Supreme Court Rules that State Sovereign Immunity Does Not Bar Eminent Domain Suits

The U.S. Supreme Court issued its opinion on Penneast Pipeline Co., v. New Jersey on June 29, 2021. In its 5-4 decision, one surprisingly not split across party lines, the Court addressed whether it is constitutional for the Federal Government to grant a pipeline company authority to condemn necessary rights-of-way in which a State has an interest. The Court answered the question in the affirmative, thereby reversing the Third Circuit’s decision.

Previously discussed on the blog here are the parties’ contentions and the facts of the case. Briefly summarized, however, PennEast, upon securing a certificate of public convenience and necessity, sought to acquire a right of way over several properties in which New Jersey claimed an interest for the construction of a natural gas pipeline. PennEast argued that the Natural Gas Act (“NGA”) authorizes holders of FERC certificates to exercise the Federal Government’s eminent domain power. New Jersey objected to this acquisition, claiming sovereign immunity.

The Supreme Court addressed four main contentions in its decision:

First, the Court agreed with the Petitioner and Respondents, stating that the Court of Appeals for the Third Circuit had jurisdiction to pronounce its ruling. The United States, serving as an amicus curiae here, raised the jurisdictional inquiry. It claimed that 15 U.S.C. §717r(b) gave the D.C. Circuit, in this case, exclusive jurisdiction to modify a FERC certificate order. Therefore, when the Third Circuit ruled that the NGA did not delegate to certificate holders the right to file a condemnation suit against nonconsenting states, it modified the order. This was incorrect because New Jersey did not seek to modify FERC’s order; rather it merely asserted a defense against PennEast’s condemnation proceedings.

Second, the crux of the decision revolved around New Jersey’s sovereign immunity defense. A State may be subjected to suit, in three limited situations:

1. State’s consent
2. Congress abrogates sovereign immunity via the 14^th Amendment, or
3. The State agreed to the suit through the “plan of the convention.”

The principal dissent, written by Justice Barrett, and the Respondents suggested that the NGA’s eminent domain provision is implemented via Congress’s interstate commerce power. Since Congress cannot abrogate sovereign immunity utilizing its commerce clause power, they argued New Jersey should be afforded immunity from suit. The Court, however, relied on the history of the Federal eminent domain power to support its holding that the third exception is implicated here. It has long been held that the Federal Government does not need consent to exercise eminent domain because states consented to it at ratification. The Federal Government can also delegate this power to private parties. Therefore, sovereign immunity does not protect New Jersey against this condemnation suit. To rule otherwise, the Court notes, would improperly divorce the eminent domain power from the power to bring condemnation suits.

Third, the Court addresses Justice Gorsuch’s additional dissent. He claims that even if States consented at the plan of convention, this case, nonetheless, fits within the rare instance where the 11^th Amendment divests federal courts of subject matter jurisdiction over suits filed against a State by a diverse plaintiff. The Court dismisses this by concluding that when a State waives its immunity and consents to suit, the 11^th Amendment cannot later bar the action.

Lastly, the Respondents contended that the NGA did not authorize the condemnation suits with the requisite clarity. The Court responded by saying that there is no clarity requirement imposed upon the Federal Government when it is authorizing a private party to exercise eminent domain.

The U.S. Supreme Court’s opinion can be found here.