PennEast Developers Press on Despite Court Decision

(Reuters) - The companies developing the $1 billion PennEast natural gas pipeline said on Wednesday they remain committed to building the project and are evaluating options after a federal appeals court decided not to rehear an earlier decision against the pipeline:

The U.S. Circuit Court of Appeals for the Third Circuit on Tuesday denied PennEast's petition for rehearing of an earlier decision in September that rejected the pipeline's use of eminent domain on properties in New Jersey under state ownership or in which the state has an interest.

PennEast obtained approval from the U.S. Federal Energy Regulatory Commission (FERC) to build the pipeline in January 2018 and promptly sued in federal court to use the federal government's eminent domain power to gain access to properties along the route in New Jersey under the U.S. Natural Gas Act.

New Jersey opposes construction of the pipeline and did not consent to PennEast's condemnation suits on properties it controls.

PennEast needs the land to build its 120-mile (190-km) pipeline, which is designed to deliver 1.1 billion cubic feet per day of gas from the Marcellus shale formation in Pennsylvania to customers in Pennsylvania and New Jersey.

In October, the New Jersey Department of Environmental Protection (NJDEP) denied PennEast's application for several permits, citing the Third Circuit's eminent domain decision.

"We believe both actions (Third Circuit and NJDEP) were profoundly wrong based on established legal precedent under the Natural Gas Act and we are currently pursuing legal and other options," South Jersey Industries Inc (SJI), one of the companies developing PennEast, said in its earnings release on Wednesday.

SJI noted demand for gas infrastructure to meet growing demand for the fuel in New Jersey has grown substantially since the project was announced five years ago.

In the past, PennEast said it anticipates starting construction in 2020.

The companies seeking to build PennEast include units of SJI, New Jersey Resources Corp (NJR), Southern Co , Enbridge Inc and UGI Corp.

The companies with contracts to use the project include units of NJR, SJI, Southern, Public Service Enterprise Group Inc and Consolidated Edison Inc.

PennEast is not the only gas pipeline facing state opposition in the U.S. Northeast. Two of Williams Cos Inc's proposed pipelines are facing state opposition, including Constitution in New York and Northeast Supply Enhancement in New Jersey.

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