On June 29, 2021, the United States Supreme Court ruled in a 5-4 decision that the federal government’s power to take property for public use could be delegated to private parties and that such power included taking land whether owned by private parties or States.
In PennEast Pipeline Co. v. New Jersey, the Court held that the Natural Gas Act (NGA) authorizes Federal Energy Regulatory Commission (FERC) certificate holders to take property for gas pipelines through eminent domain whether owned by private parties or States. Congress passed the NGA in 1938 to regulate the transportation and sale of natural gas in interstate commerce.
To build an interstate pipeline, a natural gas company must obtain from the FERC a certificate reflecting that such construction “is or will be required by the present or future public convenience and necessity.” 15 U. S. C. §717f(e). In 1947, Congress amended the NGA to authorize certificate holders to exercise the federal eminent domain power, thereby ensuring that certificates of public convenience and necessity could be given effect. See Section 717f(h).
Here, the FERC granted PennEast Pipeline Co. a certificate of public convenience and necessity authorizing construction of a 116-mile pipeline from Pennsylvania to New Jersey. PennEast filed various complaints in Federal District Court in New Jersey seeking to exercise the federal eminent domain power under Section 717f(h) to obtain rights-of-way along the pipeline route approved by FERC, including certain parcels of land in which either New Jersey or the New Jersey Conservation Foundation asserts a property interest.
New Jersey moved to dismiss PennEast’s complaints on sovereign immunity grounds. The District Court denied the motion, and it granted PennEast’s requests for a condemnation order and preliminary injunctive relief. The Third Circuit vacated the District Court’s order insofar as it awarded PennEast relief with respect to New Jersey’s property interests. The Third Circuit concluded that because Section 717f(h) did not clearly delegate to certificate holders the federal government’s ability to sue nonconsenting States, PennEast was not authorized to condemn New Jersey’s property.
The United States Supreme Court reversed the Third Circuit, and held that Section 717f(h) authorizes FERC certificate holders to condemn all necessary rights-of-way, whether owned by private parties or States. The Court held:
- The federal government has exercised its eminent domain authority since the founding, connecting our country through turnpikes, bridges, and railroads—and more recently through pipelines, telecommunications infrastructure, and electric transmission facilities.
- The Court has upheld these exercises of the federal eminent domain power—whether by the Government or a private corporation, whether through the upfront taking of property or a condemnation action, and whether against private property or state-owned land.
- The Takings Clause of the Fifth Amendment (“nor shall private property be taken for public use, without just compensation”) presupposed the existence of such a power.
- Initially, the Federal Government exercised its eminent domain authority in areas subject to exclusive federal jurisdiction. The Court later confirmed that federal eminent domain extended to property within a State in Kohl v. United States.
- For as long as the eminent domain power has been exercised by the United States, it has also been delegated to private parties. The Colonies, the States, and the Federal Government have commonly authorized the private condemnation of land for public works.
- In Luxton v. North River Bridge Co., for example, the Court rejected a landowner’s claim that Congress could not delegate its authority to condemn property necessary to construct a bridge between New York and New Jersey. Congress had the sovereign power to construct bridges for interstate commerce, and the Court confirmed Congress could choose to do so through a corporation.
- Section 717f(h) delegates to certificate holders the power to condemn any necessary rights-of-way, including land in which a State holds an interest. This delegation of the federal eminent domain authority is consistent with the Nation’s history and this Court’s precedents.
- FERC’s issuance to a company of a certificate of public convenience and necessity to build a pipeline carries with it the power—if the company cannot acquire the necessary rights-of-way by contract at an agreed compensation—to “acquire the same by the exercise of the right of eminent domain.” Section 717f(h). This delegation is categorical, including the power to condemn any land in which a State holds an interest.
The Supreme Court rejected contrary arguments that “sovereign immunity” of the States bars condemnation actions against a nonconsenting State and that that Section 717f(h) does not speak with “sufficient clarity” to authorize such actions, holding:
- The States implicitly consented to private condemnation suits when they ratified the Constitution; and
- There is no requirement that the Federal Government speak with “unmistakable clarity” when authorizing a private party to exercise its eminent domain power.
While the PennEast decision involved taking land for the construction of a natural gas pipeline, its holding is instructive for its broader implications regarding the power of the federal government to take land for public use while providing just compensation, and the federal government’s ability to delegate those powers.