Amicus Curiae Brief — PennEast Pipeline Company, LLC, Petitioner v. New Jersey, et al.
Supreme Court briefMar 23, 2020
Ask Donna
What actually matters in this document.
Text
No. 19-1039
================================================================
In The
Supreme Court of the United States
---------------------------------♦---------------------------------
PENNEAST PIPELINE COMPANY, LLC, PETITIONER
v.
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.
---------------------------------♦--------------------------------ON PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
---------------------------------♦---------------------------------
BRIEF FOR THE CHAMBER OF COMMERCE
OF THE UNITED STATES OF AMERICA AND
THE PENNSYLVANIA CHAMBER OF BUSINESS
AND INDUSTRY AS AMICI CURIAE
IN SUPPORT OF PETITIONER
---------------------------------♦--------------------------------DEANNE E. MAYNARD
DARYL JOSEFFER
MICHAEL B. SCHON
Counsel of Record
U.S. CHAMBER LITIGATION
MORRISON & FOERSTER LLP
CENTER, INC.
2000 Pennsylvania Ave. NW
1615 H St., NW
Washington, DC 20006
Washington, DC 20062
(202) 887-8740
(202) 463-5948
DMaynard@mofo.com
Counsel for the Chamber of
Commerce of the
United States of America
JAMES R. SIGEL
MORRISON & FOERSTER LLP
425 Market St.
San Francisco, CA 94105
Counsel for Amici Curiae
MARCH 23, 2020
================================================================
COCKLE LEGAL BRIEFS (800) 225-6964
WWW.COCKLELEGALBRIEFS.COM
TABLE OF CONTENTS
Page
INTERESTS OF AMICI CURIAE .......................
1
SUMMARY OF ARGUMENT ..............................
3
ARGUMENT ........................................................
5
I.
II.
THE THIRD CIRCUIT ERRONEOUSLY
PRECLUDED PIPELINES FROM CONDEMNING STATE PROPERTY INTERESTS ..........................................................
5
A. Congress Can And Did Authorize The
Taking Of State-Owned Property ........
5
B. The Third Circuit’s Contrary Reading
Is Wrong ..............................................
8
THE ISSUE IS IMPORTANT AND WARRANTS THIS COURT’S REVIEW.............
9
A. The Third Circuit’s Decision Undermines Congress’s Carefully Designed
Scheme ................................................. 10
1. The decision below grants states a
veto power over pipelines ............... 10
2. Granting states veto power frustrates Congress’s scheme ................ 14
B. The Third Circuit’s Decision Will Have
Serious Economic Repercussions ........ 18
CONCLUSION..................................................... 24
ii
TABLE OF AUTHORITIES
Page
CASES
California v. Central Pac. R. Co.,
127 U.S. 1 (1888) .....................................................23
First Iowa Hydro-Electric Cooperative v.
Federal Power Comm’n,
328 U.S 152 (1946) ..................................................22
Jackson v. Metro. Edison Co.,
419 U.S. 345 (1974)................................................. 9
Kohl v. United States,
91 U.S. 367 (1875) .....................................................7
Luxton v. N. River Bridge Co.,
153 U.S. 525 (1894) ......................................... 6, 7, 22
Oklahoma ex rel. Phillips v. Atkinson Co.,
313 U.S. 508 (1941) ...................................................6
Schneidewind v. ANR Pipeline Co.,
485 U.S. 293 (1988) .................................................10
United States v. Holt State Bank,
270 U.S. 49 (1926) ...................................................12
STATUTES AND LEGISLATIVE HISTORY
15 U.S.C. § 717f(c)(1)(B) .............................................15
15 U.S.C. § 717f(e) ......................................................15
15 U.S.C. § 717f(h) .............. 3, 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14, 15, 17, 18
15 U.S.C. § 717r(b) ......................................................16
iii
TABLE OF AUTHORITIES—Continued
Page
16 U.S.C. § 814 ............................................ 6, 13, 22, 23
S. Rep. No. 80-429 (1947) ................................ 11, 12, 17
ADMINISTRATIVE PROCEEDINGS
Comment of New Jersey Natural Gas, Oct. 18,
2019, PennEast Pipeline Company, LLC, FERC
Docket No. RP20-41 ................................................18
Comment of TC Energy Corp., Oct. 18, 2019,
PennEast Pipeline Company, LLC, FERC
Docket No. RP20-41 ................................................20
Islander East Pipeline Co.,
102 FERC ¶ 61,054 (2003) ........................................7
PennEast Pipeline Co., LLC,
170 FERC ¶ 61,064 (2020) .......... 7, 10, 12, 13, 17, 21
Recommendation to the President Alaska
Nat. Gas Transp. Sys.,
58 F.P.C. 810 (1977) ...................................................7
Tenneco Atl. Pipeline Co.,
1 FERC ¶ 63,025 (1977) ............................................7
OTHER AUTHORITIES
Adam Herman, New Jersey turns down permits
for proposed 120-mile natural gas pipeline,
PHILLY VOICE (Oct. 12, 2019), https://www.
phillyvoice.com/new-jersey-proposed-naturalgas-pipeline-120-miles-trenton-pennsylvaniapenneast/ .................................................................14
iv
TABLE OF AUTHORITIES—Continued
Page
American Gas Association, 2019 AGA Overview
(Mar. 4, 2019), https://www.aga.org/globalassets/
2019-aga-overview-updated.pdf .............................21
Order, Delaware Riverkeeper Network v. FERC,
No. 18-1128 (D.C. Cir., Oct. 1, 2019) .......................16
PennEast Pipeline, Overview (Sep. 21, 2016),
https://penneastpipeline.com/wp-content/uploads/
2016/10/PennEast_Overview_9-21-16_9pm.pdf ... 18, 19
Restatement (First) Property, § 53 (1936) ...................9
Thomas W. Merrill, The Economics of Public
Use, 72 CORNELL L. REV. 61 (1986) .........................11
U.S. Energy Information Administration, Frequently Asked Questions (Nov. 1, 2019), https://
www.eia.gov/tools/faqs/faq.php?id=46&t=8............19
U.S. Energy Information Administration, Natural
gas explained (Dec. 5, 2019), https://www.eia.
gov/energyexplained/natural-gas/natural-gaspipelines.php ...........................................................20
INTERESTS OF AMICI CURIAE1
The Chamber of Commerce of the United States of
America (“Chamber”) is the world’s largest business
federation. It represents approximately 300,000 direct
members and indirectly represents the interests of
more than three million companies and professional
organizations of every size, in every industry sector,
and from every region of the country. A vital function
of the Chamber is to represent the interests of its members in matters before this Court. The Chamber regularly files amicus briefs in cases, like this one, that
raise issues of concern to the nation’s business community, including cases implicating the development
of pipelines and other critically needed infrastructure. See, e.g., U.S. Forest Service v. Cowpasture River
Preservation Association, Nos. 18-1584, 18-1587.
The Pennsylvania Chamber of Business and Industry
is the largest broad-based business association in
Pennsylvania. It has close to ten thousand member
businesses throughout Pennsylvania, which employ
more than fifty percent of the Commonwealth’s private
workforce. Its members range from small companies
to mid-size and large business enterprises. The Pennsylvania Chamber’s mission is to advocate on public
1
No counsel for a party authored this brief in whole or in
part, and no person other than amici, their members, or their
counsel made a monetary contribution to its preparation or submission. Counsel of record for all parties listed on the docket
received notice at least ten days before the brief was due. Petitioner has filed a blanket consent to the filing of amicus briefs.
Respondents have also consented to the filing of this amicus brief.
2
policy issues that will expand private sector job creation, to promote an improved and stable business
climate, and to promote Pennsylvania’s economic development for the benefit of all Pennsylvania citizens.
3
SUMMARY OF ARGUMENT
For more than 70 years, the nation’s interstate
natural gas pipelines have been built using 15 U.S.C.
§ 717f(h), a key provision of the Natural Gas Act
(NGA). After the Federal Energy Regulatory Commission (FERC) has approved the construction of a
natural gas pipeline along a specific route, Section
717f(h) enables pipeline companies to condemn any
property necessary to the construction of the pipeline,
if the owner of that property refuses to sell. A classic
exercise of the federal government’s eminent-domain
authority, Section 717f(h) addresses the hold-out problems that arise when critical infrastructure projects
cross the properties of many different owners, all of
which may have incentives to refuse to sell their property entirely, or to do so only at exorbitant prices.
But the Third Circuit has drained Section 717f(h)
of much of its purpose by holding that the provision
does not and cannot apply to state-owned property.
This allows individual states’ policy concerns and
energy desires to undermine FERC’s authority to determine the number and location of pipelines needed
to serve the nation’s energy needs. Contrary to Congress’s clearly expressed intent, the Third Circuit
would leave the fate of all such pipeline projects to the
whims of the various states through which the pipeline
must pass. This Court’s intervention is needed to
restore the scheme that Congress designed.
First, as petitioner explains, the Third Circuit’s
decision is wrong as a matter of law. Section 717f(h)
4
by its plain terms applies to all property necessary for
pipeline construction, whoever or whatever its owner
may be. The supposed constitutional concerns the
Third Circuit raised cannot justify the court’s deviation from this plain statutory text. Nor are those concerns valid in the first place. Contrary to the court’s
reasoning, states have no immunity from federal
eminent-domain proceedings, which are an exercise of
the authority vested in the federal government by the
Constitution.
Second, the Third Circuit’s decision will upend the
comprehensive scheme Congress created in the Natural Gas Act. Under the court of appeals’ reasoning, not
only is property in which a state holds a possessory
interest exempt from Section 717f(h)’s scope, but so too
is property in which the state claims a conservation or
similar easement—however recently it may have
acquired that nonpossessory interest. Any state thus
may effectively exert a veto power over any proposed
pipeline. While Congress created extensive procedures
to allow states (and other stakeholders) to express
their views and concerns with any pipeline, Congress
specifically declined to allow states the authority to
unilaterally preclude construction altogether. The
Third Circuit’s decision renders these carefully
crafted procedures superfluous, as states may simply
exert the ultimate authority to reject a project—an
authority that Congress sought to deny them.
Third, if left standing, the Third Circuit’s decision
would have serious economic repercussions. The
PennEast pipeline—which alone would generate an
5
estimated 12,000 jobs, $740 million in wages, and
$900 million in energy savings—would be only the first
casualty. Other natural gas pipelines, particularly
those that must meet the swelling demand in the
northeast, also may soon meet their demise due to
state objections. Given the added risks associated with
investment in such projects, even those that do go forward may do so only at greater cost—costs that would
be passed on to the millions of consumers and businesses that rely on natural gas. And these costs may
soon spread to other sectors of the economy, as the
Third Circuit’s decision more broadly threatens congressional efforts to promote infrastructure development.
This Court should grant certiorari to confirm that
Section 717f(h) must be read according to its plain
terms, to restore the balanced scheme embodied in the
Natural Gas Act, and to ensure the continued development of critical infrastructure projects.
ARGUMENT
I.
THE THIRD CIRCUIT ERRONEOUSLY PRECLUDED PIPELINES FROM CONDEMNING
STATE PROPERTY INTERESTS
A. Congress Can And Did Authorize The
Taking Of State-Owned Property
The terms of the statute are clear. Section 717f(h)
provides that whenever FERC has granted a company
a “certificate of public convenience and necessity” for
“a pipe line or pipe lines for the transportation of natural gas,” that company may “acquire” any property
6
interests necessary to complete the federally approved
project along the approved route “by the exercise of
the right of eminent domain” if it cannot secure those
interests by contract. 15 U.S.C. § 717f(h). This express
delegation of the power of eminent domain does not
depend on the nature of the property or the identity of
its owner, unlike certain other delegations in similar
federal statutes. The Federal Power Act, for example,
prohibits the exercise of eminent domain over property
that, before 1992, was “owned by a State or political
subdivision thereof and [was] part of or included
within any public park, recreation area or wildlife refuge.” 16 U.S.C. § 814. The Natural Gas Act contains
no such exception. Instead, Section 717f(h) applies to
any property comprising “the necessary right-of-way to
construct, operate, and maintain a pipe line,” along
with the “necessary land or other property” for the
location of “stations or equipment necessary to the
proper operation of such pipe line.” 15 U.S.C. § 717f(h).
Whether that “necessary” property is owned by a state,
municipality, private party, or some other entity makes
no difference—it is subject to the federal eminentdomain power.
Congress’s authority to enact this provision is
equally clear. This Court has long held that “[t]he
fact that land is owned by a state is no barrier to its
condemnation by the United States.” Oklahoma ex
rel. Phillips v. Atkinson Co., 313 U.S. 508, 534 (1941).
It also has long held that Congress may delegate the
federal government’s eminent-domain authority to
private parties. E.g., Luxton v. N. River Bridge Co.,
7
153 U.S. 525, 533-34 (1894). Simply put, the federal
government’s right of eminent domain “can neither be
enlarged nor diminished by a State,” no State can
“prescribe the manner in which it must be exercised,”
and “[t]he consent of a State can never be a condition
precedent to its enjoyment.” Kohl v. United States, 91
U.S. 367, 374 (1875).
Given the plain text of Section 717f(h) and Congress’s well-established power to enact such a provision, it should come as no surprise that companies with
a certificate from FERC have regularly exercised this
federal eminent-domain authority to seize the property necessary for pipeline construction along FERCapproved routes, even when that property is stateowned. For the first 70 years following Congress’s
enactment of Section 717f(h), no court questioned its
application to state-owned property. See Pet. App. 16-17.
And both FERC and the Federal Power Commission
had repeatedly affirmed that “[t]he eminent domain
grant to persons holding * * * certificates applies
equally to private and state lands.” Tenneco Atl. Pipeline Co., 1 FERC ¶ 63,025, ¶¶ 65,203-04 (1977); accord
Islander East Pipeline Co., 102 FERC ¶ 61,054, at
¶¶ 120-126 (2003); Recommendation to the President
Alaska Nat. Gas Transp. Sys, 58 F.P.C. 810, 1454
(1977). FERC reiterated that same view earlier this
year, explaining that Section 717f(h) “does not limit a
certificate holder’s right to exercise eminent domain
authority over state-owned land.” PennEast Pipeline
Co., LLC, 170 FERC ¶ 61,064, at ¶ 25 (2020).
8
B. The Third Circuit’s Contrary Reading
Is Wrong
The Third Circuit has upended this settled understanding. Invoking the Eleventh Amendment, the
Third Circuit expressed its “deep doubt” that the federal government could delegate its power to bring condemnation actions against states. Pet. App. 26-27. In
light of these supposed constitutional concerns, the
Third Circuit read into Section 717f(h) an exception
that appears nowhere in its text: “unless that land is
state-owned.” See Pet. App. 27-30. In thus carving out
from the condemnation provision all property interests
held by a state, the Third Circuit, under the guise of
statutory “interpretation,” effectively held many applications of an act of Congress unconstitutional.
The Third Circuit’s rationale cannot withstand
scrutiny. Nothing in the Natural Gas Act’s plain language provides any license for the courts to rewrite
Section 717f(h) to apply only to property in which
states have no interest. By its terms, the provision
applies to any and all “necessary land or other property”—full stop. 15 U.S.C. § 717f(h).
Nor can the purported constitutional concerns the
Third Circuit invoked justify the court’s atextual reading. The Third Circuit’s premise was that for Section
717f(h) to provide for condemnation actions against a
state, Congress would have had to delegate not only its
eminent-domain power (which the Third Circuit
acknowledged Congress may do), but also its separate
power to bring suit against the states. Pet. App. 13-14.
9
Yet the two powers are indivisible: the exercise of the
eminent-domain power requires a condemnation proceeding in which the property owner is divested of title
and awarded with compensation. See Restatement
(First) Property, § 53 (1936). Without condemnation
proceedings, there is no eminent domain, only a
request to sell property voluntarily. Because states
have no immunity from the federal eminent-domain
power (Atkinson, 313 U.S. at 534), they have no immunity from the judicial proceedings that this power
necessarily entails.
That remains true even when this federal power
is delegated to a private party: that party exercises the
government’s power as a government actor. See Jackson v. Metro. Edison Co., 419 U.S. 345, 352-53 (1974)
(exercise of delegated power “which is traditionally
associated with sovereignty, such as eminent domain,”
is state action). The states thus have no immunity
from this exercise of federal authority. The Third Circuit erred in concluding otherwise.
II.
THE ISSUE IS IMPORTANT AND WARRANTS
THIS COURT’S REVIEW
That the Third Circuit effectively declared Section
717f(h) unconstitutional in many of its most important
applications is reason enough for this Court to grant
review. The practical consequences of the Third Circuit’s decision only confirm the need for this Court’s
intervention.
10
A. The Third Circuit’s Decision Undermines
Congress’s Carefully Designed Scheme
“The NGA long has been recognized as a comprehensive scheme of federal regulation of all wholesales
of natural gas in interstate commerce.” Schneidewind
v. ANR Pipeline Co., 485 U.S. 293, 300 (1988) (quotation
marks omitted). Section 717f(h)’s delegation of eminent-domain authority, and its application to stateowned property, is no minor or esoteric provision of this
comprehensive scheme—it is a critical element of Congress’s efforts to ensure adequate infrastructure to
meet the nation’s energy needs. As FERC found, the
Third Circuit’s decision subverts those efforts and will
consequently “have profoundly adverse impacts on the
development of the nation’s interstate natural gas
transportation system.” PennEast Pipeline Co., 170
FERC ¶ 61,064, at ¶ 56.
1. The decision below grants states a
veto power over pipelines
Section 717f(h) is designed to preclude precisely
what the Third Circuit read it to enable. The provision
addresses the prototypical problem that calls for the
exercise of eminent-domain power. Ideally, the government, like any private party, would acquire property
with the current owner’s consent. But when the government seeks to construct a road, pipeline, or similar
infrastructure that must cross through many individual parcels of land, market dynamics often will impede
such negotiations. Although the value of any one of
these property interests may be limited, the value of
the public good the government seeks to construct by
11
combining these individual interests can be considerable. Recognizing as much, each individual owner
has the incentive to hold out, refusing to sell unless
the government provides compensation or other concessions that may far exceed the worth of the underlying property interest. See Thomas W. Merrill, The
Economics of Public Use, 72 CORNELL L. REV. 61, 75-76
(1986). Eminent domain solves this problem by allowing the sovereign to seize the necessary property interests at a judicially determined fair price. Ibid. It
likewise solves the problem of individual landowners
refusing to sell at any price, whether due to personal
opposition to a project, animosity toward the people or
institutions involved, or some other reason.
This hold-out problem—and the corresponding
need for the exercise of eminent domain—does not
evaporate simply because a state rather than a private
party owns the relevant property interest. States likewise may hold out by refusing to sell, and they may do
so to secure economic rents or to pursue any number of
policy or other goals.
Congress expressly recognized this concern in
enacting Section 717f(h). As the Senate Report
declared, allowing states to “require a natural-gas
pipe-line company entering the State to serve the people of that State as a condition to obtaining the right
of eminent domain” would “defeat[ ] the very objectives
of the Natural Gas Act.” S. Rep. No. 80-429, 3 (1947).
That, the report explained, is because it is the federal
government, through the Federal Power Commission
(and now FERC), that “is given exclusive jurisdiction
12
to regulate the transportation of natural gas in interstate commerce.” Ibid. If state consent were required
for acquisition of the property interests necessary to
construct and operate a pipeline, “then it is obvious
that the orders of the Federal Power Commission may
be nullified.” Id. at 4.
Under the Third Circuit’s decision, states have
reacquired the very veto power that Congress sought
to deny them. All states have significant real property
holdings. In particular, under the equal footing doctrine, each state owns the land underlying all navigable waters within its borders. United States v. Holt
State Bank, 270 U.S. 49, 54 (1926). Few if any pipeline
projects can completely evade all such state-owned
property, and they would be able to do so only at substantial cost. There will thus be few if any projects that
could escape the control of every state through which
they pass. See PennEast Pipeline Co., 170 FERC ¶ 61,064,
at ¶ 58 n. 221 (“If state-owned lands are treated as
impassable barriers for purposes of condemnation, the
circumvention of those barriers, if possible at all, would
require the condemnation of more private land at significantly greater cost and with correspondingly
greater environmental impact.”).
The Third Circuit’s decision is all the more problematic because it exempts from Section 717f(h) even
the far more intangible property interests that a state
might claim. Here, for example, New Jersey holds possessory interests in only two of the relevant properties.
Pet. App. 5. In 40 others, it holds certain nonpossessory interests, generally “easements requiring that the
13
land be preserved for recreational, conservation, or
agricultural use.” Pet. App. 5. If such interests are immune from condemnation, then any state that seeks to
block or alter a pipeline has an easy means of doing so:
it may simply secure a conservation easement or similar property interest somewhere in a pipeline’s path
and withhold consent until its demands are met. See
PennEast Pipeline Co., 170 FERC ¶ 61,064, at ¶ 58
n. 221 (“If lands over which a state has asserted any
property interest also become impassable barriers for
purposes of condemnation, a state could unilaterally
prevent interstate transportation of an essential energy commodity through its borders, thus eviscerating
the purpose of NGA section 7(h) [15 U.S.C.
§ 717f(h)].”).
Congress has recognized that states might take
such action to block prospective projects. Thus, in the
Federal Power Act, Congress allowed for the exercise
of eminent domain over state-owned property interests
acquired after the passage of the statute, even while
exempting those acquired before. 16 U.S.C. § 814. The
Natural Gas Act’s condemnation provision is, of course,
even broader. See 15 U.S.C. § 717f(h); supra pp. 5-8.
But the Third Circuit’s reading of it allows for no limitations on state immunity from the federal eminentdomain power: no state property interests may be condemned under the Natural Gas Act, no matter when or
how the state acquired them. Pet. App. 30. By the
Third Circuit’s logic, the Constitution would preclude
any further limitations. Indeed, even the Federal
Power Act’s allowance for condemnation of a state’s
14
recently acquired property interests would be unconstitutional. Pet. App. 26-27; see infra pp. 21-22.
2. Granting states veto power frustrates
Congress’s scheme
Congress was not blind to the interests of the
states when it enacted the Natural Gas Act. Rather, as
discussed further below, it provided detailed mechanisms for states to express their concerns and for
FERC to address them. But if, as the Third Circuit
held, states are exempt from Section 717f(h)’s scope,
they will have the ultimate trump card: the ability to
block any pipeline project passing through their territory. States may exercise this veto power for policy or
other reasons inconsistent with the federal interests
the Natural Gas Act is intended to advance.
That is just what happened here. After the Third
Circuit issued its opinion denying PennEast the ability
to condemn state-owned property, a New Jersey agency
determined the pipeline project must therefore be terminated. Adam Herman, New Jersey turns down permits for proposed 120-mile natural gas pipeline, PHILLY
VOICE (Oct. 12, 2019).2 New Jersey governor Phil Murray declared: “My Administration fought and won in
court to stop the proposed 116-mile Penn East natural
gas pipeline.” Ibid. He continued: “We are committed
to transitioning New Jersey to 100% clean energy by
2050.” Ibid.
2
https://www.phillyvoice.com/new-jersey-proposed-naturalgas-pipeline-120-miles-trenton-pennsylvania-penneast/.
15
Whether New Jersey’s asserted policy preferences
are valid is beside the point: Congress did not intend
for any one state to be able to unilaterally impose such
preferences by blocking infrastructure projects federal
authorities have concluded are critical to interstate
commerce. To the contrary, although Congress established intricate mechanisms to allow all stakeholders
a say in whether and how a pipeline will be constructed, it granted FERC the ultimate authority to
weigh these interests and make a final determination
by issuing a “certificate of public convenience and
necessity.” 15 U.S.C. § 717f(h). FERC may issue such
a certificate only if it finds that pipeline construction is
“required” by present or future public needs, and it
may make that determination only after providing a
hearing to “all interested persons” on issues
including the specific route the pipeline should take.
15 U.S.C. §§ 717f(c)(1)(B), (e). But it is FERC, and not
the states, that makes this decision. Ibid.
The procedural requirements that precede any
such FERC determination provide for a full airing of
the sorts of concerns that states like New Jersey might
raise. Here, FERC first published PennEast’s application to construct the pipeline in 2015. Pet. App. 38.
Before that, FERC had published a notice that it
intended to prepare an Environmental Impact Statement (EIS) for the contemplated project, which it “sent
to more than 4,300 interested entities, including representatives of federal, state, and local agencies.” Pet.
App. 42. FERC received more than 6,000 written comments, along with numerous additional verbal
16
comments at open public meetings. Pet. App. 42-43.
FERC then issued a draft EIS, which was again both
published and sent to more than 4,000 interested parties. Pet. App. 43. After receiving and accounting for
many additional comments—some of which prompted
changes to the proposed route of the pipeline—FERC
in 2017 issued a final EIS that addressed “all substantive comments received.” Pet. App. 43. Finally, in 2018,
following a proceeding in which “New Jersey State representatives” among others were permitted to intervene (Pet. App. 38), FERC issued a final order
reaffirming the agency’s conclusions and addressing
(“for over 40 pages”) the “major environmental issues
raised.” Pet. App. 47. Only after this elaborate process
did FERC approve the proposed pipeline. Pet. App. 48.
Should any stakeholders that participated in
these proceedings object to FERC’s determination, still
further process is available to them: they may petition
for review of the FERC order in the D.C. Circuit. See
15 U.S.C. § 717r(b). New Jersey took advantage of this
avenue for review here. See Order, Delaware Riverkeeper Network v. FERC, No. 18-1128 (D.C. Cir., Oct. 1,
2019) (holding case in abeyance pending final resolution of Third Circuit proceedings).
According to the Third Circuit, all of this process
is for naught. A state need not convince FERC of the
state’s view that pipeline construction is unnecessary
or unwarranted. Nor need it convince the D.C. Circuit
that FERC’s decision must be set aside. Instead, stymied on these fronts, a state can simply assert
17
immunity from any condemnation proceeding and stop
the project in its tracks.
That is precisely the “nulli[fication]” of FERC
orders Congress designed Section 717f(h) to prevent.
S. Rep. No. 80-429, at 4. Congress recognized that
states are an important voice in the process for siting
and approving pipelines. But it intended that they be
just one voice of many, and never the determinative
one. The Third Circuit’s decision subverts that carefully calibrated approach.
The Third Circuit’s supposed “work-around” fails
to resolve this fundamental problem. Contra Pet.
App. 31. The court suggested that, rather than have
Penn-East or a similar private entity condemn stateowned land, an “accountable federal official” could “file
the necessary condemnation actions and then transfer
the property to the natural gas company.” Pet. App. 30.
But as FERC itself explained, the Natural Gas Act
grants relevant federal officials no such authority.
PennEast Pipeline Co., 170 FERC ¶ 61,064, at ¶¶ 5152. Perhaps Congress could amend the statute to permit FERC itself to condemn state-owned property. Pet.
App. 31; but see PennEast Pipeline Co., 170 FERC
¶ 61,064, at ¶ 52 (highlighting “practical considerations” that might undermine this approach). Presumably, the Third Circuit would require Congress to make
FERC more than just a nominal party to such proceedings, as otherwise this legislative fix would be a pointless formality. But if so, requiring FERC to litigate the
value of hundreds of individual parcels of land would
be a serious drain on the federal government’s
18
resources. That is why Congress delegated its eminent-domain authority to private parties in Section
717f(h) and other similar condemnation provisions, appointing them as agents of the federal government to
exercise its sovereign power.
See supra
pp. 5-7. Contrary to the Third Circuit’s decision, nothing required Congress to make a different, more costly,
choice.
B. The Third Circuit’s Decision Will Have
Serious Economic Repercussions
The Third Circuit’s rejiggering of Congress’s carefully crafted scheme will have significant practical implications. Indeed, just the single pipeline at issue in
this case is a matter of economic importance. Nearly
75 percent of New Jersey households rely on natural
gas, the vast majority of which must be transported
into the state via pipeline. Comment of New Jersey
Natural Gas, Oct. 18, 2019, at 3-4, PennEast Pipeline
Company, LLC, FERC Docket No. RP20-41. Recent
independent reviews have determined that existing
New Jersey natural gas pipelines are fully subscribed—which can cause supply outages and other reliability concerns on high-demand days (e.g., during
cold weather, when people are attempting to heat their
homes). Id. at 4-5. The PennEast pipeline would
address these concerns by delivering roughly a billion
cubic feet of natural gas every day, serving the energy
needs of as many as 4.7 million households. PennEast
19
Pipeline, Overview 1 (Sep. 21, 2016).3 According to
PennEast’s estimates, this added supply will save consumers approximately $900 million annually. Ibid.
And the construction of the pipeline alone would itself
generate more than 12,000 jobs and $740 million in
wages. Id. at 4. If the Third Circuit’s decision is left
standing, none of these benefits will materialize.
The threat to future pipeline projects is no less
real. Indeed, even were the Third Circuit’s ruling confined to the three states within its jurisdiction, the economic impact would be significant. Pennsylvania is,
after Texas, the second largest producer of natural gas
in the country (with more than double the output of
Louisiana, which comes in a distant third). U.S.
Energy Information Administration, Frequently Asked
Questions (Nov. 1, 2019).4 In part as a result, numerous natural gas pipelines must cross through the Third
Circuit to serve the energy needs of the densely populated northeast:
3
https://penneastpipeline.com/wp-content/uploads/2016/10/
PennEast_Overview_9-21-16_9pm.pdf.
4
https://www.eia.gov/tools/faqs/faq.php?id=46&t=8.
20
U.S. Energy Information Administration, Natural gas
explained (Dec. 5, 2019).5
The Third Circuit’s
allowance for state vetoes puts all such new pipeline
projects at risk.
Moreover, states outside the Third Circuit may
be emboldened by New Jersey’s success and seek to
employ the same tactics. Already, Maryland has
invoked its supposed Eleventh Amendment immunity
to attempt to prevent construction of a FERC-approved pipeline linking Pennsylvania to West Virginia. Comment of TC Energy Corp., Oct. 18, 2019, at
19, PennEast Pipeline Company, LLC, FERC Docket
No. RP20-41. Other states may soon follow.
5
https://www.eia.gov/energyexplained/natural-gas/naturalgas-pipelines.php.
21
Even if other lower courts ultimately reject the
Third Circuit’s approach (as they should), the uncertainty created by the Third Circuit’s opinion will have
widespread ramifications. Pipelines require significant capital investment, and the costs of raising such
capital depend on the associated risks. The Third Circuit’s decision multiplies that risk for all natural gas
pipelines. No longer can investors be confident that
FERC’s approval of a project will be the final word.
Instead, they must account for the possibility that one
or more states might subsequently step in and prohibit
a pipeline’s construction. To account for this risk, investors will either increase the interest rate at which
they lend funds or they will refuse to provide financing
at all. “This,” as FERC recognized, “would result in either increased costs for natural gas consumers or
greater supply constraints as a result of pipeline[s]’
inability to secure capital for construction.” PennEast
Pipeline Co., 170 FERC ¶ 61,064, at ¶ 62. Any increase
in the costs of capital for natural gas pipelines may
have broad effects on the national economy: over a
quarter of the country’s energy needs are currently
met by natural gas. American Gas Association, 2019
AGA Overview (Mar. 4, 2019).6
Nor are the effects of the Third Circuit’s decision
limited to this particular segment of the energy market. As noted above (supra pp. 13-14), the court’s
opinion also calls into question the constitutionality
of the Federal Power Act’s eminent-domain provision,
6
pdf.
https://www.aga.org/globalassets/2019-aga-overview-updated.
22
16 U.S.C. § 814. Nearly seventy-five years ago, this
Court recognized that the Federal Power Act generally
preempts state laws imposing permitting requirements that would effectively grant states a “veto
power over the federal project.” First Iowa HydroElectric Cooperative v. Federal Power Comm’n, 328 U.S.
152, 164 (1946). Having a “dual final authority * * *
would be unworkable.” Id. at 168. The Third Circuit’s
decision would grant states this same authority
through other means. The Federal Power Act authorizes FERC-approved licensees to condemn the property necessary to construct hydro-electric power
projects. 16 U.S.C. § 814. Although some state-owned
property is exempt from this condemnation provision, other state-owned property—including, most significantly, property interests a state acquired after
1992—is not. Ibid. Under the Third Circuit’s reasoning, Congress’s delegation of the power to acquire these
state-owned lands would violate the Eleventh Amendment. Pet. App. 26-27. States could thus use this immunity from condemnation to block the construction of
key hydro-electric power projects. Again, as with the
Natural Gas Act, that would subvert Congress’s clearly
expressed intent and increase the costs of energy.
More generally, the Third Circuit’s decision threatens to remove a critical tool from Congress’s toolkit.
For most of this nation’s history, Congress has delegated its eminent-domain power to private corporations in order to protect and promote interstate
commerce. E.g., Luxton, 153 U.S. at 533-34. Without
this authority, the railroads, telegraph lines, pipelines,
23
and other key infrastructure projects that knit the
nation together and constitute the foundation of our
economy might never have been built with such speed
and scope. E.g., California v. Central Pac. R. Co., 127
U.S. 1, 38-39 (1888) (discussing 1862 Act authorizing
Central Pacific Railroad Company of California to construct railroad and telegraph lines connecting San
Francisco to the Missouri river, and observing that
“[t]he power to construct, or to authorize individuals or
corporations to construct, national highways and
bridges from state to state, is essential to the complete
control and regulation of interstate commerce”). The
Third Circuit would impose a newfound limit on this
well-established authority: it may be exercised only if
each state through which these infrastructure networks extend provides its consent. If left uncorrected,
the Third Circuit’s novel decision may severely hamper
Congress’s ability to spur the development of infrastructure needed to sustain and promote economic
growth.
24
CONCLUSION
The petition for a writ of certiorari should be
granted.
Respectfully submitted,
DARYL JOSEFFER
MICHAEL B. SCHON
U.S. CHAMBER LITIGATION
CENTER
1615 H St., NW
Washington, DC 20062
(202) 463-5948
DEANNE E. MAYNARD
Counsel of Record
MORRISON & FOERSTER LLP
2000 Pennsylvania Ave. NW
Washington, DC 20006
(202) 887-8740
DMaynard@mofo.com
Counsel for the Chamber of
Commerce of the
United States of America
JAMES R. SIGEL
MORRISON & FOERSTER LLP
425 Market St.
San Francisco, CA 94105
Counsel for Amici Curiae
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.