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FERC Asserts Authority: Declaratory Order Says Eminent Domain Exempted From State Sovereign Immunity

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By Kelly Daly, Farris Gillman, and Fabian Eichentopf[1]

In a recent declaratory order, the Federal Energy Regulatory Commission (“FERC”) asserted the right of its certificate holders to “exercise eminent domain authority over state-owned land.”[2]  The Natural Gas Act (“NGA”) provides that “[w]hen any holder of a certificate . . . cannot acquire by contract . . . the necessary right-of-way to construct . . . a pipe line . . . for the transportation of natural gas, . . . it may acquire the same by the exercise of the right of eminent domain . . . .”[3]  While FERC Chairman Chatterjee (R) and Commissioner McNamee (R) interpreted this to exempt condemnation proceedings against states from the principles of sovereign immunity,[4] Commissioner Glick (D) found the order to be an unauthorized act of constitutional interpretation.

The majority found that FERC acted on its established authority to interpret statutory provisions.  They argued that the legislative intent behind the NGA was to grant the power of eminent domain even against state interests because the broad language of the provision contains no exceptions.[5]  By issuing the order, the majority aimed to provide guidance to the Supreme Court and clarify certain eminent domain issues because of their “potential to disrupt the regulation of the natural gas industry.”[6]

In dissenting, Commissioner Glick (D) argued that the Commission was acting beyond its authority by deciding an issue of constitutional law and attempting to influence the Supreme Court to accept certiorari in the pending PennEast appeal.[7]  He interpreted the declaratory order as an effort to provide a counterweight to the Third Circuit’s PennEast decision, which held that the doctrine of sovereign immunity protects states from being sued in federal courts.[8]  In his view, FERC should not “bolster a private party’s litigation position.”[9]

Commissioner Glick (D) further argued that, even though the Supreme Court established in Chevron that courts should generally defer to agencies on matters of substance,[10] the provision at issue is not under FERC’s authority but instead to be administered by the courts.  He found no specific precedent for today’s order and called on petitioners to seek relief from Congress, not FERC.  Ultimately, he took no position on whether the NGA authorizes condemnation proceedings against state interests.[11]

In conclusion, FERC declared that eminent domain applied against state interests as an exemption to the sovereign immunity doctrine, while Commissioner Glick’s dissent denied FERC’s authority over this issue.

[1] Fabian Eichentopf is a second-year law student at the University of Arizona James E. Rogers College of Law.

[2] 170 FERC ¶ 61,064 at 20 (2020) (Order).

[3] 15 U.S.C. §717f(h) (2018).

[4] Supra note 2 at 22.

[5] Commission Meeting on January 30, 2020, remarks by Commissioner McNamee; supra note 2.

[6] Commission Meeting on January 30, 2020, remarks by Chairman Chatterjee.

[7] See 170 FERC ¶ 61,064 (2020) (Dissent).

[8] In re PennEast Pipeline Co. LLC, 938 F.3d 96 (3d Cir. 2019) (“PennEast”).

[9] Commission Meeting on January 30, 2020, remarks by Commissioner Glick.

[10] See Chevron v. Natural Res. Def. Council, 467 U.S. 837 (1984) (“Chevron”).

[11] 170 FERC ¶ 61,064 at 11 (2020) (Dissent).