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The Legal Pitfalls When a New Utility Project is Proposed in Your Municipality

State and local governments sometimes find themselves enmeshed in litigation with public utility companies, particularly those in the energy sector, over the development of utility infrastructure for the transmission and distribution of natural gas and electricity. Such infrastructure projects range in size and complexity from small consumer-level distribution installations to large interstate pipeline and transmission line projects that span hundreds of miles. At the local level this can mean that municipal officials are forced to grapple with the localized effects of a utility infrastructure project that may not be designed to serve the residents of the community. Two recent cases, PennEast Pipeline Co., LLC v. New Jersey, 141 S. Ct. 2244 (2021), and Town of Sudbury v. Energy Facilities Siting Board, 487 Mass. 737 (2021), highlight some of the concerns that arise when a state or municipality becomes the host of a new utility project.

In PennEast Pipeline Co., LLC, the Supreme Court considered the reach of the eminent domain authority afforded to a natural gas company by the Natural Gas Act. The project was a 116-mile pipeline for the transportation of natural gas from Pennsylvania to New Jersey. Pursuant to the Natural Gas Act, a natural gas company must apply to the Federal Energy Regulatory Commission for a certificate reflecting that the proposed construction “is or will be required by the present or future public convenience and necessity.” Once in possession of such a certificate, the natural gas company is empowered by 15 U.S.C. §717f(h) to acquire necessary rights-of-way for the project “by the exercise of the right of eminent domain” if such rights cannot be acquired by agreement.

Does this grant of eminent domain authority in §717f(h) permit a natural gas company to acquire lands held by a state—in this case, the State of New Jersey? While New Jersey argued that the Natural Gas Act was not intended to invade state sovereign immunity, the Supreme Court held that §717f(h) was a delegation of the Federal eminent domain authority, allowing natural gas companies to take land in which a state holds an interest. As the Supreme Court describes, the delegation of the eminent domain power to private corporations is not a new practice; this case, however, highlights the significant breadth of the authority that natural gas companies enjoy.

In Town of Sudbury, the Supreme Judicial Court reviewed the decision-making process of the State Energy Facilities Siting Board (EFSB), which gave the greenlight to Eversource to construct a new electrical transmission line between substations in Sudbury and Hudson. When considering such a project, the EFSB is tasked with balancing “a reliable energy supply for the commonwealth with a minimum impact on the environment at the lowest possible cost.” Purporting to apply this standard, the EFSB approved Eversource’s preferred location for the transmission line over other design alternatives that were less costly or would have fewer environmental impacts.

Opponents to the project, including the Town of Sudbury, challenged the validity of the EFSB’s conclusions, arguing that the Board had misinterpreted its statutory mandate, failed to consider relevant information, or failed to weigh the reliability of information provided by Eversource. In upholding the EFSB’s decision, the SJC extended a significant level of deference to the Board, reiterating that “[o]ur role is not to substitute our judgment or the petitioners’ judgment for that of the [EFSB].”

These two cases reflect that public utility services enjoy a special status, one that can override the local concerns of communities that host utility infrastructure. The rulings obtained in these cases serve as a reminder that robust public and community participation and, where necessary, legal action, may help to shape the outcome of energy projects even if defeating them altogether is unlikely.


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