On March 18, 2021, the Federal Energy Regulatory Commission (FERC) approved Northern Natural Gas Company's (Northern Natural) request to build and operate 87.3 miles of pipeline in South Dakota and Nebraska (174 FERC ¶ 61189 (2021)). In its approval, FERC also, for the first time, assessed the significance of a natural gas pipeline project's potential greenhouse gas (GHG) emissions and their contribution to climate change.

The approval stated that in order to satisfy the requirements of the National Environmental Policy Act (NEPA), FERC, with the cooperation of the US Army Corps of Engineers, prepared an environmental assessment (EA) of Northern Natural's proposed pipeline that addressed geology, soils, water resources, wetlands, vegetation, fisheries, wildlife, threatened and endangered species, land use, recreation, visual resources, cultural resources, air quality, noise, safety, cumulative impacts, and alternatives. The EA disclosed that the pipeline's construction will emit 19,655 metric tons of carbon dioxide equivalent and its operation will emit 351 metric tons annually.

FERC had previously concluded that it was unable to assess the significance of a project's GHG emissions or their contribution to climate change, a policy that Chairman Richard Glick had long opposed, claiming that it violated NEPA. However, in now examining whether the GHG emissions and their contribution to climate change are significant, FERC cited its 2011 decision concerning Magnum Gas Storage, LLC, which states that "an impact [is] considered to be significant if it would result in a substantial adverse change in the physical environment" (134 FERC ¶ 61197 (2011)). FERC further stated that NEPA does not require the studies, metrics, and models on which they rely to be universally accepted, just that they are the best available evidence.

FERC's analysis revealed that the project's GHG emissions would increase the nation's GHG emissions by 0.0003% based on 2018 levels and that in subsequent years this number would shrink. Relatedly, a comparison of South Dakota's and Nebraska's operation-related emissions to 2017 levels revealed that the project would increase South Dakota's GHG emissions by 0.0002% and Nebraska's by 0.000078%. Because neither South Dakota nor Nebraska have state GHG emissions reduction targets, FERC did not take those into consideration, but stated that they would consider state goals if applicable in the future.

Due to these findings, FERC concluded that the project's contribution to climate change would not be significant and it was approved.

Chairman Glick also stated in an accompanying press release that:

While the commissioners agreed that the project should be approved, there was disagreement as to the environmental analysis. In particular, Commissioner Danly dissented arguing that:

Commissioner Danly also noted that the decision disregards the pending Notice of Inquiry that seeks comment on this very issue and may create more confusion as to the scope of this review. For information on the Notice of Inquiry, see Legal Update, FERC Issues New NOI to Revisit the Review of its Policy Statement on Interstate Natural Gas Pipeline Applications.

For more information on FERC's historic consideration of GHG emissions when reviewing natural gas pipeline projects, see Articles, FERC's Consideration and Quantification of Greenhouse Gas Emissions in Its Review of Natural Gas Pipeline Projects and Natural Gas Pipelines: 2019 In Review: Scope of GHG Review.

With the elevation to the FERC chairmanship of Commissioner Glick, who had long opposed FERC's narrow interpretation of the environmental effects of natural gas projects, developers were expecting a different approach to the way these projects are reviewed. But it is still unclear how FERC will assess a project's environmental impact as the decision did not establish a methodology for determining the significance of a project's GHG emissions. Moreover, the Northern Natural decision is a relatively easier case as it related to the replacement of an existing project and not a greenfield pipeline. It remains to be seen how FERC's new approach will be applied to review new and much longer pipeline projects.