Amicus Curiae Brief — PennEast Pipeline Company, LLC, Petitioner v. New Jersey, et al.
Supreme Court briefMar 23, 2020
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No. 19-1039
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In The
Supreme Court of the United States
---------------------------------♦--------------------------------PENNEAST PIPELINE COMPANY, LLC,
Petitioner,
v.
STATE OF NEW JERSEY; et al.,
Respondents.
---------------------------------♦--------------------------------On Petition For A Writ Of Certiorari
To The United States Court Of Appeals
For The Third Circuit
---------------------------------♦--------------------------------BRIEF OF THE INTERSTATE NATURAL GAS
ASSOCIATION OF AMERICA, AMERICAN GAS
ASSOCIATION AND AMERICAN PETROLEUM
INSTITUTE AS AMICI CURIAE
IN SUPPORT OF PETITIONER
---------------------------------♦--------------------------------LELA M. HOLLABAUGH
Counsel of Record
BRADLEY ARANT BOULT
CUMMINGS LLP
1600 Division Street
Nashville, TN 37203
(615) 252-2348
lhollabaugh@bradley.com
NICHOLAS A. DANELLA
BRADLEY ARANT BOULT
CUMMINGS LLP
1819 Fifth Avenue North
Birmingham, AL 35203
(205) 521-8576
ndanella@bradley.com
Counsel for Amici Curiae
[Additional Counsel Listed On Inside Cover]
================================================================================================================
COCKLE LEGAL BRIEFS (800) 225-6964
WWW.COCKLELEGALBRIEFS.COM
JOAN DRESKIN
SANDRA Y. SNYDER
INTERSTATE NATURAL GAS
ASSOCIATION OF AMERICA
20 F Street NW, Suite 450
Washington, DC 20001
(202) 216-5900
jdreskin@ingaa.org
ssnyder@ingaa.org
Counsel for Interstate Natural
Gas Association of America
MICHAEL L. MURRAY
MATTHEW J. AGEN
AMERICAN GAS ASSOCIATION
400 N. Capitol Street NW
Washington, DC 20001
(202) 824-7071
mmurray@aga.org
magen@aga.org
Counsel for American
Gas Association
PAUL G. AFONSO
ANDREA S. MILES
AMERICAN PETROLEUM
INSTITUTE
200 Massachusetts Avenue NW
Washington, DC 20001
(202) 682-8000
MilesA@api.org
Counsel for American
Petroleum Institute
i
CORPORATE DISCLOSURE STATEMENT
The Interstate Natural Gas Association of America (“INGAA”) is an incorporated, not-for-profit trade
association that represents virtually all of the interstate natural gas transmission pipeline companies operating in the United States. INGAA has no parent
companies, subsidiaries, or affiliates that have issued
publicly traded stock. Most INGAA member companies
are corporations with publicly traded stock.
The American Gas Association (“AGA”) is an incorporated, not-for-profit trade association that represents local energy companies that deliver natural gas
in the United States. AGA has no parent companies,
subsidiaries, or affiliates that have issued publicly
traded stock. Some AGA member companies are corporations with publicly traded stock.
The American Petroleum Institute (“API”) is an incorporated, not-for-profit trade association that represents all aspects of America’s oil and gas industry. API
has no parent companies, subsidiaries, or affiliates
that have issued publicly traded stock. Some API member companies are corporations with publicly traded
stock.
ii
TABLE OF CONTENTS
Page
CORPORATE DISCLOSURE STATEMENT ......
i
TABLE OF CONTENTS ......................................
ii
TABLE OF AUTHORITIES .................................
iii
INTEREST OF THE AMICI CURIAE .................
1
SUMMARY OF THE ARGUMENT .....................
4
ARGUMENT ........................................................
5
I.
II.
The decision below has dire practical consequences for the development and operation of the nation’s critical infrastructure.
5
These practical problems are not theoretical – they are acknowledged by the Third
Circuit and emphasized by the Commission, and they were one of the key reasons
Congress long ago amended the Natural
Gas Act to add the eminent domain delegation ......................................................... 17
CONCLUSION..................................................... 22
iii
TABLE OF AUTHORITIES
Page
CASES
Columbia Gas Transmission, LLC v. 0.12 Acres,
No. 1:19-cv-01444-GLR (D. Md.) ...............................8
In re PennEast Pipeline Co., LLC, 938 F.3d 96
(3d Cir. 2019) ...........................................................17
PennEast Pipeline Co., 170 FERC ¶ 61,064
(2020) .......................................................................18
Transcon. Gas Pipe Line Co. v. 0.607 Acres of
Land, No. 3:15-cv-00428 (D.N.J. Feb. 23, 2015) .......11
Transcon. Gas Pipe Line Co. v. 2.163 Acres of
Land, No. 3:12-cv-07511 (D.N.J. Jan. 10, 2013) .......11
Transcon. Gas Pipeline Co. v. 2.705 Acres of Land,
No. 3:15-cv-00397 (D.N.J. Feb. 23, 2015) .................11
CONSTITUTIONAL PROVISIONS
U.S. Const. amend. XI ........................... 4, 10, 11, 12, 13
STATUTES
15 U.S.C. § 717f(c) .........................................................6
15 U.S.C. § 717f(h) ......................................................20
61 Stat. 459 (1947) ......................................................18
S. REP. 80-429 (1947) ............................................ 18, 21
iv
TABLE OF AUTHORITIES – Continued
Page
RULES AND REGULATIONS
Sup. Ct. R. 37.6 .............................................................1
Sup. Ct. R. 37.2(a) .........................................................1
OTHER AUTHORITIES
AGA, About Us, https://www.aga.org/about/ (last
visited Mar. 10, 2020) ................................................1
AGA, Natural Gas Safety Resilience Innovation
2019 Playbook 61 (2019), http://playbook.aga.
org/#p=61 (last visited Mar. 10, 2020) ......................2
Alexandra B. Klass & Danielle Meinhardt,
Transporting Oil and Gas: U.S. Infrastructure
Challenges, 100 IOWA L. REV. 947 (2015) ...............19
Amendments to the Natural Gas Act: Hearings
on H.R. 2185, H.R. 2235, H.R. 2292, H.R. 2569,
and H.R. 2956 Before the H. Comm. on Interstate and Foreign Commerce, 80th Cong.
(1947) (“Congressional Hearings”) .........................19
API, About API, https://www.api.org/about (last
visited Mar. 10, 2020) ................................................2
Br. of Amici Curiae Interstate Natural Gas Association of America, et al., Nos. 19-1191 thru
19-1232 (3d Cir. May 15, 2019) ...............................10
Congressional Hearings (statement of David T.
Searls, Texas Eastern Transmission Corp.) ...........19
Hunterdon County map, available at https://www.
nj.gov/agriculture/sadc/farpreserve/progress/
maps/maphunco.pdf (last visited Mar. 10, 2020) .........9
v
TABLE OF AUTHORITIES – Continued
Page
INGAA, North American Midstream Infrastructure Through 2035: Significant Development
Continues 37 (June 18, 2018), https://
www.ingaa.org/File.aspx?id=34703 ..........................3
INGAA, Pipeline Fun Facts, https://www.ingaa.org/Pipelines101/Economics/25811/PipelineFunFacts.aspx (last visited Mar. 10, 2020)..........1
INGAA, Pipelines 101: Economics, Natural Gas
Facts, Pipeline Fun Facts, https://www.ingaa.org/
Pipelines101/Economics/25811/15915.aspx (last
visited Mar. 10, 2020) ................................................3
Letter from Ruth Foster, Acting Dir., NJ DEP, to
Kimberly Bose, Secretary, FERC (July 25,
2018) ........................................................................11
Marcellus Shale Coalition, Marcellus and Utica
Shale Formation Map, https://marcelluscoalition.org/pa-map/ (last visited Mar. 20, 2020) .........14
National Grid, Natural Gas Long-Term Capacity Report for Brooklyn, Queens, Staten Island
and Long Island (“National Grid Report”) (Feb.
2020) at 9, https://millawesome.s3.amazonaws.
com/Downstate_NY_Long-Term_Natural_Gas_
Capacity_Report_February_24_2020.pdf ..............15
New Jersey Department of Agriculture State
Agriculture Development Committee, Overview, https://www.nj.gov/agriculture/sadc/farm
preserve/ (last visited Mar. 10, 2020) .......................9
vi
TABLE OF AUTHORITIES – Continued
Page
U.S. Energy Info. Admin., Annual Energy Outlook 2020, https://www.eia.gov/outlooks/aeo/
(last visited Mar. 10, 2020) ......................................... 3
U.S. Energy Info. Admin., Today in Energy (Apr.
16, 2019), https://www.eia.gov/todayinenergy/
detail.php?id=39092 ................................................15
U.S. Energy Info. Admin., What is U.S. electricity
generation by energy source?, https://www.eia.
gov/tools/faqs/faq.php?id=427&t=3 (last visited
Mar. 10, 2020) ............................................................3
U.S. Pipeline and Hazardous Materials Safety
Admin., General Pipeline FAQs, https://www.
phmsa.dot.gov/faqs/general-pipeline-faqs (last
visited Mar. 10, 2020) ................................................2
1
INTEREST OF THE AMICI CURIAE1
These amici curiae (“Industry Amici”) represent
critical infrastructure: the interstate natural gas pipeline industry and companies dependent on pipelines to
deliver natural gas across the country.
The Interstate Natural Gas Association of America (“INGAA”) represents virtually all interstate natural gas pipeline companies in the United States.
INGAA members transport natural gas through a network of almost 200,000 miles of interstate pipelines
and storage facilities.2
The American Gas Association (“AGA”) represents
local distribution companies that deliver natural gas.
There are more than 74 million retail residential, commercial, government, industrial, and electric generation natural gas customers in the United States,
and 95 percent of those customers receive their gas
from AGA members.3 AGA’s members are obligated, in
1
Pursuant to Supreme Court Rule 37.6, amici curiae certify
that no counsel for any party authored this brief in whole or in
part and that no entity or person, aside from the amici curiae and
their members, and their counsel, made any monetary contribution toward the brief ’s preparation and submission. Pursuant to
Supreme Court Rule 37.2(a), amici curiae further certify that
counsel of record for all parties received timely notice of amici curiae’s intent to file this brief and provided written consent for
amici curiae to file the brief.
2
See INGAA, Pipeline Fun Facts, https://www.ingaa.org/
Pipelines101/Economics/25811/PipelineFunFacts.aspx (last visited Mar. 10, 2020).
3
See AGA, About Us, https://www.aga.org/about/ (last visited Mar. 10, 2020).
2
accordance with applicable state law and regulatory
requirements, to distribute natural gas transported by
interstate pipelines to these customers, and they develop detailed long-term supply and transportation
plans to ensure that they can reliably meet the nation’s
energy requirements. Acquiring necessary pipeline capacity is a critical part of how these companies fulfill
their obligation to serve.
The American Petroleum Institute (“API”) represents all facets of the natural gas and oil industry,
which supports 10.3 million jobs and nearly 8 percent
of the U.S. economy. API’s 600+ members include natural gas and oil exploration, production, refining, marketing, pipeline, service, and supply firms.4
Industry Amici have substantial and direct interests in continued investment in and development of interstate natural gas infrastructure. These interests are
increasingly important because interstate natural gas
pipelines have become “[t]he arteries of the Nation’s
energy infrastructure.”5 The natural gas they move
heats 69 million American homes,6 generates over 30
4
See API, About API, https://www.api.org/about (last visited
Mar. 10, 2020).
5
See U.S. Pipeline and Hazardous Materials Safety Admin.,
General Pipeline FAQs, https://www.phmsa.dot.gov/faqs/generalpipeline-faqs (last visited Mar. 10, 2020).
6
See AGA, Natural Gas Safety Resilience Innovation 2019
Playbook 61 (2019), http://playbook.aga.org/#p=61 (last visited
Mar. 10, 2020).
3
percent of the nation’s electricity,7 provides a key component of fertilizer that feeds our food, and in raw form
is a component of many manufactured goods, including
medicines, fabrics, plastics, computers, cell phones, furniture, and cosmetics.8 Demand for natural gas continues to increase because it is abundant, clean, and
affordable,9 so additional interstate infrastructure will
be needed for the foreseeable future.10
Industry Amici submit this brief because the decision below gravely threatens the continued development of federally approved interstate natural gas
infrastructure as well as the ability of the natural gas
industry to ensure reliable access to a supply of natural gas adequate to meet the nation’s energy requirements. As explained below, this kind of threat is
precisely what Congress was trying to avoid when it
amended the Natural Gas Act to delegate the federal
power of eminent domain to federally approved interstate natural gas pipeline projects.
---------------------------------♦---------------------------------
7
See U.S. Energy Info. Admin., What is U.S. electricity generation by energy source?, https://www.eia.gov/tools/faqs/faq.php?id=
427&t=3 (last visited Mar. 10, 2020).
8
See INGAA, Pipelines 101: Economics, Natural Gas Facts,
Pipeline Fun Facts, https://www.ingaa.org/Pipelines101/Economics/
25811/15915.aspx (last visited Mar. 10, 2020).
9
See U.S. Energy Info. Admin., Annual Energy Outlook
2020, https://www.eia.gov/outlooks/aeo/ (last visited Mar. 10, 2020).
10
See INGAA, North American Midstream Infrastructure
Through 2035: Significant Development Continues 37 (June 18,
2018), https://www.ingaa.org/File.aspx?id=34703.
4
SUMMARY OF THE ARGUMENT
The decision below works a seismic shift in federal
law applicable to the operation and development of
critical interstate natural gas pipeline infrastructure:
it allows States a unilateral and unconstrained veto,
subject to their sole discretion, over federally approved
interstate pipeline projects and routes based on an unprecedented view of the Eleventh Amendment. This
shift has profoundly disrupted the system of administering the Natural Gas Act (“the Act”) that has been in
place for nearly eighty years.
Industry Amici support certiorari review because
the practical consequences of this shift are urgent and
exceptionally important to the nation’s infrastructure.
It is difficult to overstate the scope or scale of the problems that the decision below creates. Most federally approved interstate natural gas pipeline projects involve
some location on state land interests. Any State may
now delay or halt the development of necessary infrastructure simply by acquiring (or being gifted) a property interest (and not even a fee interest) in land in the
federally approved pathway of a pipeline. Likewise,
any State may now impede the operation of existing
infrastructure simply by acquiring (or being gifted) a
property interest in a parcel in the pathway of the
pipeline that is subject to a renewable easement, crossing permit, or right-of-way license, and then refusing
to renew the easement, crossing permit, or rightof-way license. States now have a mechanism to
block the operation and development of
5
federally approved interstate infrastructure
within their borders, and this is untenable.
Our country has tested such an unconstrained
state veto once before, and Congress amended the Natural Gas Act to address the dire consequences that ensued. Congress expressly recognized when it added the
eminent domain provision to the Natural Gas Act that
its earlier omission of an eminent domain delegation
from the Act had created serious problems, including
that natural gas often could not cross state lines to get
to where it was needed, triggering residential, commercial, and industrial shortages and shutdowns. Certiorari review is essential to give effect to Congress’s
choice and prevent the many millions of American citizens and businesses who depend on a reliable supply
of natural gas from revisiting those calamitous circumstances.
---------------------------------♦---------------------------------
ARGUMENT
I.
The decision below has dire practical consequences for the development and operation of the nation’s critical infrastructure.
The decision below has dire practical consequences for the development and operation of the nation’s critical interstate natural gas pipeline
infrastructure. With the stroke of a pen, the decision
grants States the power to use their property interests
unilaterally to override the federal government’s decisions about where to site such infrastructure, even
6
after the responsible federal agency (the Federal Energy Regulatory Commission, or “the Commission”)
has issued the requisite approval for a project –
namely, a Certificate of Public Convenience and Necessity (“Certificate”).
The veto power created by the decision below is
unconstrained – there are no legal standards or criteria for when or how it may be used. There is no requirement that the State even own in fee the property
that it seeks to immunize from condemnation: the
great majority of New Jersey’s property interests at issue in this case are not fee interests. Moreover, in the
world that the decision below has created in the Third
Circuit and heralds for other circuits, once a State exercises its veto power, a pipeline company that is building or operating interstate natural gas pipeline
infrastructure has no legal recourse to override the
State’s veto.
States’ new unconstrained veto also is apparently
perpetual – it may be exercised even after the Commission has issued a Certificate for an infrastructure
project, which necessarily reflects the agency’s conclusion (following a lengthy administrative process in
which States may participate) that a proposed interstate pipeline project and its route is in the public convenience and necessity. See 15 U.S.C. § 717f(c).
Indeed, the decision below provides States numerous opportunities to thwart federal approval: States
may acquire parcels of or interests in property along a
proposed pipeline route, wait until after a project is
7
federally approved to immunize from condemnation
parcels along the approved route, or even disrupt the
operation of existing infrastructure by refusing to renew previously granted easements, crossing permits,
or right-of-way licenses necessary for the pipeline to
operate. Alarmingly, this cycle may repeat as often as
a State wishes.
This case illustrates perfectly how a State may
force a pipeline company to re-route a proposed project
after both industry and federal authorities have sunk
many years and expenses into developing a route and
obtaining or providing federal approval for it, conducted extensive environmental analyses and reviews,
and consulted numerous stakeholder populations (including the States).
Ultimately, if federally approved interstate natural gas pipeline infrastructure is forever vulnerable to
a State’s unconstrained veto, with no legal recourse,
many federally approved pipeline projects may not be
completed, and existing infrastructure may not be operable.
Additionally, following the decision below, States
likely will have the opportunity to exercise their new
veto power in many, many cases, including any case
involving any property in which the State or any subdivision of the State has any kind of property interest,
including property interests that will endure in perpetuity, thereby forever immunizing that property from
condemnation for necessary interstate infrastructure.
The decision below creates the opportunity for States
8
to expand their unconstrained veto with relatively little effort: even private landowners may permanently
immunize more and larger parcels of privately-owned
property from condemnation for interstate pipeline infrastructure by selling a parcel to the State or conveying to the State an inexpensive, easy-to-transfer
conservation, agricultural or other easement interest
in the property.
In Industry Amici’s experience, most federally approved interstate pipeline projects cross some state
property interests. In some States, all federally approved interstate natural gas pipeline projects developed by a particular company cross state property
interests.11 Most States have numerous state highways
and roadways that cross the State both north to south
and east to west. Most States have numerous streams
and creeks in which the State owns the riverbed or
other submerged land. Often, rivers form the borders
between States. Depending on how States use their
new veto powers, each and all of these roadways and
waterways could easily become an insurmountable
barrier to the development of interstate natural gas
pipeline infrastructure.
11
See Columbia Gas Transmission, LLC v. 0.12 Acres, No.
1:19-cv-01444-GLR (D. Md.), Doc. 38 at 6 (pipeline’s pleading stating that “every single one” of its Commission-regulated interstate
pipeline projects in North America, which together transport gas
through nearly 10,000 miles of pipeline in ten States, crosses
and/or collocates with state-owned property or property interests).
9
This case illustrates the scale of the problem. One
of the New Jersey governmental entities that is a respondent, the New Jersey State Agriculture Development Committee, operates a Farmland Preservation
Program in which the State offers “valuable incentives
to landowners” to sell or gift development easements
or fee interests in property to the State to preserve that
property for agricultural purposes.12 A quick glance at
just one of the State’s county-level maps reveals that if
the State were to use the property interests it has acquired with this program to veto the development of
interstate infrastructure on affected parcels of property (as the State has done in this case), it would be
extremely difficult and likely impracticable for a pipeline company to re-route the pipeline to avoid those
parcels.13 To use an unscientific description, the pipeline would need to look like a tangled spaghetti noodle
just to get through this one county, if a route were even
possible.
Disturbingly, States’ new unconstrained veto
power over federally approved interstate pipeline projects is limited only by each State’s then-current
policy whims and desires. If the rule set forth in the
decision below becomes the rule nationwide, federally
approved pipeline companies will be unable to apply to
12
See generally New Jersey Department of Agriculture State
Agriculture Development Committee, Overview, https://www.nj.gov/
agriculture/sadc/farmpreserve/ (last visited Mar. 10, 2020).
13
See Hunterdon County map, available at https://www.
nj.gov/agriculture/sadc/farmpreserve/progress/maps/maphunco.
pdf (last visited Mar. 10, 2020).
10
state courts for relief because States may unilaterally
refuse to waive their sovereign immunity in those
courts, and federal courts will be unable to enter condemnation orders against any governmental entity or
subdivision of a State.
The upshot is that an Eleventh Amendment objection, once raised, necessarily will be fatal to any attempt by a pipeline company to exercise the federal
eminent domain power to build or operate interstate
pipeline infrastructure. Eager States now have every
incentive to try to expand this new power, and they
may assert that numerous kinds of state property interests that touch property in the path of a pipeline
completely foreclose condemnation of the affected parcels. If the opinion below remains in place, the only limitation on how many projects are delayed, disrupted, or
halted, and how fast these effects materialize, will be
the political whims of the States.
This case exemplifies this problem and provides a
clear roadmap for how a State may tactically maneuver its property interests to advance a discretionary
policy agenda. New Jersey historically has acknowledged that interstate natural gas pipeline companies
have the authority to exercise the federal eminent domain power to condemn lands in which New Jersey has
a property interest. New Jersey’s recognition dates as
far back as the early 1950s, and it continued until just
last year.14
14
See Br. of Amici Curiae Interstate Natural Gas Association
of America, et al., Nos. 19-1191 thru 19-1232 (3d Cir. May 15,
11
Similarly, New Jersey historically has not resisted
condemnation of its property interests under the Natural Gas Act on the basis of the Eleventh Amendment;
on the very few occasions that New Jersey even has
pleaded an Eleventh Amendment objection, the State
has not seriously pursued the argument. Instead, New
Jersey governmental entities have an established history of contracting for interstate natural gas pipeline
companies with Commission Certificates to access
lands in which the State has a property interest, or in
the alternative (if state law does not allow the agency
to contract for the sale of a property interest) of ultimately allowing “friendly” condemnation actions regarding such properties to proceed to resolution
without objection.15
Put simply, New Jersey has very rarely raised, has
never seriously maintained, and (until the decision
2019), at 24-26 & Ex. A (2008 lease agreement between New Jersey Department of Environmental Protection (“DEP”) and federally approved interstate pipeline company reciting that it was
executed because 50-year right-of-way agreement executed prior
to condemnation had expired); Letter from Ruth Foster, Acting
Dir., NJ DEP, to Kimberly Bose, Secretary, FERC (July 25, 2018)
(on file in FERC Docket No. PL18-1-000, acknowledging to Commission that Commission Certificate holders may condemn land
in which New Jersey has a property interest and urging Commission to take measures to reduce the impact of condemnation on
New Jersey’s land preservation efforts).
15
See, e.g., Transcon. Gas Pipe Line Co. v. 0.607 Acres of
Land, No. 3:15-cv-00428 (D.N.J. Feb. 23, 2015); Transcon. Gas
Pipeline Co. v. 2.705 Acres of Land, No. 3:15-cv-00397 (D.N.J. Feb.
23, 2015); Transcon. Gas Pipe Line Co. v. 2.163 Acres of Land, No.
3:12-cv-07511 (D.N.J. Jan. 10, 2013) (examples of “friendly” condemnation orders involving New Jersey governmental entities).
12
below) has never prevailed on an Eleventh Amendment argument in connection with condemnation actions brought by interstate natural gas pipeline
companies. And yet the State now asserts an aggressive Eleventh Amendment position that is unprecedented in any federal court in the country and which
would afford the State a unilateral and unconstrained
veto over a federally approved pipeline project.
New Jersey’s about-face illustrates perfectly how
a change in the political winds in a single State may
adversely affect interstate infrastructure development. Indeed, following the decision below, all States
have an incentive to avail themselves of the opportunity to frustrate the operation and development of
interstate natural gas pipeline infrastructure by raising Eleventh Amendment objections. New Jersey’s example leaves no doubt that, absent certiorari review by
this Court, other States will have a similar opportunity
to wield their property interests to advance a discretionary policy agenda with respect to the development
of interstate pipeline infrastructure.
Ultimately, the victims of this circumstance will
include not only the interstate natural gas pipeline industry, but also citizens and businesses in neighboring
States who are unable to develop and access an adequate supply of natural gas to meet their energy requirements. The local distribution companies that
distribute natural gas foresee that this circumstance
will frustrate and interfere with their legal obligation
to safely and reliably serve such customers.
13
Finally, States’ new unconstrained veto is unpredictable. Because States may exercise their veto at
any point in the federal approval process (or afterwards), for any reason (or no reason), pipeline companies and the Commission will never know whether or
how much difficulty in infrastructure development or
operation is just around the corner.
This uncertainty is inherently volatile and disruptive. In a worst-case scenario, it will foreclose the operation and development of federally approved interstate
natural gas pipeline infrastructure if pipeline companies are unable to re-route around state property interests, cutting off pipeline companies’ ability to
transport natural gas to citizens and businesses who
depend on it. Residential, commercial, and industrial
shortages are not far-fetched.
In a best-case scenario, the mere presence of this
uncertainty and risk will be priced into project financing for such infrastructure, diminishing pipeline companies’ ability to develop and operate infrastructure
sufficient to meet the nation’s growing energy needs.
Even projects that are entirely self-financed by pipeline companies will be adversely affected, as constant
uncertainty in project planning makes such projects
more expensive and difficult, if they can even be completed after they are begun.
This problem will not be limited to projects in the
Third Circuit, as States in other federal circuits follow
New Jersey’s lead and assert Eleventh Amendment objections to advance a discretionary policy agenda. The
14
problem is highly consequential even in only the Third
Circuit; the States in the Third Circuit have significant
natural gas resources, including substantial portions
of the Marcellus and Utica Shale formation, which is
found beneath approximately sixty percent of Pennsylvania’s total land mass.16
Ultimately, there can be no serious dispute that
States’ new unconstrained veto will be extremely disruptive to the operation and development of interstate
natural gas pipeline infrastructure in the United
States. Alarmingly, the decision below creates not only
the opportunity, but also powerful incentives for these
dire consequences to materialize. It opens the door for
state governments or governmental entities to succumb to political whims or parochial views of their constituents, to the detriment of other States and their
citizens. It creates an incentive for private landowners
to sell or gift to States any kind of property interest to
avoid condemnation.
Depending on the kind of property interest conveyed, the conveyance may forever immunize a parcel
from condemnation for interstate infrastructure. A
large number of permanently immunized parcels scattered throughout a State may make the operation and
development of pipeline infrastructure in that State
impossible.
16
Marcellus Shale Coalition, Marcellus and Utica Shale Formation Map, https://marcelluscoalition.org/pa-map/ (last visited
Mar. 20, 2020).
15
Ultimately, if a State decides that it wants no further interstate natural gas pipeline projects within its
borders, the decision below affords a mechanism for
the State to pursue that goal. This is unsustainable. In
2018, the United States consumed more energy than
ever before, and natural gas consumption reached a
record high.17 Domestic energy companies already are
challenged to meet existing peak demand during winter months and have assessed their current and
planned future capacity as insufficient to meet forecast
demand.18 As just one example of a concerning forecast
in just one area of one State, National Grid assesses
for Brooklyn, Queens, Staten Island and Long Island
“a gap between expected demand and capacity of supply that grows to a range of 265–415 MDth/day by
2032-2035.”19
Notably, the Commission issued a Certificate for
the PennEast project at issue in this case primarily because of existing demand, placing less emphasis on
forecast demand. See PennEast Pipeline Co., LLC, 162
FERC ¶ 61,053, at ¶ 29 (2018). Before PennEast even
applied for its Certificate, it already had entered into
long-term, firm precedent agreements with twelve
shippers for approximately 90 percent of the pipeline’s
17
See U.S. Energy Info. Admin., Today in Energy (Apr. 16,
2019), https://www.eia.gov/todayinenergy/detail.php?id=39092.
18
See, e.g., National Grid, Natural Gas Long-Term Capacity
Report for Brooklyn, Queens, Staten Island and Long Island (“National Grid Report”) (Feb. 2020) at 9, https://millawesome.s3.amazon
aws.com/Downstate_NY_Long-Term_Natural_Gas_Capacity_
Report_February_24_2020.pdf.
19
See National Grid Report, supra n.18 at 9.
16
total capacity of approximately 1,107 MDth/day. See id.
at ¶¶ 1, 28. Standing alone, New Jersey’s decision to
veto this one pipeline project pertains to an amount of
capacity that is of great practical significance to demand for natural gas that is already here and simply
waiting to be met.
Given the United States’ increasing reliance on
natural gas and the concomitant need for new interstate transportation capacity, the scale of the gap between demand and supply is virtually guaranteed to
grow if pipeline companies face new and extreme difficulties in developing additional capacity. The United
States cannot afford for any State to be off limits for
the operation and development of interstate natural
gas pipeline infrastructure.
The bottom line is this: certiorari review is essential to ensure that there are boundaries on States’ opportunity to interfere with federally approved
interstate infrastructure that has been determined to
be in the public interest, convenience and necessity.
The process of siting, building, operating, and expanding such infrastructure cannot be subject to the unpredictable free-for-all of States’ selfish political whims.
In Industry Amici’s experience, federally approved
interstate natural gas pipeline projects take many
years to study, design, permit, and build. As a result,
the decision below is a disruptive force now and sows
seeds of disruption that will be felt by millions of American businesses and citizens for years to come. As the
ability of pipeline companies to complete and maintain
17
federally approved interstate projects is called into
question, uncertainty threatens all stages of project development, planning, and operation. Accordingly, the
need for certiorari review in this case is not only acute,
but urgent.
II.
These practical problems are not theoretical – they are acknowledged by the Third
Circuit and emphasized by the Commission,
and they were one of the key reasons Congress long ago amended the Natural Gas Act
to add the eminent domain delegation.
The profound practical consequences of the decision below are not merely theoretical. As an initial
matter, they were expressly acknowledged by the
Third Circuit in its decision: the appellate court understood PennEast’s “warn[ing] that [its] holding . . . will
give States unconstrained veto power over interstate
pipelines, causing the industry and interstate gas pipelines to grind to a halt – the precise outcome Congress
sought to avoid in enacting the NGA.” In re PennEast
Pipeline Co., LLC, 938 F.3d 96, 113 (3d Cir. 2019). In
response, the court was “not insensitive to those concerns and recognize[d] that [its] holding may disrupt
how the natural gas industry, which has used the NGA
to construct interstate pipelines over State-owned land
for the past eighty years, operates.” Id.
Likewise, the practical consequences of the decision below have since been emphasized by the Commission, which did not participate in the proceedings
18
in the Third Circuit. In issuing a rare declaratory order
providing its interpretation of how the Natural Gas
Act’s grant of eminent domain authority to federally
approved pipelines is intended to operate, the Commission described the Third Circuit’s acknowledgment
that its decision would be disruptive as “correct,” and
predicted that the decision “would have profoundly adverse impacts on the development of the nation’s interstate natural gas transportation system, and will
significantly undermine how the natural gas transportation industry has operated for decades.” PennEast
Pipeline Co., 170 FERC ¶ 61,064, at ¶ 56 (2020).
History makes clear that the predictions of the
Third Circuit, the Commission, and Industry Amici are
well-founded: such dire circumstances are a key reason
why Congress amended the Natural Gas Act to delegate the federal eminent domain power to interstate
pipeline companies with the requisite federal approvals. See 61 Stat. 459 (1947).
According to a well-developed legislative history,
in the period leading up to the amendment of the Natural Gas Act in 1947, disparate state-law provisions relating to interstate natural gas pipelines posed
problems for the development of much-needed interstate infrastructure. See S. REP. 80-429 at 2-3 (1947).
Multiple States would not grant the right of eminent
domain to pipelines that crossed but did not distribute
natural gas in that State, and in other States, state law
expressly denied the right of eminent domain to federally approved interstate pipelines. See id. As a result,
federally approved interstate pipelines lacked any
19
eminent domain authority in numerous States. The expressly stated purpose of the amendment to the Natural Gas Act delegating the federal eminent domain
power to federally approved pipelines was to “correct
this deficiency and omission” in the Act. See id. at 3.
Extensive congressional hearings established that
Congress’s earlier omission of an eminent domain delegation from the Natural Gas Act created very serious
problems.20 At that time, because 94 percent of the
country’s natural gas reserves were located in four contiguous States (Kansas, Oklahoma, Texas, and Louisiana), most natural gas had to be transported across
many States to supply heat and energy to the country’s
most densely populated areas (such as New York and
New Jersey).21
Because the pipeline companies could not exercise
the federal eminent domain power, and there was no
arm of the federal government that condemned land to
build natural gas infrastructure, natural gas often
simply could not get to where it was needed. Citizens
and businesses across the United States suffered serious consequences as a result.
20
See Amendments to the Natural Gas Act: Hearings on H.R.
2185, H.R. 2235, H.R. 2292, H.R. 2569, and H.R. 2956 Before the
H. Comm. on Interstate and Foreign Commerce, 80th Cong. (1947)
(“Congressional Hearings”); see also Alexandra B. Klass & Danielle Meinhardt, Transporting Oil and Gas: U.S. Infrastructure
Challenges, 100 IOWA L. REV. 947, 996-98 (2015).
21
See Congressional Hearings, supra n.20, at 544 (statement
of David T. Searls, Texas Eastern Transmission Corp.)
20
During the Congressional Hearings, the governor
of Kentucky submitted a statement that described natural gas shortages during winter that caused that
State to limit the availability of natural gas for heat
and for industrial purposes.22 A similar statement from
the governor of West Virginia addressed industrial
shutdowns that left citizens out of work.23 Members of
Congress from States with natural gas shortages
voiced support for the eminent domain delegation because it would facilitate the transportation of muchneeded gas to citizens and businesses in their States.24
Notably, other testimony at the Congressional
Hearings expressly called to members’ attention a
countervailing concern highly relevant here – namely,
that if the proposed eminent domain provision became
law, then pipeline companies could use the federal eminent domain power to condemn State property.25 Nevertheless, the eminent domain amendment passed
both the House and Senate as it was written, with no
exception or limitation restricting any federal delegee
from condemning State property under any circumstance. See 15 U.S.C. § 717f(h).
Consistent with this result, the Senate Report concluded that if States were permitted to “nullif[y]” federal
approvals issued by the Commission by frustrating a
22
See id. at 46-48.
See id.
24
See id. at 622 (statement of Rep. Carson of Ohio).
25
See id. at 611 (House committee hearing); id. at 105 (Senate committee hearing).
23
21
pipeline’s exercise of the federal eminent domain
power within their borders, that circumstance would
“defeat[ ] the very objectives of the Natural Gas Act,”
including the Commission’s “exclusive jurisdiction, to
regulate the transportation of natural gas in interstate
commerce.” See S. REP. 80-429, at 3-4.
This historical evidence makes clear that the
United States has been down this road before, that the
practical problems of an unconstrained state veto over
federally approved interstate infrastructure are grave,
and that Congress has taken affirmative, deliberate
steps to correct and avoid the very problems that the
decision below threatens to revisit. The decision below
is irreconcilable with the controlling and unambiguous
Act of Congress, not to mention Congress’s good, clear,
and stated reasons for its chosen solution. Certiorari
review is necessary to give effect to Congress’s choice
and prevent these problems from recurring.
---------------------------------♦---------------------------------
22
CONCLUSION
The petition for a writ of certiorari should be
granted.
Respectfully submitted,
LELA M. HOLLABAUGH
Counsel of Record
BRADLEY ARANT BOULT
CUMMINGS LLP
1600 Division Street
Nashville, TN 37203
(615) 252-2348
lhollabaugh@bradley.com
NICHOLAS A. DANELLA
BRADLEY ARANT BOULT
CUMMINGS LLP
1819 Fifth Avenue North
Birmingham, AL 35203
(205) 521-8576
ndanella@bradley.com
Counsel for Amici Curiae
PAUL G. AFONSO
JOAN DRESKIN
SANDRA Y. SNYDER
ANDREA S. MILES
INTERSTATE NATURAL GAS
AMERICAN PETROLEUM
ASSOCIATION OF AMERICA
INSTITUTE
20 F Street NW, Suite 450
200 Massachusetts Avenue NW
Washington, DC 20001
Washington, DC 20001
(202) 216-5900
(202) 682-8000
jdreskin@ingaa.org
MilesA@api.org
ssnyder@ingaa.org
Counsel for American
Counsel for Interstate Natural Petroleum Institute
Gas Association of America
MICHAEL L. MURRAY
MATTHEW J. AGEN
AMERICAN GAS ASSOCIATION
400 N. Capitol Street NW
Washington, DC 20001
(202) 824-7071
mmurray@aga.org
magen@aga.org
Counsel for American
Gas Association
March 23, 2020
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.