April 5, 2020

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April 03, 2020

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PennEast Pipeline Update: FERC and the U.S. Supreme Court

The litigation surrounding the PennEast pipeline continues, with neither side backing down. Although the battle is being fought in multiple courts, two recent orders are worth highlighting.

On February 20, 2020, the Federal Energy Regulatory Commission (FERC) granted PennEast Pipeline Company, LLC’s (“PennEast”) request for an extension of time to complete its 116 mile natural gas pipeline project which originates in Pennsylvania and extends into Mercer County, New Jersey. The original deadline to complete construction was January 19, 2020, and the new deadline is January 19, 2022.

Although the extension is not a surprise, since FERC grants these extensions routinely, it is interesting to note that one FERC Commissioner (Commissioner Glick) wrote a short and concise dissent and expressly recommended that FERC “simultaneously stay the certificate” so “PennEast cannot further exercise eminent domain until at least some” of the issues that support the extension are resolved. A very good and fair suggestion since what we now have is a clear example of putting the cart before the horse – seeking to take property for a pipeline that may never be built.

PennEast used this artificial deadline in support of its original application for injunctive relief in the eminent domain cases filed in New Jersey arguing it would be irreparably harmed if it could not meet this deadline. Property owners pointed out the weakness of this claim by giving the court numerous examples of how easy it is to get extensions. The court was not persuaded by the property owner’s arguments and granted injunctive relief allowing PennEast to move forward with the project.

The United States Supreme Court granted PennEast’s extension of time for filing its petition for a writ of certiorari to March 4, 2020. In simpler terms, a petition for the issuance of a writ of certiorari is a written request to the United States Supreme Court to review a lower court decision; in this case, the decision of the Third Circuit Court of Appels ruling that PennEast cannot sue the State of New Jersey in Federal Court.

PennEast requested the extension for several reasons, including the need to allow FERC time to decide PennEast’s request that FERC issue a declaratory order on FERC’s understanding of the scope of a certificate holder’s authority under the Natural Gas Act, that scope being whether a pipeline company can sue a state in federal court – the exact issue already decided by the United State Court of Appeals. Once again, to no surprise, FERC sided with the pipeline company in a decision that is a bit brazen, to say the least. Commissioner Glick, in another telling dissent, drives home the obvious problem with this superficial decision:

There is no need for the Commission to insert itself into what is primarily a constitutional question that is being litigated where those questions belong: The federal courtsNor is this an area where the Commission has the particular expertise the majority is so quick to claim. The NGA requires the Commission to determine whether an interstate pipeline is required by the public convenience and necessity. If the Commission finds that a proposed pipeline is so required, section 7(h) of the NGA automatically provides the pipeline developer eminent domain authority without any action or further involvement by the Commission. The congressional intent behind a statutory provision that governs a judicial scheme, which the Commission has no role in administering, is not a subject on which we are especially well-qualified to opine.

Unfortunately, the dissent is just the opinion of one commissioner disagreeing with the majority. However, a dissent can sometimes lead to a change in the law if new commissioners are appointed who share the dissenter’s view, the majority reconsiders its past positions, or Congress decides to correct the problem with legislation.

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About this Author

Timothy P. Duggan, Stark Law, Creditor's Rights Lawyer, Bankruptcy Attorney
Shareholder

Timothy P. Duggan is Chair of Stark & Stark’s Bankruptcy & Creditors' Rights Group.  Mr. Duggan represents national and community banks, agricultural lenders, franchisors, equipment leasing companies, shopping centers and trade creditors in commercial litigation and bankruptcy cases.  Mr. Duggan has substantial experience in creditor-rights litigation, including foreclosures, replevin matters and negotiating corporate loan restructuring. Mr. Duggan’s litigation experience covers most aspects of bankruptcy litigation, with a focus on defending preference and fraudulent transfer...

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