PennEast Pipeline Company, LLC, 013020 FERC, RP20-41-000

Docket Nº:RP20-41-000
Party Name:PennEast Pipeline Company, LLC
Judge Panel:Before Commissioners: Neil Chatterjee, Chairman; Richard Glick and Bernard L. McNamee. Kimberly D. Bose, Secretary. GLICK, Commissioner, dissenting: Richard Glick Commissioner
Case Date:January 30, 2020
Court:Federal Energy Regulatory Commission

170 FERC ¶ 61, 064

PennEast Pipeline Company, LLC

No. RP20-41-000

United States of America, Federal Energy Regulatory Commission

January 30, 2020

Before Commissioners: Neil Chatterjee, Chairman; Richard Glick and Bernard L. McNamee.


1. On October 4, 2019, PennEast Pipeline Company, LLC (PennEast) filed a petition for a declaratory order (Petition) following a decision from the U.S. Court of Appeals for the Third Circuit (Third Circuit) in In re PennEast Pipeline Company, LLC.1 PennEast seeks the Commission's interpretation of the scope of the eminent domain authority in section 7(h) of the Natural Gas Act (NGA).[2] The Commission grants the Petition in part, and denies it in part, as discussed below.



2. PennEast is a Delaware limited liability company, managed by UGI Energy Services, LLC, pursuant to a Project Management Agreement.3 On January 19, 2018, in Docket No. CP15-558-000, the Commission issued a certificate of public convenience and necessity for the PennEast Project, an approximately 116-mile greenfield natural gas pipeline designed to provide firm natural gas transportation service from receipt points in the eastern Marcellus Shale region, in Luzerne County, Pennsylvania, to delivery points in New Jersey and Pennsylvania, terminating at an interconnection with Transcontinental Gas Pipe Line Company, LLC in Mercer County, New Jersey.4 The project's total certificated capacity of 1, 107, 000 dekatherms per day[5] is approximately 90 percent subscribed pursuant to long-term agreements for firm transportation service and will provide service to markets in New Jersey, New York, Pennsylvania, and surrounding states.6 Upon commencement of activities authorized in the Certificate Order, PennEast will become subject to the Commission's jurisdiction as a natural gas company under NGA section 2(6).7

3. PennEast states that, following issuance of the certificate, it was unable to reach agreement with the State of New Jersey to acquire easements for the portions of its proposed pipeline route that would cross land in which New Jersey holds a property interest.8 Consequently, PennEast instituted condemnation proceedings in the United States District Court for the District of New Jersey (District Court) in order to obtain these and other necessary easements.[9] The State of New Jersey and its agencies (collectively, "State" or "New Jersey") claimed property interests in forty-two parcels of land that PennEast sought access to via condemnation: two parcels in which New Jersey holds fee simple ownership interests, and forty parcels in which New Jersey claims non-possessory property interests, including conservation easements and restrictive covenants mandating under state law a particular land use.[10]

4. New Jersey moved to dismiss the condemnation actions for lack of jurisdiction, asserting that the Eleventh Amendment grants New Jersey sovereign immunity from suit by private parties such as PennEast in federal court.11 The District Court granted PennEast's application for orders of condemnation, and rejected New Jersey's sovereign immunity argument.12 Responding to New Jersey's assertion that "their arguments would [have been] different if the United States government were pursuing eminent domain rights[, ]" the District Court found that PennEast "has been vested with the federal government's eminent domain powers and stands in the shoes of the sovereign."13 The District Court further reasoned that "the NGA expressly allows" certificate holders to utilize eminent domain in District Court, and as "PennEast holds a valid certificate . . . issued by the FERC[, ]" New Jersey's Eleventh Amendment arguments failed.14

5. New Jersey then appealed to the United States Court of Appeals for the Third Circuit, which held that the NGA does not abrogate New Jersey's sovereign immunity and vacated the District Court's order.15 The Third Circuit found that while the NGA delegates eminent domain authority to certificate holders, the text of "the NGA does not constitute a delegation to private parties of the federal government's exemption from Eleventh Amendment immunity."16 In the court's view, "there are powerful reasons to doubt the delegability of the federal government's exemption from Eleventh Amendment immunity, "17 particularly when that delegation occurs through a statute enacted pursuant to the Commerce Clause.18 However, the court consciously avoided that constitutional question19 by holding that the text of the NGA failed to provide an "unmistakably clear" delegation of the federal government's exemption from Eleventh Amendment immunity.20 Ultimately, the Third Circuit declined to "assume that Congress intended -by its silence - to upend a fundamental aspect of our constitutional design."21

6. On October 4, 2019, PennEast petitioned the Commission to issue a declaratory order providing the Commission's interpretation of three questions under NGA section 7(h). Specifically, PennEast requests a declaratory order that addresses the following: 1) Whether a certificate holder's right to condemn land pursuant to NGA section 7(h) applies to property in which a state holds an interest;

2) Whether NGA section 7(h) delegates the federal government's eminent domain authority solely to certificate holders; and

3) Whether NGA section 7(h) delegates to certificate holders the federal government's exemption from claims of state sovereign immunity.22

II. Public Notice, Interventions, Protests and Comments

7. Notice of the Petition was published in the Federal Register on October 10, 2019.23 The notice established October 18, 2019, as the deadline for filing comments and interventions.24 Timely, unopposed motions to intervene were filed by the entities listed in Appendix A. These motions to intervene are granted automatically by operation of Rule 214 of the Commission's Rules of Practice and Procedure.25 During the comment period, the New Jersey Conservation Foundation and Niskanen Center (collectively, Niskanen), Maya K. van Rossum and the Delaware Riverkeeper Network (collectively, Riverkeeper), 26 the Township of Hopewell, U.S. Senator Cory A. Booker, the Environmental Defense Fund, the New Jersey Division of Rate Counsel, and the State of New Jersey27 filed protests of the Petition, and numerous commenters, including landowners, filed comments in opposition to the Petition. After the comment deadline, U.S. Representatives from New Jersey filed a letter in opposition to the Petition.[28]Several protestors assert that it is inappropriate for the Commission to grant the instant Petition when the Third Circuit has already spoken on the matter and argue that submitting a brief as amicus curiae would be a more proper avenue for the Commission to express its opinion.29 Protestors also agree with the Third Circuit's decision that the NGA does not provide delegated authority for a pipeline to condemn lands in which a state has a property interest.30

8. Numerous parties, including natural gas transporters, local distribution companies, and associations within the natural gas industry, commented in support of the Petition. Several parties state that the text and legislative history of NGA section 7(h) demonstrates that Congress specifically intended to delegate federal eminent domain authority to certificate holders against all owners of property needed for a project with whom a certificate holder cannot reach agreement, including states, and that this eminent domain authority has been an essential part of a comprehensive regulatory scheme since the statute was amended to include that authority in 1947.31 Commenters note that certificates of public convenience and necessity may only be obtained through a quasi-judicial adjudicatory process administered by Commissioners appointed by the President and confirmed by the Senate and that this adjudicatory process is replete with robust opportunities for public participation.[32] Commenters further contend that the Commission grants certificate holders only a limited authority to condemn specific rights of way with little ability to alter the route without further Commission approval, a process heavily regulated by federal oversight and enforcement.33 Finally, commenters assert the Third Circuit's decision will have significant adverse consequences on end-use consumers, local distribution companies, and the natural gas industry as a whole.34Commenters support the Petition because they agree that a decision of this magnitude should not be made without input from the regulatory agency charged with administration of the statute.35

9. On October 11, 2019, the New Jersey Conservation Foundation and Niskanen Center jointly filed a motion to extend the deadline for comments until November 1, 2019. The Commission's...

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