The U.S. Court of Appeals for the Third Circuit has denied a request to have an en banc panel reconsider a decision disallowing use of eminent domain to acquire properties belonging to the state of New Jersey along the PennEast pipeline's route.

In September, a Third Circuit panel reversed approval of PennEast Pipeline Co.'s orders of condemnation and immediate access to 42 properties, finding that condemnation powers granted to private pipeline builders under the Natural Gas Act do not permit them to take land owned by the state, which are immune from federal lawsuits by private parties under the 11th Amendment.

"We will not hesitate to stand up to private companies when their actions violate the law—or, in this case, the U.S. Constitution," New Jersey Attorney General Gurbir S. Grewal said in a statement Tuesday. "From the very beginning, we have made clear that the Eleventh Amendment prohibits private pipeline companies like PennEast from condemning state properties for private use, and we're pleased that the Third Circuit agreed with our position. The Third Circuit's decision not to rehear this case is great news for New Jersey and the environment."

James Graziano of Archer & Greiner in Haddonfield represents PennEast. A company spokesman said, "The PennEast member companies remain committed to the Project, and PennEast is evaluating all of its options in light of this recent development."

The Third Circuit previously rejected PennEast's argument that the Natural Gas Act delegates to pipeline builders the federal government's exemption to a state's sovereign immunity. It's unclear whether the federal government can delegate its power to override a state's 11th Amendment immunity, the appeals court said, but it declined to answer that question because "nothing in the text of the NGA suggests that Congress intended the statute to have such a result."

"PennEast's condemnation suits are thus barred by the state's Eleventh Amendment immunity," the appeals court said.

The 115-mile PennEast Pipeline, undertaken by a coalition of private energy companies, is slated to run from near Wilkes-Barre, Pennsylvania, an area with extensive gas reserves, across the Delaware River near Frenchtown, to Pennington, north of Trenton.

The Federal Energy Regulatory Commission gave its approval to the project in January 2018, issuing a certificate of public convenience and necessity. That decision was appealed by various parties, including the state of New Jersey, at the U.S. Court of Appeals for the District of Columbia Circuit. That appeal is still pending.

After receiving FERC's approval, PennEast filed condemnation petitions in New Jersey for 131 properties, including 42 parcels in which the state has an interest. In many of those properties, the state holds an easement requiring the land be preserved for recreational, agricultural or conservation purposes.

Last last year, U.S. District Judge Brian Martinotti of the District of New Jersey gave PennEast the green light to condemn the state-owned properties, rejecting New Jersey's assertion of immunity. Martinotti found that because "the NGA expressly allows any holder of a certificate of public convenience and necessity" to condemn property, PennEast could do so for properties along the planned pipeline, even if owned by the state. The ruling said the U.S. Marshals could investigate, arrest, imprison or bring to court any property owner who violated the court's order.

The state was granted an appeal and a stay of construction of the pipeline.

In the reversal in September, Judges Kent Jordan, Stephanos Bibas and Richard Nygaard of the U.S. Court of Appeals for the Third Circuit held it was essential to distinguish between the two powers at issue in the case—the federal government's eminent domain power and its exemption from 11th Amendment immunity. Jordan, writing for the court, stated that the federal government can condemn state-owned land in federal court because it enjoys a special exemption from the 11th Amendment.

"Thus, the federal government's ability to condemn state land—what PennEast contends it is entitled to do by being vested with the federal government's eminent domain power—is, in fact, the function of two separate powers: the government's eminent domain power and its exemption from Eleventh Amendment immunity. A delegation of the former must not be confused for, or conflated with, a delegation of the latter," Jordan wrote.

"A private party is not endowed with all the rights of the United States by virtue of a delegation of the government's power of eminent domain," Jordan wrote, and PennEast "fails to adequately grapple with the constitutional impediment to allowing a private business to condemn state land: namely, Eleventh Amendment immunity."