U.S. Supreme Court Upholds Eminent Domain Authority for FERC ‘Certificate’ Gas Pipeline Company Despite New Jersey’s Sovereign Immunity Challenges

October 2021

Environmental, Energy & Climate Change Law and Regulation Reporter, Volume 2, Number 1

On June 29, 2021, an uncharacteristic majority of the U.S. Supreme Court upheld the right of Federal Energy Regulatory Commission (FERC) certificate holders to exercise federal eminent domain authority and bring condemnation actions against states to acquire necessary rights-of-way to construct pipelines. Despite New Jersey’s defense that sovereign immunity protected the State against condemnation suits, the majority – a mix of liberal and conservative justices, Justices Roberts, Breyer, Alito, Sotomayor, and Kavanaugh – found that no such protection applied.

Background

In 1938, Congress authorized FERC to administer the Natural Gas Act (NGA), for the transportation and sale of natural gas in interstate commerce.  Pursuant to NGA § 717f(e), in order to build an interstate pipeline, a natural gas company must first receive a certificate from FERC that the construction “is or will be required by the present or future public convenience and necessity.”  Congress further amended NGA after natural gas companies struggled to exercise their construction rights without a mechanism by which to secure property rights.  That 1947 amendment authorized FERC certificate holders to exercise federal eminent domain power under NGA § 717f(h).

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