In New Jersey Case, Supreme Court Rules For Natural Gas Developer

On June 28, the U.S. Supreme Court issued an important ruling regarding oil and natural gas development.

As Connecting the Dots reported earlier this year, in 2020 the U.S. Court of Appeals for the Third Circuit, which covers New Jersey, Pennsylvania, and Delaware, ruled that the private company PennEast could not exercise its federally-delegated eminent domain authority to route the pipeline through New Jersey state-owned property. That ruling threatened the future of the project in New Jersey.

As a result, PennEast petitioned the U.S. Supreme Court in February of this year to review and overturn the Third Circuit’s ruling. MSCI’s partners at the Energy Equipment and Infrastructure Alliance (EEIA) filed a friend of the court brief that presented a compelling argument why the Court should review and set aside the Third Circuit’s decision.

Last week, the Court sided with PennEast and EEIA, ruling that PennEast can exercise eminent domain on state-owned lands along the project’s route. Chief Justice John Roberts said, “Although nonconsenting states are generally immune from suit, they surrendered their immunity from the exercise of the federal eminent domain power when they ratified the Constitution.” Justice Roberts also argued the federal government could delegate eminent domain power to private parties who “can initiate condemnation proceedings, including against state-owned property.”

According to EEIA, if this case had gone against PennEast, a precedent would have been set making it practically impossible to construct a pipeline through any state where political officials were opposed to the project. Read more here.