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Pipeline Operators Score Massive Supreme Court Victory

The U.S. Supreme Court backed on Tuesday a pipeline development consortium in its legal battle with the state of New Jersey over eminent domain for a planned natural gas pipeline between Pennsylvania and New Jersey.

The Supreme Court was hearing over the last two months arguments in a landmark lawsuit that could have dramatically changed the fate of pipeline projects if the court had sided with the state of New Jersey. But it did not.

New Jersey argued that the PennEast Pipeline Company, a consortium including Enbridge, could not use eminent domain to seize land for the project’s construction.   

Taking the case to the Supreme Court, PennEast Pipeline Company was looking to overturn a federal appeals court ruling from 2019, which said that PennEast could not use eminent domain to seize land owned by the state of New Jersey for pipeline construction. The federal appeals court argued in 2019 that taking the New Jersey-owned land went against the 11th Amendment, which protects states from certain lawsuits.

Just after the Supreme Court agreed in March to hear the case, the Biden Administration, just like the Trump Administration before that, backed in a brief to the court the arguments of the pipeline company seeking to overturn the lower court’s ruling.

Related: High Oil Prices Set Supermajors Up For A Promising Earnings Season

The move from President Joe Biden’s Department of Justice to back the pipeline developers in the lawsuit shocked environmentalists who had hoped the Administration would not support any oil and gas pipeline projects.

In a 5-4 ruling on Tuesday, the U.S. Supreme Court justices overturned the federal appeals court ruling and backed the pipeline consortium.

“Specifically, we are asked to decide whether the federal government can constitutionally confer on pipeline companies the authority to condemn necessary rights-of-way in which a state has an interest. We hold that it can,” conservative Chief Justice John Roberts wrote, as carried by Reuters. 

By Tsvetana Paraskova for Oilprice.com

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