Recall that recent Third Circuit decision which held that a private condemnor exercising federal eminent domain authority pursuant to the Natural Gas Act could not sue the State of New Jersey in federal court to take the state's property for a pipeline? The court based its conclusion on the Eleventh Amendment immunity states enjoy.
That ruling, however, was no impediment to this recent Order by FERC (Federal Energy Regulatory Commission) which -- at least on its face -- seems to address the very same question. In the Order, a 2-1 FERC majority concluded that the NGA permits a private condemnor to sue a state in federal court to take its property. For more details on the FERC Order, see "Divided FERC Finds Pipeline Companies Can Seize State-Owned Interests," by Addisah Sherwood
And what about the earlier ruling by the Third Circuit? Not a problem, according to a majority of the agency members. Here's the logic:
1. The Third Circuit decision wasn't based on the statute itself. Order at 11. Rather, it was a ruling about the Eleventh Amendment. That doesn't prevent us, the agency, from interpreting the statute.
2. In the Order, FERC isn't making a constitutional ruling (that would be outside of our agency authority, and a violation of separation of powers); we're merely making a ruling about how a statute that we administer should be interpreted. Order at 10-11.
3. We're the definitive authority on what a statute we administer says. Order at 11 ("Moreover, our interpretation of NGA section 7(h) merits deference."). See Chevron.
The majority expressly disclaimed making a constitutional ruling: "[w]hile we decline to reach the constitutional validity of Congress’s delegation of eminent domain to condemn state land under NGA section 7(h), the implications of the Third Circuit’s opinion merit discussion here." Order at 42. (Barista's note: no kidding, FERC; agencies -- even those acting in their "quasi-judicial" function -- have no authority to make decisions about what the Constitution does or doesn't allow.)
And the Third Circuit ruling sort of jumped over the statutory question, resolving the case as one of constitutional law. Like us, the dissenting FERC member didn't see what the FERC ruling accomplishes. See Dissent at 1 ("There is no need for the Commission to insert itself into what is primarily a constitutional question that is being litigated where those questions belong: The federal courts."). If the Eleventh Amendment truly prohibits these takings actions in federal court, what does it matter what the NGA says. And especially what does it matter what the agency charged with administering the statute thinks it says?
Given that, why would FERC plunge in anyway?
The Third Circuit acknowledged that its holding “may disrupt how the natural gas industry, which has used the NGA to construct interstate pipelines over State-owned land for the past eighty years, operates.” That is correct. If the Third Circuit’s opinion stands, we believe it would have profoundly adverse impacts on the development of the nation’s interstate natural gas transportation system, and will significantly undermine how the natural gas transportation industry has operated for decades.
Order at 42 (footnotes omitted). In short, the way we read this is the agency thinks the Third Circuit result was wrong, and will screw up the well-oiled mechanism for taking land for private NGA pipelines. If there is any doubt about the FERC majority's motive, check out the final paragraph in the Order:
66. In enacting the NGA, Congress established a carefully crafted comprehensive scheme in which the Commission was charged with vindicating the public interest inherent in the transportation and sale of natural gas in interstate and foreign commerce, in significant part through the issuance of certificates of public convenience and necessity for interstate gas pipelines. A key aspect of this scheme was the remit to natural gas companies of the ability to exercise, where necessary, the power of eminent domain to acquire lands needed for projects authorized by the Commission. We here confirm our strong belief that NGA section 7(h) empowers natural gas companies, and not the Commission, to exercise eminent domain and that this authority applies to lands in which states hold interest. A contrary finding would be flatly inconsistent with Congressional intent, as expressed in the text of NGA section 7(h), which is also supported by the legislative history.
Order at 49.
Finally, we leave you with this. Recall that the courts regularly conclude that the decision about whether a particular taking is "for public use" under the Fifth Amendment in these cases is one to be made by FERC, without any meaningful judicial interference. Recall also that one of the primary justifications for judicial deference to questions of Public Use is that it is a legislative question, to be decided by legislatures and legislators.
So remind us again who elected these FERC guys?
Order on Petition for Declaratory Order (PennEast Pipeline Co., LLC), No. RP 20-41-000, 170 FERC 61,064 (Ja...
