On March 22, 2021, FERC, for the first time, assessed the significance of a proposed natural gas pipeline project’s greenhouse gas emissions (“GHGs”) and their contribution to climate change when it approved Northern Natural Gas Company’s (“Northern”) South Sioux City to Sioux Falls A-line Replacement project (“Project”). As proposed, Northern will abandon in-place certain pipeline facilities in Nebraska and South Dakota, construct and operate approximately 87.3 miles of replacement pipeline, and modify existing and install new above-ground facilities. While all five FERC Commissioners agreed to approve the Project, both Commissioner Danly and Commissioner Christie dissented from FERC’s decision to determine the significance of GHGs in an individual pipeline proceeding.

Pursuant to section 7 of the Natural Gas Act (“NGA”), FERC found, in part, that Northern’s proposed abandonment of its pipeline facilities is permitted by the public convenience or necessity because Northern’s proposal will address safety risks from leaks and pipeline stress and will provide new pipeline facilities, allowing Northern to maintain continuity of service to customers served by the abandoned facilities. Northern estimates that the cost to construct the proposed facilities will be approximately $173.8 million.

As for GHG emissions, FERC announced that it was reversing its prior conclusion that FERC “was unable to assess the significance of a project’s GHG emissions or those emissions’ contribution to climate change.” In this regard, FERC noted that “[a] rigorous review of a project’s reasonably foreseeable GHG emissions is …an essential part of the Commission’s responsibility under [the National Environmental Policy Act] to take a ‘hard look’ at a project’s environmental impacts.” FERC explained that such a process discloses to both the decisionmakers and the public information regarding the extent of a project’s adverse environmental impacts. Finally, FERC concluded that, citing to past precedent, whether an impact is significant is determined based on whether “it would result in a substantial adverse change in the physical environment.”

Based on FERC’s new approach to the significance of GHGs, FERC noted that the Project’s construction will emit a total of 19,655 metric tons of carbon dioxide equivalent, while its operation will emit 351 metric tons annually. Based on these totals, FERC explained that the Northern project could potentially increase CO2e emissions in the U.S., based on 2018 levels, by 0.0003%, and once conclusion was finished, this figure would drop to 0.000006% based on operational emissions. As a result, FERC concluded that the Project’s contribution to climate change would not be significant. It also noted that, even if it were to determine that a Project’s reasonably foreseeable GHG emissions are significant, those GHG-related impacts would be considered along with a number of other factors in determining whether a project is required by the public convenience and necessity.

Commissioner Danly concurred in part, agreeing that FERC should grant the requested authorizations. However, he dissented in part because he believes FERC violated the Administrative Procedure Act (“APA”) by reversing its longstanding position that it cannot assess the significance of a project’s GHG emissions or those emissions’ contribution to climate change without sufficient reasoning. On this point, he referred to prior FERC orders concluding that there is no accepted methodology by which to assess a project’s GHG emissions or their climate impacts. Commissioner Danly further notes that FERC’s decision to compare raw project emissions numbers to the national total disregards a pending notice of inquiry (“NOI”) that seeks comments on whether FERC should revise its current pipeline certificate policy, including whether and how the Commission could determine the significance of GHG emissions to climate change. Commissioner Danly stated that majority’s order “fails every applicable legal standard: it is arbitrary and capricious, fails reasoned decision making, and is not based on substantial evidence. It also exceeds our authority under the NGA.”

Commissioner Christie also concurred with the majority’s finding to approve the Project, but dissented in part in that the order makes the approval of Northern’s specific Project legally dependent on FERC’s analysis of the Project’s climate impacts from GHGs. Commissioner Christie asserts that this is a “major” question of law that will be considered in the pending NOI. According to Commissioner Christie, prematurely deciding this major question in an individual pipeline proceeding with limited participation prohibits all interested persons and groups a fair opportunity to fully participate and weigh in on the matter.

Click here to read the order.