On January 30, 2020, the Federal Energy Regulatory Commission ("FERC"), in a 2-1 vote, issued an order on condemnation rights of natural gas companies that hold a certificate of public convenience and necessity under section 7(h) of the Natural Gas Act ("NGA"),1 which may have wide-reaching effects for interstate natural gas pipeline companies, end-users of natural gas, and their investors. On May 21, 2020, FERC upheld its interpretation by issuing an order denying rehearing, in a 3-1 vote. As described below, FERC's decision conflicts with recent court action and is being tested in pending litigation.
Background
In the latter part of 2019, the U.S. Court of Appeals for the Third Circuit issued an order barring PennEast Pipeline Company, LLC ("PennEast") from condemning state-owned land in New Jersey to build an interstate natural gas pipeline.2 FERC issued a certificate of public convenience and necessity to PennEast in early 2018,3 which automatically conferred federal eminent domain authority on PennEast under section 7(h) of the NGA. However, according to the Third Circuit decision, the eminent domain authority that section 7(h) delegates does not apply to land in which a state claims an interest. The court thus held that PennEast could not condemn any land in which New Jersey claims any kind of property interest.
In response to the Third Circuit decision, PennEast filed a Petition for Declaratory Order ("Petition") in October 2019, asking FERC to address the scope of the condemnation power delegated to PennEast by NGA section 7(h).4 On February 18, 2020, the pipeline also filed a petition for writ of certiorari seeking U.S...
