By Lawrence Hurley
WASHINGTON (Reuters) -The U.S. Supreme Court on Tuesday ruled in favor of a consortium of energy companies including Enbridge (NYSE:ENB) Inc seeking to seize land owned by New Jersey to build a federally approved natural gas pipeline despite the state's objections, though hurdles remain for the $1 billion project.
The 5-4 ruling, authored by conservative Chief Justice John Roberts, handed a victory to PennEast Pipeline Company LLC, a joint venture seeking to build the 116-mile (187-km) pipeline from Pennsylvania to New Jersey. The justices overturned a lower court ruling in favor of New Jersey's government.
Other companies joining Enbridge in the consortium include South Jersey Industries (NYSE:SJI) Inc, New Jersey Resources (NYSE:NJR) Corp, Southern Co (NYSE:SO) and UGI (NYSE:UGI) Corp.
The decision enables interstate pipelines to proceed with efforts to seize state-owned lands without a state's consent as long as federal regulators have approved the project. But New Jersey Attorney General Gurbir Grewal said the ruling does not end the state's fight against the PennEast project.
"We still have other, ongoing legal challenges to this proposed pipeline, which is unnecessary and would be destructive to New Jersey lands," Grewal added, as he urged the federal government "to take another look at this harmful proposal."
Climate activists, Native American groups and some states have increased opposition to pipeline construction across the United States, shutting down some projects including the long-planned Keystone XL crude pipeline from Canada. Few pipeline battles have been fought over eminent domain issues.
PennEast wants the land to build a pipeline to deliver 1.1 billion cubic feet per day of gas - enough to supply about 5 million homes - from the Marcellus shale formation in Pennsylvania to customers in Pennsylvania and New Jersey.
PennEast said it plans to put the first phase of the project - about 68 miles (110 km) of pipe in Pennsylvania - into service in 2022 and is targeting completion of the second phase - the line from Pennsylvania into New Jersey - in 2023.
The court ruled that a 1938 U.S. law called the Natural Gas Act that lets private energy companies seize "necessary" parcels of land for a project if they have obtained a certificate from the Federal Energy Regulatory Commission (FERC) can be applied to state-owned land. The law effectively gives private companies the power of eminent domain in which government entities can take property in return for compensation.
"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," Roberts wrote in the ruling.
Roberts added that the U.S. Constitution's 11th Amendment, which prevents courts from hearing certain lawsuits against states, does not bar the lawsuit, as the state had argued.
"We are pleased that the Supreme Court kept intact more than seven decades of legal precedent for the families and businesses who benefit from more affordable, reliable energy. This decision is about more than just the PennEast project," said Anthony Cox, chair of the PennEast board of managers.
FERC in 2018 approved PennEast's request to build the pipeline. The company then sued to gain access to properties along the route.
After a federal judge approved the property seizure, the Philadelphia-based 3rd U.S. Circuit Court of Appeals ruled in 2019 that PennEast could not use federal eminent domain to condemn land controlled by the state, prompting the appeal to the Supreme Court.
The court, which has a 6-3 conservative majority, was divided along non-ideological lines. Roberts was joined in the majority by two conservative justices, Samuel Alito and Brett Kavanaugh, and two liberals, Stephen Breyer and Sonia Sotomayor.