Minnesota Environmental Protection Act requires EIS prior to issuance of certificate of need for oil pipeline

In the Matter of the Application of North Dakota Pipeline Company LLC for a Certificate and Permit for the Sandpiper Pipeline Project in Minnesota
Minnesota Court of Appeals, September 14, 2015

Friends of the Headwaters (FOH) challenged a decision by the Minnesota Public Utilities Commission (MPUC) to move forward on a final decision on a certificate of need for an oil pipeline by arguing that this violates Minnesota’s Environmental Protection Act (MEPA).

In 2013 North Dakota Pipeline Company LLAC (NDPC) applied for a certificate of need and a pipeline routing permit to connect oil pipelines in North Dakota to other pipelines in Minnesota and Wisconsin. In early 2014 MPUC approved the permits and allowed hearings and environmental review to move forward.

The Energy Environmental Review and Analysis unit (EERA) gathered 53 route alternatives and one system alternative through public outreach that were accepted by MPUC. Route alternatives are defined as, “a deviation from the [NDPC’s] proposed project with no apparent major engineering or environmental issues.” System alternatives are defined as, “a pipeline route that is generally separate or independent of the pipeline route proposed by [NDPC], and that does not connect to the specified Project endpoints.” MPUC decided to bifurcate the certificate of need and pipeline routing permit proceedings. MPUC told EERA to do an environmental evaluation of all of the systems alternatives to be used during the certificate of need proceedings, but that this would be used to develop a record and “not be equivalent in terms of the specificity and level of detail to a comparative environmental analysis undertaken in the route permit proceeding.”

The issue at stake is whether MEPA requires an environmental impact statement before MPUC can make a final decision on a certificate of need for an oil pipeline.

All parties acknowledge that MEPA environmental review must happen at some point during the approval process, but the question is when this must happen. When certificate of need and routing permit proceeding are conducted together Chapter 7852 of Minnesota administrative rules requires applicants to do a comprehensive environmental assessment for the pipeline routing permit. The Environmental Quality Board has allowed this assessment to take the place of a formal environment impact statement. FOH argues that making a decision on the certificate of need without a formal environmental review violates MEPA.

Minn. Stat. § 116D.04, subd. 2a (2014), requires the responsible governmental unit to prepare a detailed EIS before engaging in any “major governmental action” that creates the “potential for significant environmental effects.” Subdivision 2b says that “a project may not be started and a final governmental decision may not be made to grant a permit, approve a project, or begin a project…” FOH argues that issuance a certificate of need qualifies as making a final governmental decision. The court agreed. The language of those statues is unambiguous and as applied to this situation means that when the MEPA complaint environmental review will not happen until after the certificate of need is issued, an environmental impact statement must be competed as part of the proceedings.

The Court of Appeals reversed the grant of a certificate of need and remands to the MPUC to complete an EIS before holding certificate of need proceedings.

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