Amicus Curiae Brief — PennEast Pipeline Company, LLC, Petitioner v. New Jersey, et al.

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.

---------------------------------♦--------------------------------ON 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

---------------------------------♦--------------------------------DARYL JOSEFFER

MICHAEL B. SCHON

U.S. CHAMBER

LITIGATION CENTER

1615 H Street, NW

Washington, DC 20062

(202) 463-5948

Counsel for Chamber

of Commerce of the

United States of America

DEANNE E. MAYNARD

Counsel of Record

MORRISON & FOERSTER LLP

2100 L Street, NW,

Suite 900

Washington, DC 20037

(202) 887-8740

DMaynard@mofo.com

JAMES R. SIGEL

MORRISON & FOERSTER LLP

425 Market Street

San Francisco, CA 94105

Counsel for Amici Curiae

MARCH 8, 2021

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COCKLE LEGAL BRIEFS (800) 225-6964

WWW.COCKLELEGALBRIEFS.COM

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES .................................

ii

INTERESTS OF AMICI CURIAE .......................

1

INTRODUCTION AND SUMMARY OF ARGUMENT ...............................................................

3

ARGUMENT ........................................................

6

I.

THE NATURAL GAS ACT AUTHORIZES

CONDEMNATION OF STATE PROPERTY

INTERESTS ..............................................

6

A. Congress Can And Did Authorize The

Taking Of State-Owned Property ........

6

B. The Third Circuit’s Contrary Reading

Is Wrong ..............................................

8

C. The Third Circuit’s Decision Undermines

Congress’s Carefully Designed Scheme ... 11

1. The Third Circuit’s interpretation

of the Natural Gas Act grants states

a veto power over pipelines .............. 11

2. Granting states veto power frustrates

Congress’s scheme ............................ 16

II.

DEPARTING FROM THE PREVAILING

UNDERSTANDING OF THE NATURAL

GAS ACT WOULD HAVE SIGNIFICANT

REPERCUSSIONS .................................... 20

CONCLUSION..................................................... 25

ii

TABLE OF AUTHORITIES

Page

CASES

California v. Central Pac. R. Co.,

127 U.S. 1 (1888) .....................................................24

Chesapeake & Ohio Canal Co. v.

Union Bank of Georgetown,

5 F. Cas. 570 (C.C.D.D.C. 1830) ...............................24

First Iowa Hydro-Elec. Coop. v.

Fed. Power Comm’n,

328 U.S 152 (1946) ..................................................23

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) ............................................. 7, 24

Oklahoma ex rel. Phillips v. Guy F. Atkinson Co.,

313 U.S. 508 (1941) ............................................... 7, 9

Schneidewind v. ANR Pipeline Co.,

485 U.S. 293 (1988) .................................................11

Shaffer v. Heitner,

433 U.S. 186 (1977) .................................................10

Tenn. Student Assistance Corp. v. Hood,

541 U.S. 440 (2004) ........................................... 10, 11

United States v. Holt State Bank,

270 U.S. 49 (1926) ...................................................13

iii

TABLE OF AUTHORITIES—Continued

Page

STATUTES AND LEGISLATIVE HISTORY

15 U.S.C. § 717f(c)(1)(B) .............................................17

15 U.S.C. § 717f(e) ......................................................17

15 U.S.C. § 717f(h) .............. 3, 4, 5, 6, 7, 8, 9, 10, 11, 13,

......................................................... 15, 16, 17, 19, 20

15 U.S.C. § 717r(b) ......................................................18

16 U.S.C. § 814 .................................................. 6, 15, 23

Act of Apr. 8, 1858, ch. 14, 11 Stat. 263 ......................24

Act of Mar. 3, 1809, ch. 31, 2 Stat. 539 ................... 7, 24

S. Rep. No. 80-429 (1947) ...................................... 13, 19

ADMINISTRATIVE PROCEEDINGS

Comment of New Jersey Natural Gas, PennEast

Pipeline Company, LLC, FERC Docket No.

RP20-41 (Oct. 18, 2019) ....................................... 20, 21

Comment of TC Energy Corp., PennEast Pipeline

Company, LLC, FERC Docket No. RP20-41

(Oct. 18, 2019) .........................................................21

Islander East Pipeline Co.,

102 FERC ¶ 61,054 (2003) ........................................8

PennEast Pipeline Co.,

170 FERC ¶ 61,064 (2020) .......... 8, 11, 14, 15, 19, 22

Recommendation to the President

Alaska Nat. Gas Transp. Sys,

58 F.P.C. 810 (1977) ...................................................8

iv

TABLE OF AUTHORITIES—Continued

Page

Tenneco Atl. Pipeline Co.,

1 FERC ¶ 63,025 (1977) ............................................8

OTHER AUTHORITIES

Adam Hermann, 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/ ........................................................... 16, 17

Order, Delaware Riverkeeper Network v. FERC,

No. 18-1128 (D.C. Cir., Oct. 1, 2019) .......................18

PennEast Pipeline, Overview 1 (Sep. 21, 2016),

https://penneastpipeline.com/wp-content/

uploads/2016/10/PennEast_Overview_9-2116_9pm.pdf ..............................................................21

Restatement (First) Property, § 53 (1936) ...................9

Thomas W. Merrill, The Economics of Public Use,

72 CORNELL L. REV. 61 (1986) .................................12

U.S. Energy Information Administration, Natural

gas explained (Dec. 3, 2020), https://www.

eia.gov/energyexplained/natural-gas/naturalgas-pipelines.php ....................................................14

U.S. Energy Information Administration, U.S.

energy facts explained (May 7, 2020), https://

www.eia.gov/energyexplained/us-energy-facts ......22

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 Ass’n, 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 10,000 member businesses throughout Pennsylvania, which employ more

than half 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 policy

issues that will expand private sector job creation, to

promote an improved and stable business climate, and

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. All parties have consented to the filing of this brief.

2

to promote Pennsylvania’s economic development for

the benefit of all Pennsylvania citizens.

Amici have a substantial interest in the issues

presented here. The Third Circuit’s decision in this

case represented a significant departure from the previously settled understanding that Congress may—

and, in the Natural Gas Act, did—authorize the taking of state-owned land to facilitate the construction of

much-needed interstate pipelines. Acceptance of the

court of appeals’ erroneous reasoning would cause

significant harm to many of amici’s members, including members that construct pipelines and other infrastructure projects, and members that rely on that

infrastructure to serve their energy and other needs.

3

INTRODUCTION AND

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’s decision, if affirmed, would

drain Section 717f(h) of much of its purpose. If Section

717f(h) does not apply to state-owned property, individual states’ policy concerns and energy preferences

would undermine FERC’s authority to determine the

number and location of pipelines necessary to serve

the nation’s energy needs. Contrary to Congress’s

clearly expressed intent, this reading of Section

717f(h) would leave the fate of all such pipeline projects to the whims of the various states through which

the pipeline must pass. That is not the scheme Congress designed.

4

First, Section 717f(h) 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.

While

FERC’s decision to authorize the taking of a state’s

property may offend that state’s sovereign interests,

it has long been settled that states consented to this

abrogation of their sovereignty in the plan of the Constitutional Convention. States have no residual sovereign interest that might be implicated by the

eminent-domain proceedings that are the necessary

consequence of FERC’s decision—proceedings intended to compensate property owners like the states,

not to impose liability on them.

Second, a contrary reading of Section 717f(h)

would upend the comprehensive scheme Congress created in the Natural Gas Act. Under the Third Circuit’s

interpretation, 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 acquired that nonpossessory interest may be.

Any state thus may effectively exert a veto power

over any proposed pipeline. While Congress created

extensive procedures to allow states (and other

5

stakeholders) to express their views and concerns, Congress specifically declined to allow states the authority

to unilaterally preclude pipeline construction altogether. The Third Circuit’s understanding of Section

717f(h) would render 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, this Court’s acceptance of that misreading

of Section 717f(h) would have serious economic repercussions. The PennEast pipeline—which alone would

generate an estimated 12,000 jobs, $740 million in

wages, and as much as $900 million in annual energy

savings—would be only the first casualty. Other natural gas pipelines also may soon meet their demise due

to state objections. Even those pipelines that do go

forward may do so only at greater cost given the added

risks associated with investment in such projects—

costs that would then 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 interpretation of Section 717f(h) would more broadly threaten Congress’s

ability to delegate its eminent-domain authority—a

power Congress has used to facilitate construction of

roads, railroads, and other infrastructure projects for

more than two centuries.

This Court should confirm that Section 717f(h)

must be read according to its plain terms, restore the

balanced scheme embodied in the Natural Gas Act,

6

and ensure the continued development of critical infrastructure projects.

ARGUMENT

I.

THE NATURAL GAS ACT AUTHORIZES

CONDEMNATION OF 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

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.

In this respect, Section 717f(h) is 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

7

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 eminent-domain power.

Congress’s authority to enact Section 717f(h) 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. Guy F. Atkinson Co., 313 U.S. 508, 534 (1941).

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).

It also has long held that Congress may delegate

the federal government’s eminent-domain power to

private parties. E.g., Luxton v. N. River Bridge Co.,

153 U.S. 525, 533-34 (1894). Indeed, for more than two

hundred years, it has been Congress’s practice to

grant the condemnation authority needed to construct

important infrastructure projects to the private companies equipped to build those projects. E.g., Act of

Mar. 3, 1809, ch. 31, 2 Stat. 539 (authorizing taking for

construction of road).

Given the plain text of Section 717f(h) and

Congress’s well-established power to enact such a

8

provision, it should come as no surprise that parties

have regularly exercised this federal eminent-domain

authority to seize the property necessary for pipeline

construction along FERC-approved routes, even when

that property is state-owned. 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 “the 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 last 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., 170 FERC ¶ 61,064, at ¶ 25 (2020).

B. The Third Circuit’s Contrary Reading Is

Wrong

The Third Circuit’s decision 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.

9

The Third Circuit’s rationale cannot withstand

scrutiny. Nothing in the Natural Gas Act’s plain language provides any license for 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

court of appeals invoked justify its 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.

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 the case even when this federal

power is delegated to a private party, because 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

10

is traditionally associated with sovereignty, such as

eminent domain,” is state action). The states thus have

no immunity from this exercise of federal authority.

That is all the more true given the nature and purpose of these particular Natural Gas Act proceedings,

which impose no liability on the state. To be sure, the

state may be a nominal defendant in the Section

717f(h) action, which is part of the process by which

the state is deprived of a property right. But an

eminent-domain proceeding is in rem, not in personam,

meaning the effect of any judgment “is limited to the

property that supports jurisdiction and does not

impose a personal liability on the property owner.”

Shaffer v. Heitner, 433 U.S. 186, 199 (1977). And the

decision to divest the state of its property interest is

made by the federal government when FERC issues

the requisite “certificate of public convenience and

necessity” that encompasses the state’s property interest—not in the Section 717f(h) action. 15 U.S.C.

§ 717f(h).

The Section 717f(h) action itself is intended

merely to compensate the state for this taking (assuming the state and the holder of the FERC-issued certificate cannot privately agree on a fair measure of

what the state is owed). See ibid. In initiating such

an action, the certificate holder “does not seek monetary damages or any affirmative relief from a State.”

Tenn. Student Assistance Corp. v. Hood, 541 U.S. 440,

450 (2004). Nor does it otherwise subject the state to

“a coercive judicial process.” Ibid. Rather, the certificate holder seeks a judicial assessment of its liability

11

to the state. Thus, much like similar in rem proceedings under bankruptcy and admiralty law, Section

717f(h) actions pose no “threat[ ] to state sovereignty,”

and the exercise of federal jurisdiction does not “offend

the sovereignty of the State.” Id. at 451 & n.5.

C. The Third Circuit’s Decision Undermines

Congress’s Carefully Designed Scheme

Not only is the Third Circuit’s reading of the Natural Gas Act inconsistent with the Act’s text, it would

also drain the statute of much of its purpose. The Natural Gas Act “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 interpretation subverts those efforts

and would 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 Third Circuit’s interpretation of

the Natural Gas Act 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

12

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

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.

13

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 is because, the report explained, it is the

federal government, through the Federal Power Commission (and now FERC), that “is given exclusive jurisdiction 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 reading of the Natural

Gas Act, states would reacquire 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).

As this map of natural gas pipelines shows, few if any

pipeline projects can completely evade all such stateowned property:

14

U.S. Energy Information Administration, Natural gas

explained (Dec. 3, 2020).2 Those pipelines that could

avoid state-owned property would be able to do so only

at substantial cost. There are thus 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 interpretation of the Natural

Gas Act is all the more problematic because it exempts

2

https://www.eia.gov/energyexplained/natural-gas/naturalgas-pipelines.php.

15

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 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 Company, 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. 6-7.

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

16

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

recently acquired property interests would be unconstitutional. Pet. App. 26-27; see infra pp. 22-23.

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, Congress provided detailed

mechanisms for states to express their concerns and

for FERC to address them. But if, as the Third Circuit

concluded, 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 Hermann, New Jersey turns down

permits for proposed 120-mile natural gas pipeline,

PHILLY VOICE (Oct. 12, 2019).3 New Jersey governor

Phil Murray declared: “My Administration fought and

3

https://www.phillyvoice.com/new-jersey-proposed-naturalgas-pipeline-120-miles-trenton-pennsylvania-penneast/.

17

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.

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. 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 having provided 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 that

makes this decision for interstate pipelines, and not

the individual states. Ibid.

The procedural requirements that precede any

such FERC determination allow 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

18

representatives of federal, state, and local agencies.”

Pet. App. 42. FERC received more than 6,000 written

comments, along with numerous additional verbal

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, Del. Riverkeeper

Network v. FERC, No. 18-1128 (D.C. Cir. Oct. 1, 2019)

(holding case in abeyance pending final resolution of

Third Circuit proceedings).

Under the Third Circuit’s reading of the Natural

Gas Act, however, 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.

19

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 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 interpretation subverts that

carefully calibrated approach.

The Third Circuit’s suggested “work-around” fails

to resolve this fundamental problem. Contra Pet. App.

31. The court of appeals suggested that, rather than

have PennEast or a similar private entity condemn

state-owned 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 ¶¶ 51-52. 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

20

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 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. 6-11.

Contrary to the Third Circuit’s decision, nothing

required Congress to make a different, more costly,

choice.

II.

DEPARTING FROM THE PREVAILING

UNDERSTANDING OF THE NATURAL GAS

ACT WOULD HAVE SIGNIFICANT REPERCUSSIONS

The consequences of the Third Circuit’s interpretation of the Natural Gas Act further confirm the

court of appeals’ error. Parties had long accepted the

straightforward proposition that the statute authorizes condemnation of any property FERC determines

to be necessary for the nation’s natural gas infrastructure, including state-owned property. Accepting the

Third Circuit’s recalibration of Congress’s carefully

crafted scheme would have significant practical implications.

Indeed, just the single pipeline directly 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

21

Natural Gas, at 3-4, PennEast Pipeline Co., FERC

Docket No. RP20-41 (Oct. 18, 2019). 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 4.7 million households. PennEast Pipeline, Overview 1 (Sept. 21, 2016).4

According to PennEast’s estimates, this added supply

could save consumers nearly $900 million in some

years. Ibid. And the construction of the pipeline alone

would itself generate 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. Already, Maryland has asserted 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., at 19, PennEast Pipeline Company, LLC,

FERC Docket No. RP20-41 (Oct. 18, 2019). Were this

Court to affirm the decision below, other states would

undoubtedly invoke this newfound veto power.

The uncertainties created by these potential state

vetoes would have widespread ramifications. Pipelines

4

https://penneastpipeline.com/wp-content/uploads/2016/10/

PennEast_Overview_9-21-16_9pm.pdf.

22

require significant capital investment, and the costs of

raising such capital depend on the associated risks.

Any reading of the Natural Gas Act that allows states

to exempt themselves from the statute’s eminentdomain provision would multiply that risk for all natural gas pipelines. No longer could investors be confident that FERC approval of a project will be the final

word. Instead, they would be required to account for

the possibility that one or more states might subsequently step in and prohibit a pipeline’s construction.

To address that risk, investors would either increase

the interest rate at which they lend funds or 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 would, in turn, have broad effects on the

national economy. Indeed, nearly a third of the country’s energy needs are currently met by natural gas.

U.S. Energy Information Administration, U.S. energy

facts explained (May 7, 2020).5

Nor would the effects of adhering to the Third Circuit’s interpretation of the Natural Gas Act be limited

to this particular segment of the energy market. As

noted above (supra pp. 15-16), if sovereign immunity

concerns require departing from the Natural Gas

Act’s plain text, they also call into question the

5

https://www.eia.gov/energyexplained/us-energy-facts.

23

constitutionality of the Federal Power Act’s eminentdomain provision, 16 U.S.C. § 814. Nearly 75 years

ago, this Court recognized that the Federal Power Act

generally preempts state laws imposing permitting

requirements that would otherwise effectively grant

states “a veto power over the federal project.” First

Iowa Hydro-Elec. Coop. v. Fed. Power Comm’n, 328 U.S.

152, 164 (1946). Having a “dual final authority * * *

would be unworkable.” Id. at 168.

Under the Third Circuit’s reasoning, however, states

would acquire that same “final 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. Yet if Congress’s delegation of power to acquire

state-owned lands in the Natural Gas Act would violate the Eleventh Amendment, so too would the Federal Power Act’s parallel delegation of power. Pet. App.

26-27. States could use this newly recognized 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, adopting the Third Circuit’s rationale

would threaten to remove a critical tool from Congress’s toolkit. For most of this nation’s history, Congress has delegated its eminent-domain power to

24

private corporations to protect and promote interstate

commerce. See Luxton, 153 U.S. at 533-34. Congress

has used this authority to construct roads,6 canals,7

aqueducts,8 railroads and telegraph lines,9 and innumerable other public goods. Without this authority,

the 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.

The Third Circuit’s understanding of eminent

domain proceedings would impose a novel limit on this

well-established authority: it may be exercised only if

each state consents to having these infrastructure

networks pass through its boundaries. This Court’s

acceptance of that proposition would severely hamper

6

Act of Mar. 3, 1809, ch. 31, 2 Stat. 539 (authorizing company to take land for construction of turnpike).

7

Chesapeake & Ohio Canal Co. v. Union Bank of Georgetown, 5 F. Cas. 570, 572 (C.C.D.D.C. 1830) (discussing condemnation proceedings for property taken to construct canal).

8

Act of Apr. 8, 1858, ch. 14, 11 Stat. 263 (authorizing takings

by government’s approved agents for construction of aqueduct).

9

California v. Cent. 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, California, 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”).

25

Congress’s ability to spur the development of infrastructure needed to sustain and promote economic

growth.

CONCLUSION

The judgment of the court of appeals should be

reversed.

Respectfully submitted,

DARYL JOSEFFER

MICHAEL B. SCHON

U.S. CHAMBER LITIGATION

CENTER

1615 H Street, NW

Washington, DC 20062

(202) 463-5948

Counsel for Chamber

of Commerce of the

United States of America

DEANNE E. MAYNARD

Counsel of Record

MORRISON & FOERSTER LLP

2100 L Street, NW,

Suite 900

Washington, DC 20037

(202) 887-8740

DMaynard@mofo.com

JAMES R. SIGEL

MORRISON & FOERSTER LLP

425 Market Street

San Francisco, CA 94105

Counsel for Amici Curiae

MARCH 8, 2021