US Interstate Natural Gas Pipelines: Supreme Court Decision Reveals a Constitutional High-Wire Act

01 September 2021
By Dr. Jeff D. Makholm

In an article in the September 2021 issue of the Wiley journal Climate and Energy, Managing Director Dr. Jeff D. Makholm examines the 29 June 2021 US Supreme Court decision in PennEast Pipeline CO., LLC v. New Jersey et al., in which the court confirmed by only the narrowest of margins that pipeline companies with a Federal Energy Regulatory Commission (FERC) “certificate of public convenience and necessity” can invoke eminent domain throughout the US. Until the PennEast decision, the industry and economists thought this basic power of eminent domain was already settled law.

Not only was the near-split decision surprising, but so was the procedural channel by which it arrived at the court for review. Most FERC cases spring from the US Court of Appeals for the DC Circuit, which handles regulatory matters. This case, however, came via the Third Circuit Court of Appeals. The unusual pathway to a decision regarding a FERC matter was upheld by the court’s majority. This meant that the court did not examine how FERC did its job (a DC Circuit matter). Rather, the majority took a case that raised the issue of the basic power of Congress to invoke eminent domain over state-owned land for a national purpose.

The 5-4 ruling indicates that we may see the time come in which private companies, even if delegated the power through FERC certification, could invoke eminent domain authority only against private landowners and not state-owned land if the state objects. If the dissenters’ position eventually prevails, it would nullify centuries-long accumulation of infrastructure regulation and would create additional hurdles for interstate pipelines to acquire state-owned land. The enormously successful US interstate natural gas pipeline system may be more vulnerable than we would have believed before the PennEast decision.

Makholm, Jeff D. (September, 2021). “US Interstate Natural Gas Pipelines: Supreme Court Decision Reveals a Constitutional High-Wire Act,” 38/2, ©2021 Wiley Periodicals, Inc., a Wiley company.