Energy Conference: Decarbonization - A Business Perspective REGISTER

The U.S. Supreme Court on Tuesday ruled in favor of PennEast Pipeline, which has been embroiled in a legal battle with the State of New Jersey in a case with national implications for the energy industry, as well as businesses and consumers who depend on a secure supply of market-priced energy. 

In a 5-4 decision, the justices overturned a lower court ruling that had allowed New Jersey to effectively block the $1 billion natural gas pipeline project, which the Federal Energy Regulatory Commission (FERC) approved in 2018, that would carry 1 billion cubic feet of gas underground each day from the Marcellus shale fields in Pennsylvania through Hunterdon and Mercer counties. 

The State of New Jersey holds easements on 40 of the 42 affected land parcels needed for the project and sought to block PennEast from using eminent domain powers provided under the FERC decision to take the land needed for the project and compensate property owners. New Jersey claimed the federal government cannot delegate condemnation powers to a private company, but opponents argued the that meant any landowner could block a pipeline project by granting an easement to the state. 

PennEast Pipeline and the New Jersey Business & Industry Association, which filed a legal brief in March in support of the company’s position, each welcomed the U.S. Supreme Court’s decision. 

“We are pleased that the Supreme Court kept intact more than seven decades of legal precedent for the families and businesses who benefit from more affordable, reliable energy,” said Anthony Cox, chair of the PennEast Board of Managers in a statement issued after the decision. 

“This decision is about more than just the PennEast project; it protects consumers who rely on infrastructure projects – found to be in the public benefit after thorough scientific and environmental reviews – from being denied access to much-needed energy by narrow State political interests,” Cox said. 

NJBIA Vice President of Government Affairs Ray Cantor said the justices’ decision made it clear that one state does not have the power to stop an interstate pipeline project and potentially disrupt the supply of energy throughout the region or nation. 

“The Supreme Court made the correct decision today in reversing this harmful lower court decision, which would have irrefutably had a negative impact on the supply and cost of natural gas in New Jersey, as well as interstate commerce,” Cantor said in a statement. 

Writing for the majority, Chief Justice John Roberts said that states surrendered their immunity from the exercise of the federal eminent domain power when they ratified the U.S. Constitution. 

“That power carries with it the ability to condemn property in court,” Roberts wrote. “Because the Natural Gas Act delegates the federal eminent domain power to private parties, those parties can initiate condemnation proceedings, including against state-owned property.”  

Cantor said the court decision was a win for New Jersey consumers because natural gas is used to generate 50% of the state’s electricity and heat 75% of its homes and buildings.  

“Our residents and businesses are reliant on this low-cost energy,” Cantor said. “The demand for natural gas is growing, with pipeline capacity poised to reach maximum levels in the coming years. Without new supplies of natural gas, other often dirtier forms of energy would need to be used and some businesses and homes will not be able to hook up to natural gas for their cooking or heating.”