(Bloomberg) -- A controversial $1 billion shale gas pipeline that’s been stalled by a dispute over whether it can seize state-owned land for construction won the backing of the nation’s top energy regulator.
PennEast had sought the support of the Federal Energy Regulatory Commission after a court decision prevented it from exercising eminent domain in New Jersey. Its developers -- which include Enbridge Inc. and Southern (NYSE:SO) Co. -- argued the ruling overturned 80 years of industry practice.
On Thursday, the energy commission voted 2-1 in favor of PennEast’s petition, lending the project support as it prepares to take its case to the nation’s highest court.
“The commission’s order rejecting the court’s interpretation strengthens PennEast’s forthcoming petition to the Supreme Court,” Patricia Kornick, a spokeswoman for the project, said by email.
But the project’s viability “remains on life support,” Guggenheim Securities analyst Shahriar Pourreza said Thursday in a note to clients.
“Headwinds remain material to get a project through a state that appears to be anti natural gas due to Governor Murphy’s policies,” Pourreza said, referring to New Jersey Governor Phil Murphy.
FERC Chairman Neil Chatterjee said at the agency’s meeting that the earlier court ruling has the “potential to disrupt the commission’s regulation of the natural gas industry” and that Thursday’s order would provide clarity for other potential litigants. The “text, legislative history and precedent” of the Natural Gas Act of 1938 reflect Congress’s intent to delegate the authority to condemn state property to pipeline certificate holders, he argued.
But Democrat Commissioner Rich Glick, the sole dissenter, criticized the regulator’s decision as “both deeply troubling and frankly, a discredit to this agency.”
The 120-mile line (193-kilometer) PennEast line would carry about 1 billion cubic feet of gas per day, enough for 4.7 million homes, from Pennsylvania to New Jersey.
