Wednesday, May 2, 2018

Shale Law in the Spotlight: PennEast Pipeline Project – An Overview of Status and Current Legal Developments

Written by Chloe Marie – Research Fellow

This article is intended to provide an overview of the current status of the PennEast Pipeline Project as well as a review of recent legal developments related to construction activities on the project.

Overview of the pipeline project’s current status

The PennEast Pipeline is a 118-mile expansion project now operated by Enbridge Inc. following its merger with Spectra Energy Corp. in February 2017. The pipeline proposes to transport 1 Bcf per day of Marcellus shale gas from Northeast Pennsylvania to the existing Texas Eastern Transmission and Algonquin Gas Transmission systems in Lambertville, New Jersey.

After initiating a pre-filing review process with FERC, Spectra Energy Corp. filed an application in September 2015 to obtain a certificate of public convenience and necessity for the PennEast Pipeline Project. On April 7, 2017, FERC released a Final Environmental Impact Statement and concluded that the approval of the PennEast Pipeline Project would create adverse environmental impacts; however, these impacts would be reduced to acceptable levels through the implementation of mitigation measures recommended by FERC staff.

On January 19, 2018, FERC subsequently granted a certificate of public convenience and necessity to PennEast Pipeline Company allowing construction and operation of the proposed pipeline project. Shortly after, on February 20, 2018, the New Jersey Department of Environmental Protection (DEP) filed a motion for a stay pending rehearing of the certificate authorizing such project.

The New Jersey DEP alleged the presence of “fundamental flaws” in the certificate mostly due to the lack of surveying work over two-thirds of the proposed pipeline route. The New Jersey DEP claimed that FERC “mistakenly purports to allow PennEast to mitigate for environmental impacts in lieu of minimization/avoidance.” In addition, the state agency pointed out that despite having proposed the use of Horizontal Directional Drilling (HDD) enabling construction of the pipeline underneath wetlands and streams,  “PennEast has yet to perform on-site geological surveys showing that HDD is feasible for all of the stream crossings, nor has it outlined an acceptable plan if HDD fails.”

Finally, the New Jersey DEP asserted that a stay was necessary to prevent PennEast Pipeline Company from filing for eminent domain over numerous properties in New Jersey where surveys could not be undertaken due to opposition from landowners. The New Jersey DEP requested compromises on the part of PennEast Pipeline Company “to condemn only those property interests absolutely necessary to conduct surveys, soil borings, and other environmental analyses along the proposed route.”

In the meantime, New Jersey DEP denied in a letter dated February 1, 2018, PennEast Pipeline Company’s application for a freshwater wetlands individual permit, which was submitted on April 6, 2017. On April 26, 2017, New Jersey DEP asked for additional information regarding the application pointing out its incompleteness and set a deadline of 60 days. Owing to a lack of progress on the part of PennEast Pipeline Company, New Jersey DEP “administratively closed” the application in a decision issued on June 28, 2017. 

Overview of the current legal developments

The pipeline route selection generated a lot of opposition among landowners, whose lands would be condemned through eminent domain proceedings. This opposition has become greater after PennEast Pipeline Company brought condemnation actions in February 2018 before the U.S. District Court for the District of New Jersey, in Trenton.

As a result of the initiation of eminent domain proceedings, the New Jersey Conservation Foundation, together with the Stony Brook-Millstone Watershed Association (SBMWA), announced in a Press Release dated February 13, 2018, that they filed a request for rehearing and rescission of the certificate order granted by FERC in January as well as a motion of stay of that certificate order.

The two groups argued that the certificate fails to demonstrate the project benefit to the community; thus violating the Natural Gas Act. In addition, they alleged that the certificate order violates the U.S. Constitution’s 5th amendment by providing the company with the eminent domain power “without a constitutionally sufficient public use analysis.” The SBMWA Executive Director declared that “FERC failed to consider the magnitude of the damage that PennEast would cause to our water, land and natural resources – and acted before New Jersey had its chance to review the project’s harm to natural resources – and we will not stand by while these natural resources are lost for a project that is unneeded and unwanted by the people of New Jersey.”

This request for rehearing follows a complaint filed by the Eastern Environmental Law Center and Columbia Environmental Law Clinic, on behalf of the Foundation, in November 2017 challenging FERC’s use of eminent domain and its delegation to private pipeline companies. In a Press Release dated November 27, 2017, it is mentioned that “among FERC practices challenged in the complaint are allowing eminent domain authority to grant seizure of land that will not be for public use before a pipeline project has received its other required state and federal approvals that might never be issued.”

In March 2018, in response to PennEast Pipeline Company’s condemnation actions, New Jersey Attorney General Gurbir Grewal asked the U.S. District Court to reject PennEast Pipeline Company’s actions to condemn state-owned and preserved lands. 

Stay tuned for further legal developments!

The material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.

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