Interstate Pipeline Companies: Condemning the State in Federal Court

September 4, 2019

This article originally appeared in the May 2019 issue of Pipeline & Gas Journal. Since publication, there’s been an important judicial update; additional information immediately follows the article reprint.

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At oral argument, held on June 10, 2019, the Court questioned the State’s attorney as to whether the State’s failure to assert its sovereign immunity as a defense in previous condemnation actions informs how the 11th Amendment should be interpreted.  The State’s attorney responded that the State’s failure to assert immunity does not mean that it believed it was not immune from suit but shows that states will not be regularly asserting immunity in these types of cases.  The Court also raised the concerns expressed by PennEast and amicus that the State could acquire easements on private property in an effort to thwart pipeline projects, effectively giving states a veto contrary to Congress’ intent under the Natural Gas Act.  The State responded that it matters who is filing the condemnation.  The State noted that the federal government has the authority to condemn property in which the State holds an interest, and that if Congress authorized the federal government to directly condemn for the construction of natural gas pipelines, it could do so and assign its rights to the pipeline company. 

The Court, however, saved its toughest questions for PennEast, asking the company’s attorney whether the United States could delegate to PennEast the authority to strip the state of its sovereign immunity.  The Court pointed to the U.S. Supreme Court’s decision in Blatchford v. Native Village of Noatak, 501 U.S. 775 (1991), in which the justices questioned whether the United States could delegate its exemption from state sovereign immunity. The Court also questioned PennEast’s attorney that, even if the United States could delegate its authority, whether Congress had done so through the Natural Gas Act.  PennEast responded that the Natural Gas Act allows condemnation of all “necessary property”, but the Court pushed back by noting that the law is silent about State property and, therefore, does not provide the “unmistakable clarity” that would demonstrate Congress’ intent to strip the State of its immunity.