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Court of Appeals Upholds Pipeline Condemnation
Eminent domain has divided pipeline developers, landowners, environmentalists, and the government in a recent series of high profile cases involving natural gas pipeline projects. For example, the Third Circuit in In re PennEast Pipeline Co., LLC, 938 F.3d 96 (3d Cir. 2019), held that eminent domain cannot be used to acquire state lands. And the D.C. Circuit, animated by concern about the ability for pipeline developers to use eminent domain long before the Federal Energy Regulatory Commission (FERC) and the courts finally resolve challenges to FERC's certificates approving such infrastructure projects, recently overturned 30 years of jurisdiction-related precedents in Allegheny Defense Project, et al. v. FERC, No. 17-1098, 2020 WL 3525547 (D.C. Cir. Jun. 30, 2020) (en banc). The U.S. Supreme Court has signaled its interest in eminent domain by inviting the Solicitor General to address whether certiorari should be granted in PennEast.
This article focuses on a recent decision upholding a pipeline developer's exercise of eminent domain under New York law in National Fuel Gas Supply Corp. v. Schueckler, 2020 N.Y. Slip Op. 03563, 2020 WL 3453939 (June 25, 2020). (Note: The authors represented National Fuel.) The Court held that National Fuel satisfied the New York Eminent Domain Procedure Law (EDPL) section 206(A) because it possessed a FERC certificate of public convenience and necessity. The Court's holding was narrow, strictly focused on EDPL 206(A)'s statutory requirements. Had the Court of Appeals ruled differently, however, it would have threatened the ability of developers to invoke eminent domain under New York law in connection with a broader range of projects wholly unrelated to FERC certificates.
Statutory Framework
To construct, extend, acquire, or operate any facility for interstate transportation or sale of natural gas, the Natural Gas Act requires a company to obtain a "certificate of public convenience and necessity" from FERC. 15 U.S.C. §717f(c)(1)(A). In determining whether to issue such a certificate, FERC considers "all factors bearing on the public interest." Atl. Ref. Co. v. Pub. Serv. Comm'n of N.Y., 360 U.S. 378, 391 (1959). A FERC certificate empowers the holder to acquire the land it needs "by the exercise of the right of eminent domain." 15 U.S.C. §717f(h).
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