such a result. PennEast’s condemnation suits are thus barred by the State’s Eleventh Amendment immunity. We will therefore vacate the District Court’s order with respect to New Jersey’s property interests and remand the matter for the dismissal of any claims against New Jersey.

I. BACKGROUND

The NGA authorizes private gas companies to acquire "necessary right[s]-of-way" for their pipelines "by the exercise of the right of eminent domain[,]" if three conditions are met. 15 U.S.C. § 717f(h). First, the gas company seeking to condemn property must have obtained a Certificate of Public Convenience and Necessity (a "Certificate") from the Federal Energy Regulatory Commission ("FERC"). Id . Second, it must show that it was unable to "acquire [the property] by contract" or "agree with the owner of property" about the amount to be paid. Id. Third and finally, the value of the property condemned must exceed $3,000. Id .

In the fall of 2015, PennEast applied for a Certificate for its proposed 116-mile pipeline running from Luzerne County, Pennsylvania to Mercer County, New Jersey (the "project"). After a multi-year review,¹ FERC granted PennEast’s application and issued a Certificate for the project, concluding that, so long as PennEast met certain conditions, "the public convenience and necessity require[d] approval of PennEast’s proposal[.]"² (App. at 226.)

Certificate in hand, PennEast filed verified complaints in the United States District Court for the District of New Jersey, asking for orders of condemnation for 131 properties along the pipeline route, determinations of just compensation for those properties, and preliminary and permanent injunctive relief to gain immediate access to and possession of the properties to begin construction of its pipeline. Forty-two of the 131 property interests PennEast sought to condemn belong to New Jersey or arms of the State (collectively, the "State" or "New Jersey").³ The State holds possessory interests in two of the properties and non-possessory interests – most often, easements requiring that the land be preserved for recreational, conservation, or agricultural use – in the rest.⁴

After PennEast filed its complaints, the District Court ordered the affected property owners to show cause why the Court should not grant the relief sought.⁵ New Jersey filed a brief invoking its Eleventh Amendment immunity and arguing for dismissal of the complaints against it. It also argued that PennEast had failed to satisfy the jurisdictional requirements of the NGA by not attempting to contract with the State for its property interests.

After hearings on the show-cause order,⁶ the District Court granted PennEast’s application for orders of condemnation and for preliminary injunctive relief. At the outset, the Court rejected New Jersey’s assertion of Eleventh Amendment immunity. It found that "PennEast ha[d] been vested with the federal government’s eminent domain powers and stands in the shoes of the sovereign[,]" making Eleventh Amendment immunity inapplicable. (App. at 33.) The Court reasoned that, because "the NGA expressly allows ‘any holder of a certificate of public convenience and necessity’ " to condemn property, PennEast could do so here – even for property owned by the State. (App. at 33 (quoting 15 U.S.C. § 717f(h) ).)

Next, the Court held that PennEast met the three requirements of the NGA, entitling it to exercise the federal government’s eminent domain power. First, it found that PennEast holds a valid Certificate for the project. Next, it concluded that PennEast had been unable to "acquire by contract, or [was] unable to agree with the owner of property to the compensation to be paid for" the affected properties. (App. at 48 (alteration in original) (quoting 15 U.S.C. § 717f(h) ).) On that point, the Court rejected the State’s contention that PennEast had to negotiate with the holders of all property interests, including easement holders. In the District Court’s view, § 717f(h) refers only to the "owner of [the] property[,]" meaning the owner of the possessory interest. (App. at 48 n.49.) Finally, the Court found that the statute’s property value requirement was satisfied because PennEast had extended offers exceeding $3,000 for each property. The Court thus granted PennEast’s request for orders of commendation.

The District Court went on to hold that PennEast had satisfied the familiar four-factor test for preliminary injunctive relief. To obtain a preliminary injunction, the movant must show "1) that there is reasonable probability of success on the merits, 2) that there will be irreparable harm to the movant in the absence of relief, 3) that granting the injunction will not result in greater harm to the nonmoving party, and 4) that the public interest favors granting the injunction." Transcon. Gas Pipe Line Co. v. Conestoga Twp. , 907 F.3d 725, 732 (3d Cir. 2018). As to the first factor, the Court said that PennEast had already effectively succeeded on the merits, given that "the Court ha[d] found PennEast satisfied the elements of § 717f(h) and is therefore entitled to condemnation orders." (App. at 50.) As to the second factor, the Court found that, without an injunction, PennEast would suffer irreparable harm in the form of non-recoupable financial losses and construction delays. For the third factor, the Court noted that, while it had "carefully considered a wide range of arguments from Defendants regarding the harm PennEast’s possession will cause," the property owners would not be harmed "by the Court granting immediate possession" because they would receive just compensation. (App. at 53, 55.) Lastly, the Court was persuaded, especially in light of FERC’s conclusion about public necessity, that the project is in the public interest. Having found all four factors weighed in favor of granting a preliminary injunction, the Court ordered that...