Federal decision on eminent domain could impact pipeline development in Louisiana


A recent federal appellate court decision in New Jersey could have implications for pipeline development in Louisiana, according to a Baton Rouge pipeline defense attorney.

Writing for the Louisiana Law Blog, Kean Miller attorney Pam Mascari outlined a recent Third Circuit Court of Appeals decision that found pipeline companies may not exercise their powers of eminent domain granted under the federal Natural Gas Act in federal courts when seeking to acquire state-owned lands.

In the matter of PennEast Pipeline Company LLC, the appellate court ruled in favor of New Jersey, finding that its sovereign immunity under the 11th Amendment prohibited PennEast Pipeline from condemning property owned by the State of New Jersey.

“Due to the vast acreage of state owned water bottoms in Louisiana,” Mascari writes, “this decision portends potentially significant changes in pipeline development within the state.”

PennEast Pipeline Company LLC obtained federal approval to construct a pipeline through Pennsylvania and New Jersey, according to Mascari. After PennEast obtained approval for the project, it sued in federal court to condemn and gain access to properties along the approved route. Of  the 113 tracts sued upon, 42 are owned, at least in part, by the State of New Jersey.

According to Mascari, a New Jersey federal court concluded PennEast had met all conditions required under the NGA to exercise the right of eminent domain, rejected New Jersey’s argument that it was immune from suit by a private entity under the 11th Amendment, and granted PennEast orders of condemnation and immediate access to the properties. New Jersey appealed the decision.

The Third Circuit pointed to the two competing powers at issue: the federal government’s eminent domain power and the federal government’s exemption from Eleventh Amendment immunity. PennEast argued that the Natural Gas Act impliedly represents a delegation of the federal government’s power to sue a state government when exercising the power of eminent domain. The Third Circuit rejected this notion finding no authority for a “delegation theory” of the waiver of sovereign immunity. Further, the Third Circuit noted that Congress may only abrogate sovereign immunity by unequivocal statutory language. The court found no such unequivocal waiver of sovereign immunity in the Natural Gas Act.

In their ruling, the justices disputed acknowledged their decision “may disrupt how the natural gas industry, which has used the NGA to construct interstate pipelines over State-owned land for the past 80 years, operates.” But they noted that interstate gas pipelines can still proceed, with an “accountable federal official”—rather than a private pipeline company—filing the necessary condemnation actions and then transferring the property to the natural gas company.

Read the Louisiana Law Blog blog post.