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In a Clash of Condemning Authorities Who Prevails?

March 30, 2022

Reprinted with permission from the March 24, 2022 edition of The Legal Intelligencer © 2022 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.

By Kandice Hull

When two entities vested with the power of eminent domain clash over the use of a property, which entity prevails? The answer depends upon which entities authority is considered superior in the particular contest at hand. That superiority may flow from the relevant positions of the two entities within the governmental hierarchy, or it may flow from the specific statutory authority granted each entity.

The U.S. Supreme Court’s decision in PennEast Pipeline v. New Jersey, 141 S.Ct. 2244, 2251 (2021), which held that that a pipeline company with eminent domain power pursuant to the federal Natural Gas Act (NGA) could condemn land owned by the state of New Jersey, has drawn attention to the issue in recent months. In that case, the decision turned on the superior position of the pipeline company as a delegee of the federal government.

The NGA authorizes private pipeline companies to exercise federal eminent domain power if they receive approval to construct a pipeline from the Federal Energy Regulatory Commission (FERC). In January 2018, PennEast received approval from FERC to build a pipeline from Luzerne County, Pennsylvania to Mercer County, New Jersey. PennEast filed several actions in federal district court in New Jersey, seeking to condemn land for the pipeline route belonging to the state of New Jersey. New Jersey moved to dismiss the complaints on the grounds of state sovereign immunity. The district court denied New Jersey’s motion to dismiss and granted a condemnation order for PennEast. On appeal, the U.S. Court of Appeals for the Third Circuit vacated the decision of the district court and remanded the case with and order to dismiss any claims against New Jersey. The Third Circuit reasoned that although the federal government can delegate its eminent domain power, there is “reason to doubt” that it can also delegate its power to sue nonconsenting states through condemnation actions.

The Supreme Court reversed the decision of the Third Circuit, holding that PennEast has the authority to bring a condemnation action against New Jersey. Writing for the court, Chief Justice John Roberts explained that the federal government has delegated its eminent domain power to private entities since its inception, citing a long history of cases to illustrate this point. Roberts further asserted that this federal eminent domain power may be exercised against state owned property, regardless of whether the power is wielded by the federal government or its delegatees. Additionally, Roberts criticized the Third Circuit for separating the federal eminent domain power from the federal power to bring condemnation actions against non‑consenting states. Roberts asserted that these two powers are “inextricably intertwined,” and that separating them “would violate the basic principle that a State may not diminish the eminent domain authority of the federal sovereign.” PennEast prevailed essentially because the court ruled that the federal power of eminent domain, which flowed from the federal sovereign, was greater than the state’s power.

PennEast’s dispute with New Jersey is not the first example of a condemnation dispute between two entities with eminent domain power. On the contrary, these situations have been occurring for quite some time. Similar results have occurred in cases involving the condemnation power of Amtrak, which also flows from a federal statute. More recently, in 1997, the Eighth Circuit decided a condemnation dispute between the Union Center Redevelopment Corp.—a redevelopment corporation created under Missouri law—and the National Railroad Passenger Corp. (Amtrak). Union Center Redevelopment v. National Railroad Passenger, 103 F.3d 62, 63 (8th Cir. 1997). Union Center has the right to exercise state eminent domain under a Missouri state statute, and Amtrak has the right to exercise federal eminent domain power under its enabling statute. Union Center brought a condemnation action against Amtrak, seeking to condemn two parcels of land. Amtrak had previously acquired the land in question through its federal eminent domain power for the purpose of building a rail passenger service station.

The Eighth Circuit held that Union Center could not condemn the land in question because the statute authorizing Amtrak to exercise federal eminent domain impliedly preempts Missouri condemnation law. Under the doctrine of implied preemption outlined by the Supreme Court, one of the ways implied preemption occurs is when a “state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,” (quoting Freightliner v. Myrick, 514 U.S. 280, 287 (1995)). The Eighth Circuit reasoned that allowing Union Center to condemn Amtrak’s land would violate this doctrine by “frustrating Amtrak’s ability to accomplish its federal mandate of creating a nationwide rail system …”

A similar conflict arose in 2004 between Amtrak and UGI Utilities, Inc. (UGI), a Pennsylvania public utility corporation. UGI Utilities v. National Railroad Passenger, No. 1:CV-02-1230 (M.D. Pa. July 2, 2004). UGI has limited power of eminent domain from Pennsylvania statutory law. UGI brought an action to condemn utility rights‑of‑way for an underground gas pipeline below railroad tracks that were owned and operated by Amtrak. A Pennsylvania district court drew an analogy between the present case to the Eighth Circuit’s decision in Union Center and held that UGI could not condemn the rights‑of‑way under Amtrak’s land because doing so would “frustrate Amtrak’s ability to accomplish its federal mandate of creating a nationwide rail system.” The district court also stated that because of the Supreme Court’s preemption doctrine, “no court has ever allowed a state agency to condemn the real property or facilities of Amtrak.”

Such disputes have occurred within the state of Pennsylvania as well, between two authorities each deriving their power from the state sovereign’s eminent domain authority. In those cases, a close look at the statutory authority granted both entities is necessary to determine which will prevail.

For example, In In re Condemnation by the Borough of Hanover, 950 A.2d 373 (Pa. Cmwlth. 2008), the borough sought to condemn land belonging to the Hanover School District. The Pennsylvania Commonwealth Court ruled that the borough did not have the statutory authority to condemn property held by another public entity. The court found that the borough code authorized condemnations only of private land and, therefore, there was no ability for the borough to seize the property of the school district.

A different result was achieved, however, in Marple Township v. Marple Newton School District, 856 A.2d 225 (Pa. Cmwlth. 2004). In that case, Marple Township filed a declaration of taking against the Marple Newtown School so as “to acquire land for the purpose of erecting public buildings, public works, playgrounds and recreational areas.” Newtown School District filed preliminary objections and alleged, among other things, that “the township lacks the power to condemn the subject property under the first class township code. The Commonwealth Court disagreed, finding that the first class township code did indeed allow the condemnation. The different results stemmed from the very specific language of the two different statutes granting condemnation authority.

In Urban Redevelopment Authority of Pittsburgh v. Hackaday, 501 A.2d 349 (Pa. Cmwlth. 1985), the clash was between a redevelopment authority and a city. In that case, the city prevailed. The court held invalid the authority’s declaration of taking which attempted to acquire property from the city of Pittsburgh. The court again relied upon the enabling statute finding that the enabling act for redevelopment authorities provides, “no real property belonging to a city, county or to the commonwealth may be acquired without its consent.” Since Pittsburgh did not consent to the taking it was invalid.

Interestingly, the question of what happens when one state seeks to condemn the land of another has recently been raised in a public forum. The governor of Nebraska has publicly stated a plan to condemn land in Colorado in order to ensure a sufficient supply of water to his state. Nebraska intends to rely upon a 99-year-old compact with Colorado which gives it the authority to build and operate canals within Colorado’s borders to divert water from the South Platte River for use by Nebraska. It also gives Nebraska the power to condemn land in Colorado to acquire to build those canals. The power has not previously been tested in court and observers anticipate litigation between the states if Nebraska moves forward with the plan. The equal status of the two entities makes for a novel legal question as to whose authority is superior.

It is clear that condemnation disputes between two entities that each have the power of eminent domain have occurred more often than people might think. Whenever these disputes take place, there is always the question of whose sovereignty will prevail.

—Charles T. Jones III, a third-year law student at Washington and Lee University School of Law, helped in the preparation of this article.

Kandice K. Hulla member of McNees Wallace & Nurick, is chair of the firm’s litigation group and leads the eminent domain practice. Contact her at