FERC "fully satisfied its obligations under the National Environmental Policy Act (NEPA)" in deciding the fate of Dominion Transmission Inc.'s New Market project last year, and an environmental group's challenge should be denied, according to a brief filed by the regulatory agency in the U.S. Court of Appeals for the District of Columbia (DC) Circuit.

Last May the Federal Energy Regulatory Commission by a 3-2 vote denied a request for rehearing of its April 2016 decision to issue a certificate of public convenience and necessity for the New Market project, with the majority declaring that it would continue to take into account proposed pipelines' potential greenhouse gas (GHG) emissions, but not their impacts on natural gas production and consumption [CP14-497].

NEPA requires federal agencies to consider indirect impacts of projects. Since a 2017 decision by the DC appeals court found that downstream GHG emissions from burning natural gas are indirect impacts, FERC has taken that requirement a step further. That practice is coming to an end, the majority said.

Arguing that FERC "arbitrarily and capriciously" ignored its obligations under NEPA, the environmental group Otsego 2000 in July challenged the order [No. 18-1188]. According to Otsego 2000, the court's 2017 ruling "left no ground for the Commission to shirk its obligations under NEPA, and yet that is precisely what the Commission majority has done..." with its decision last May.

The environmental group, joined by landowners John and Maryann Valentine, asked the court to set aside FERC's decision in May and its 2016 approval of the project, and to compel the Commission to comply with the court's 2017 decision.

Six states and the District of Columbia have also argued that FERC should set aside plans to limit climate reviews when considering natural gas pipeline project applications.

In the brief filed Friday, FERC said the petition for review should be denied and its orders affirmed by the court.

"The Commission estimated and discussed the greenhouse gas emissions associated with the construction and operation of the project and discussed potential climate change impacts in the region," according to FERC's brief. "The Commission reasonably declined to analyze the upstream greenhouse gas emissions arising from any additional natural gas production activities.

"The record establishes that the project -- which was built to satisfy a demand for additional gas transportation capacity -- was not the proximate cause of the natural gas extraction activities that led to that very transportation demand.

“This is consistent with the Commission's experience in numerous natural gas proceedings that transportation infrastructure follows production, rather than vice versa. And here it is unknown -- and virtually unknowable -- whether the gas to be transported on the project will come from new or existing production."

"Absent that basic information, it is nearly impossible to assess whether there will be any additional production activities in connection with the gas to be transported on the project. As a result, any greenhouse gas emissions from any additional, incremental production activities are not reasonably foreseeable."

The two Democrats at FERC -- Cheryl LaFleur and Richard Glick -- voted against the May 2018 order. LaFleur supported the original authorization of the New Market Project and joined Glick in stating that they might have voted for the order denying rehearing if not for the policy shift attached to it. A project's upstream and downstream natural gas production and consumption are indirect impacts that should be considered when reviewing applications, they said.

Dominion first asked for FERC approval of the New Market project in 2014. FERC staff issued an environmental assessment in 2015 and gave Dominion permission to begin construction in upstate New York in March 2017, with a target in-service date eight months later. The $159 million project is designed to provide 112,000 Dth/d of firm transportation service, improve access for two National Grid subsidiaries, and add more than 33,000 hp of compression.