On October 28, 2025, the U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit) denied several petitions for review of FERC’s authorization of Gas Transmission NW, LLC’s (GTN) GTN Xpress compressor expansion project (Project).  Specifically, the Fifth Circuit (1) denied GTN’s petition for review challenging FERC’s denial of a predetermination of rolled-in rate treatment; (2) denied Washington’s and Oregon’s (States) petition for review challenging FERC’s finding that the Project is in the public convenience and necessity and the initial rates FERC set for the project; and (3) denied Columbia Riverkeeper’s and Rogue Climate’s (Environmental Groups) petition for review challenging FERC’s environmental review of the Project.  The Project went into service at the end of 2024.

In late 2021, GTN filed an application under section 7 of the Natural Gas Act (NGA) for the Project, which would expand capacity at three compressor stations that GTN had recently modified under 18 C.F.R. § 2.55(b).  This regulatory provision provides automatic authorization for replacement of existing natural gas pipeline facilities if, among other things, the replacement facilities will have a “substantially equivalent designed delivery capacity” as the originally certificated facilities.  GTN explained that the Project, which now would expand the compressor stations’ capacity, responded to rising demand for natural gas in the Pacific Northwest and the need for an alternative supply of natural gas due to declining production from Rocky Mountain supply basins.  GTN entered into precedent agreements with three unaffiliated shippers (Expansion Shippers) for the Project’s full capacity.  Pursuant to the National Environmental Policy Act (NEPA), FERC issued an environmental impact statement (EIS) concluding that the Project “would not result in significant environmental impacts” and subsequently certificated the Project under NGA section 7.  FERC denied GTN’s request for a predetermination that GTN may roll the Project costs into base rates in a future NGA section 4 general rate proceeding.

On petition for review, GTN argued that FERC acted arbitrarily and capriciously in denying a predetermination that rolled-in rate treatment will be appropriate for the Project’s costs in a future rate proceeding under NGA section 4.  As a threshold matter, the Fifth Circuit held that GTN had standing to challenge FERC’s action and that GTN’s petition was ripe for review.  On the merits of GTN’s claim, the Fifth Circuit upheld FERC’s denial of a predetermination of rolled-in rate treatment.  The Fifth Circuit explained that the Project’s expanded capacity is fully allocated to Expansion Shippers, leaving none of the expanded capacity for existing shippers, and the new compression units provided a 6,000-horsepower increase from the old units, so the replacements did not have “substantially equivalent designed delivery capacity” as the originally certificated facilities.  The court noted that GTN would still be able to argue in a future NGA section 4 general rate proceeding why such a large increase in horsepower was needed to benefit existing shippers to justify rolled-in rate treatment, but GTN will not have a “predetermination putting a thumb on the scale in its favor.”

The Fifth Circuit denied the States’ arguments that FERC erred in finding that the Project was in the public convenience and necessity under NGA section 7.  The Fifth Circuit explained that if a pipeline secures precedent agreements for an expansion project’s full capacity, FERC’s decision to certificate the expansion project is supported by “substantial evidence.”  The Fifth Circuit also rejected the States’ argument that FERC arbitrarily and capriciously calculated the Project’s depreciation rate based on the rate from GTN’s last NGA section 4 proceeding, explaining that initial rates under NGA section 7 are merely intended to “hold the line” until rates are adjudicated in further detail under NGA sections 4 or 5.

Lastly, the Fifth Circuit denied the Environmental Groups’ arguments that FERC’s EIS failed to properly consider the “no action alternative” to the Project, failed to consider the section 2.55(b) replacement compressors as a “connected action” to the Project, and failed to adequately consider the Project’s risks to “public health or safety.”  Citing the Supreme Court’s recent decision in Seven County Infrastructure Coalition v. Eagle County, Colorado, 145 S. Ct. 1497 (2025) (see May 30, 2025, edition of the WER), the Fifth Circuit explained that FERC’s EIS is entitled to “substantial deference” and must merely “fall within a broad zone of reasonableness.”  The court held that FERC’s exercise of its discretionary authority under NEPA in issuing its EIS was “well within” that “broad zone of reasonableness.”

The Fifth Circuit’s full order, issued in Case No. 24-60002, can be accessed here.