Supreme Court Hesitant to Give Business More Eminent Domain Powers
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Justices Skeptical of Biden Admin and Natural Gas Pipeline Company’s Arguments in Favor of Eminent Domain for Big Business

The Supreme Court heard oral arguments in a case with significant implications for the extent of the power that private companies have over governments in terms of eminent domain.

Stylized as PennEast Pipeline Co. v. New Jersey, the dispute centers around whether the hydrocarbon business can seize state-owned property in order to build a 116-mile-long natural gas pipeline through Pennsylvania and New Jersey. The Garden State wants nothing to do with the proposed boondoggle and several different tribunals, courts and otherwise, have been implicated so far–leading up to Wednesday’s showdown before the nation’s high court.

In 2018, the Federal Energy Regulatory Commission (FERC) issued PennEast a “certificate of public convenience and necessity” under the Natural Gas Act (NGA) which authorized pipeline construction–pending an environmental review–and which purported to confer eminent domain powers comparable to the government itself.

New Jersey challenged the issuance of that certificate using FERC procedures and was denied–so they filed a mandatory appeal with the U.S. Court of Appeals for the District of Columbia Circuit.

Around the same time, PennEast filed several eminent domain lawsuits before a federal district court in New Jersey which prompted the D.C. appellate court to pause their own review of the FERC certificate issuance pending the resolution of those lawsuits.

New Jersey, responding to the various eminent domain lawsuits, asserted 11th Amendment sovereign immunity and initially lost at the district level before winning their argument on appeal before the U.S. Court of Appeals for the Third Circuit.

The Third Circuit reasoned that the federal government’s ability to seize state land “is, in fact, the function of two separate powers: the government’s eminent domain power and its exemption from Eleventh Amendment immunity.” The court went on to caution that “[a] delegation of the former must not be confused for, or conflated with, a delegation of the latter” and added that “[a] private party is not endowed with all the rights of the United States by virtue of a delegation of the government’s power of eminent domain.”

PennEast filed a petition with the Supreme Court, arguing that NGA certificates delegating federal eminent domain powers to private entities can defeat even a state’s own claims of sovereign immunity.

The foremost question before the nine justices is “whether the NGA delegates to FERC certificate holders the federal government’s eminent domain power to condemn land in which a state claims an interest.” A separate jurisdictional question was also briefed but not really taken up during oral argument on Wednesday.

“It’s really quite extraordinary to have private parties overruling state immunities,” Chief Justice John Roberts told PennEast’s lead counsel Paul Clement, the former U.S. Solicitor General under then-President George W. Bush, reflecting a general state of skepticism from the court’s members toward the natural gas company’s position.

Clement repeatedly argued that a private entity becomes a “limited purpose public actor” under the current statutory regime of the NGA, with varying degrees of success.

“Condemnation lawsuits against the states were unthinkable at the founding,” New Jersey Assistant Attorney General Jeremy M. Feigenbaum said when it was his turn to field questions from the chief justice. “The NGA is silent as to states.”

Justice Sonia Sotomayor said that “delegation is troublesome for me” and asked if the federal government could delegate such authority absent the FERC. Clement suggested similar things have happened in the past with the construction of the nation’s railroads. When asked by the furthest left justice why a sovereign should be forced to negotiate with a non-sovereign, Clement said sovereign immunity doesn’t kick in until you’re in court but added that PennEast is effectively acting as the FERC’s agent.

Justice Samuel Alito was skeptical of PennEast as well, echoing New Jersey’s argument that their entry into the United States was premised on the idea that the state would only give up sovereign immunity (and therefore cede eminent domain authority) to the United States itself, not to a deputized or delegated private party.

An odd moment occurred when Clement attempted to favorably cite legendary former justice Antonin Scalia, a staunch opponent of eminent domain, in an effort to defend his client’s pro-eminent domain position–while being taken to task by clear eminent domain foe and the judge who is widely viewed as the living embodiment of Scalia’s arch-textualist bent: Justice Neil Gorsuch.

“Why doesn’t this case fall within the plain text of the 11th Amendment itself?” Gorsuch asked Clement. “We have a citizen of one state suing a citizen of another state.”

PennEast’s attorney again attempted to make the “limited purpose public actor” argument before launching into the ill-advised Scalia invocation that ultimately went nowhere.

Notably, Gorsuch later extracted a concession from the federal government on the 11th Amendment issue as the Biden administration took PennEast’s side in the matter.

Deputy U.S. Solicitor General Edwin Kneedler consistently echoed PennEast’s position on the points of law at stake. Eventually, however, Gorsuch got Kneedler to acknowledge that, at root, PennEast has filed a lawsuit against a U.S. state, which is typically barred by the 11th Amendment’s grant of sovereign immunity.

Justice Clarence Thomas suggested that New Jersey’s controlling interests–possessory and environmental–in the properties at stake might prove fatal to PennEast. The justice formerly known for his silence on the bench later sought to clarify the level of control that New Jersey has over the parcels when quizzing Feigenbaum.

Thomas also asked if the U.S. can delegate its ability to override sovereign immunity and got the answer he seemed to be looking for.

“We don’t think so, no,” Feigenbaum said, citing the “lack of any evidence at the founding or at any time since” that such a delegation would have been allowed or even comprehended.

Justice Amy Coney Barrett was also less than unclear about her position, saying that didn’t “see any historical support” for PennEast’s argument that a deputized private entity can successfully sue a state on eminent domain grounds.

Justice Elena Kagan sought to clarify the extent of how the federal government was actually involved if the court should accept PennEast’s argument that they have stepped into the government’s shoes. Clement admitted that the FERC is not “directly sitting over our shoulder” and directing PennEast’s actions. Kagan countered that New Jersey’s argument is that PennEast has acted in numerous ways the federal government would not have in terms of timing, land valuation and other issues–and later appeared to endorse some of Feigenbaum’s arguments about the lack of federal control.

PennEast did appear to make some headway with Justices Stephen Breyer and Sotomayor, who both looked back to the history of gas pipeline construction in the United States and suggested that New Jersey’s argument might have negative ripple effects.

While Breyer cautioned that Congress is usually clear when there’s an exception to sovereign immunity, he also noted that the several states and the federal government have been delegating such authority “for quite a long time.”

“History is very important to me,” Sotomayor added when addressing Feigenbaum, referencing Breyer’s position. She attempted to frame New Jersey’s position as something of a new objection in terms of how eminent domain, sovereign immunity and natural resources development have played out over the past.

Feigenbaum said that if the objection was new, it wouldn’t be dispositive but also argued that states have been raising such objections for around 20 years–before circling back to New Jersey’s understanding of the law itself.

“Modern practice can’t overcome the lack of founding-era consent,” he said.

[image via BRENDAN SMIALOWSKI/AFP via Getty Images]

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