On June 25, the U.S. Supreme Court must decide if it will hear a potential landmark case concerning the proposed PennEast Pipeline project, a dispute that has implications for interstate commerce as well as the supply and cost of natural gas in New Jersey. Let’s hope that the justices accept the case and reverse a harmful lower court decision.
While PennEast v. State of New Jersey deals with technical legal issues, such as the interpretation of the Natural Gas Act and eminent domain rights under the 11th Amendment, the real-world implications of this case are not difficult to understand. Unless the Supreme Court reverses the Third U.S. Circuit Court of Appeals decision that has all but shut down future interstate gas pipelines, the businesses and citizens of Pennsylvania, New Jersey and beyond will see energy prices rise, pollution increase and jobs lost.
The nation’s energy security and economic growth will also be weakened if the lower court ruling is allowed to stand.
Both New Jersey and Pennsylvania have benefited tremendously from the availability and transport of natural gas through interstate pipelines. Pennsylvania is now the second-largest producer of natural gas in the nation, behind only Texas. Extracting and exporting natural gas to New Jersey, New York and other states has resulted in more than 320,000 jobs and $44 billion of economic activity.
For New Jersey’s part, as a state that imports all of its natural gas, it has benefited both economically and environmentally. The Garden State uses natural gas to create over 50% of its electric generation and to heat 75% of its homes and buildings.
Due in part to Pennsylvania’s Marcellus Shale and new fracking technologies, the price for natural gas has decreased significantly over the last decade. In fact, if the PennEast project is completed, it can save consumers in our two states as much as $900 million a year in lower energy costs.
From a business perspective this low-cost source of natural gas has rejuvenated our petrochemical and manufacturing industries, reliant on low-cost energy. Thousands of good-paying jobs have been created as a result and more than 500,000 manufacturing jobs in both states benefit from more affordable and reliable natural gas.
Environmentally, the region has made significant progress in reducing carbon, ozone and particulate pollution by the abundance of natural gas being transported from Pennsylvania to New Jersey and beyond. In the last decade, New Jersey has closed four coal-fired power plants and replaced them with natural gas facilities. This has allowed the state to meet its 2020 carbon reduction goals years ahead of time.
There are many other environmental benefits of natural gas. Ozone has also been reduced, as has asthma-producing particulate matter, saving thousands of lives and countless hospital visits.
None of these achievements would have happened but for a state’s ability to produce energy and ship natural gas through pipelines to other states and regions. But while we benefit from the interstate natural gas pipeline system, the Third Circuit Court of Appeals decision will undermine over 80 years of progress and the benefits of unencumbered interstate commerce.
Essentially, the court held that one state has the power to stop an interstate pipeline. It is obvious that such a practice would totally disrupt the flow of energy throughout the nation. The court even recognized that its ruling would have that effect. It is analogous to a state stopping an interstate road from crossing its jurisdiction, effectively preventing travelers from going from one part of the country to another. That is not how our national economy works.
And the need for new natural gas pipelines is real. The demand for natural gas is growing with experts predicting that pipeline capacity will be at maximum levels within the next three to five years. Without new supplies of natural gas, other, often dirtier, forms of energy will be used and some businesses and homes will not be able to hook up to natural gas for their cooking or heating.
We have already seen this happen in other parts of the nation, such as New York, where restaurants could not open because there wasn’t enough natural gas to meet the demand.
There is a solution. The U.S. Supreme Court needs to accept the PennEast case for review and reverse the mistake of the appellate court. If we want a reliable, clean and affordable energy future, we must allow for a national gas pipeline system, as we have for the last 80 years.
• David N. Taylor is President and CEO of the Pennsylvania Manufacturers’ Association. Ray Cantor is Vice President of Government Affairs at the New Jersey Business & Industry Association.