Manageable Lines and Cost Causation: Fifth Circuit Clarifies NEPA Scope and Predeterminations under the Natural Gas Act

Introduction

In Columbia Riverkeeper v. FERC, Nos. 24-60002, 24-60197, 24-60280, 24-60354 (5th Cir. Oct. 28, 2025), the Fifth Circuit consolidated multiple petitions challenging the Federal Energy Regulatory Commission’s (FERC) approval of Gas Transmission Northwest, LLC’s (GTN) capacity expansion project on its interstate natural gas pipeline and FERC’s related rate and NEPA determinations. The court denied all petitions.

The dispute sits at the intersection of three regulatory pillars: the Natural Gas Act (NGA), the National Environmental Policy Act (NEPA), and FERC’s replacement-facilities regulation, 18 C.F.R. § 2.55(b). GTN had replaced aging compressor units under § 2.55(b), then sought a certificate under NGA § 7 to remove horsepower limits and add capacity. FERC issued a certificate after preparing an environmental impact statement (EIS), but denied GTN a “predetermination” that future permanent “rolled‑in” rates would apply. Environmental groups and two States (Washington and Oregon) challenged the certificate and NEPA findings; GTN challenged the denial of a predetermination on rates.

The key issues were:

• Whether GTN had standing and ripeness to seek judicial review of the denial of a predetermination for rolled‑in rates before the § 4 rate case.
• Whether FERC lawfully denied a predetermination of rolled‑in rates in light of the earlier § 2.55(b) replacements and cost‑causation principles.
• Whether FERC properly found “public convenience and necessity” under NGA § 7, and properly set initial (hold‑the‑line) rates including depreciation.
• Whether FERC’s EIS satisfied NEPA regarding the no‑action alternative, “connected actions” (the § 2.55(b) replacements), and public safety risks.

Summary of the Opinion

The Fifth Circuit:

• Held GTN had Article III standing and that its petition was ripe. Financial harm from construction delays, renegotiations, and increased transaction costs constituted concrete injury caused by FERC’s orders and redressable by favorable relief.
• Affirmed FERC’s denial of a predetermination for rolled‑in rates. The court rejected GTN’s claim that § 2.55(b) replacements presumptively receive rolled‑in treatment in this context, emphasizing cost‑causation and the excess horsepower used exclusively by expansion shippers.
• Upheld FERC’s § 7 certificate. Precedent agreements for the full expansion capacity were substantial evidence of need; FERC could defer disputed cost-allocation questions to later § 4 proceedings; collateral challenges to § 2.55(b) approvals were out of scope.
• Upheld FERC’s use of the pipeline’s most recent § 4 rate case depreciation rate for initial § 7 rates under the “hold‑the‑line” policy.
• Applied the Supreme Court’s 2025 decision in Seven County to afford substantial deference to FERC’s NEPA judgments:
  • No‑action alternative: FERC’s baseline analysis sufficed.
  • Connected actions: FERC reasonably drew a “manageable line” excluding § 2.55(b) replacements from the EIS scope.
  • Public safety: FERC reasonably relied on DOT safety standards and project context; NEPA consultations fall within agency discretion.

All petitions for review by GTN, the States, and Columbia Riverkeeper/Rogue Climate were denied.

Analysis

Precedents Cited and Their Influence

• NGA certification and rate cases:
  • PennEast Pipeline Co. v. New Jersey, 594 U.S. 482 (2021): Reiterated § 7 certificate requirement for construction/expansion.
  • FERC’s Certificate Policy Statement, 88 FERC ¶ 61,227 (1999) (clarified in 2000, 2001): Three criteria for public convenience and necessity, including no subsidy by existing customers, minimization/balancing of adverse effects, and open season.
  • Atlantic Refining Co. v. Public Service Comm’n, 360 U.S. 378 (1959): § 7 “public interest” initial rates “hold the line” pending §§ 4/5 just-and-reasonable ratemaking.
  • Gulf South Pipeline Co. v. FERC, 955 F.3d 1001 (D.C. Cir. 2020): Initial § 7 rates use § 4 cost-of-service determinants; holding the line.
  • Missouri PSC v. FERC, 601 F.3d 581 (D.C. Cir. 2010): Initial § 7 rates protect public interest pending § 4/5.
  • City of Oberlin v. FERC, 39 F.4th 719 (D.C. Cir. 2022): Policy Statement guides § 7 need analysis.
• Predeterminations and rolled‑in vs incremental rates:
  • FERC Predetermination Policy, 71 FERC ¶ 61,241 (1995): Rolled‑in presumption at § 4 may issue if the expansion’s effect on existing customers is “not substantial.”
  • Consolidated Edison Co. v. FERC, 315 F.3d 316 (D.C. Cir. 2003): De‑emphasized rolled‑in treatment; incremental rates favored absent showing.
  • Brooklyn Union Gas Co. v. FERC, 190 F.3d 369 (5th Cir. 1999): Predetermination concept; ripeness considerations for preliminary FERC actions.
  • FERC orders applying § 2.55(b) costs (e.g., Paiute Pipeline, Dominion Transmission, ANR Pipeline): Show context‑dependent treatment, often for in‑kind replacements or shared capacity usage.
• NEPA deference and scope:
  • Seven County Infrastructure Coalition v. Eagle County, 145 S. Ct. 1497 (2025): Core guidepost—NEPA is procedural; agencies get “substantial deference” within a “broad zone of reasonableness;” courts should not micromanage; agencies may draw a “manageable line” in scoping and need not chase but‑for causation.
  • Dept. of Transportation v. Public Citizen, 541 U.S. 752 (2004): Rule of reason; manageable line sweeping across NEPA scope.
  • Robertson v. Methow Valley Citizens Council, 490 U.S. 332 (1989): NEPA requires evaluation, not particular substantive outcomes.
  • Food & Water Watch v. FERC, 104 F.4th 336 (D.C. Cir. 2024): Precedent agreements as evidence of market need; connected action scope.
  • Brazoria, 98 F.4th 178 (5th Cir. 2024): Alternatives limited to applicant's goals; baseline and no‑action analysis expectations.
  • Indigenous Peoples of Coastal Bend v. U.S. Army Corps, 132 F.4th 872 (5th Cir. 2025): Safety analysis and significance factors.
• Standing and ripeness:
  • Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992); Spokeo v. Robins, 578 U.S. 330 (2016): Injury in fact requirements.
  • FDA v. Alliance for Hippocratic Medicine, 602 U.S. 367 (2024): Causation/redressability framework.
  • Clapper v. Amnesty International, 568 U.S. 398 (2013): Speculative injuries insufficient; contrasted here with concrete construction delay and negotiation harms.
  • Abbott Labs. v. Gardner, 387 U.S. 136 (1967): Ripeness—fitness and hardship.
  • Energy Transfer Partners v. FERC, 567 F.3d 134 (5th Cir. 2009); Midship Pipeline Co. v. FERC, 45 F.4th 867 (5th Cir. 2022): Ripeness of FERC orders; finality vs need for further factual development.

Legal Reasoning

1) Standing and Ripeness to Challenge Denial of Predetermination

The court held GTN established injury in fact through increased transaction costs, lost monthly revenues from construction delay (quantified by affidavit), worsened bargaining leverage with expansion shippers, and diminished competitiveness attributable to the denial of a predetermination. The injury was not a voluntary Clapper-type self‑inflicted harm; FERC’s orders presented a Hobson’s choice: accept major business risks without a predetermination or delay/cancel the project. Causation was satisfied because FERC’s denial was a significant contributor to the harms at the time of filing; redressability followed because a favorable decision would lessen the imminent burdens GTN faces in an upcoming § 4 case.

On ripeness, the court stressed “fitness” and “hardship.” Fitness was met because GTN attacked the discrete, final denial of a predetermination—no further factual development was required to decide whether FERC reasonably refused to put a thumb on the scale for rolled‑in treatment. Hardship existed because the order affected primary conduct—construction sequencing, contracting, and financing—causing tangible, immediate consequences. The case fit within the Fifth Circuit’s recognition that some FERC orders are reviewable before the conclusion of evidentiary § 4 proceedings when no additional record is needed on the issue presented.

2) Predetermination of Rolled‑In Rates

On the merits, the Fifth Circuit affirmed FERC’s refusal to grant a predetermination favoring rolled‑in rates in the later § 4 case. Two pillars drove the result:

• No broad presumption for § 2.55(b) replacements in this posture: GTN overread FERC’s prior statements about a tendency to roll in replacement costs. The cited orders involved in‑kind replacements or circumstances where both existing and expansion customers shared capacity from the replacement. Here, the Solar Titan replacements materially increased horsepower beyond in‑kind levels (about 6,000 HP over the prior units), and the expansion capacity was fully committed to expansion shippers under long‑term deals—not shared by existing shippers.
• Cost‑causation and excess capacity: FERC reasonably applied cost‑causation and incremental pricing principles. Because the added horsepower made available by removing prior software limits would be used to support the expansion and not shared with existing shippers, rolling replacement costs into existing shippers’ rates would mismatch costs and beneficiaries. FERC thus acted reasonably in declining to create a presumption of rolled‑in rates, leaving GTN to justify any cost allocations in the § 4 case on a full record.

The court emphasized that predeterminations are discretionary and case‑specific. FERC adequately distinguished its earlier decisions and did not silently depart from policy; rather, it applied the familiar framework to a materially different fact set (non‑in‑kind replacements whose additional capacity is dedicated to the expansion).

3) Certification under NGA § 7 and Initial Rates

The court upheld FERC’s public‑convenience-and‑necessity finding. Precedent agreements for the full expansion capacity—especially with unaffiliated purchasers—are long‑recognized, substantial evidence of market need. FERC permissibly focused on that market evidence and deferred rate design and cost allocation disputes to § 4/§ 5 proceedings, consistent with the “hold‑the‑line” nature of § 7 initial rates.

The court rejected the States’ attempt to fold the earlier § 2.55(b) replacement costs into the § 7 need calculus or to collaterally challenge the § 2.55(b) approvals. By the time of the § 7 proceeding, the replacements had already been authorized and placed in service; any disagreement with the § 2.55(b) approvals had to be raised in a direct challenge to those actions, not in the later certificate case.

On initial rates, the court affirmed FERC’s policy of using the pipeline’s most recent § 4 cost‑of‑service determinants—including the depreciation rate—to set § 7 rates. Given § 7’s limited purpose (temporary rate protection pending full ratemaking), FERC need not engage in bespoke depreciation analyses at certification, which risk undue delay. Deviations from this policy in other cases were explained by those projects’ customer‑specific contexts; here, the policy applied sensibly.

4) NEPA: No‑Action Alternative, Connected Actions, and Public Safety

The Fifth Circuit, guided by Seven County, gave FERC’s NEPA judgments substantial deference:

• No‑action alternative: The EIS established a baseline by describing the existing environment and, in effect, recognized that if no action were taken, the project’s impacts would not occur. That “baseline‑as‑no‑action” approach, though succinct, sufficed within NEPA’s rule of reason.
• Connected actions (segmentation): FERC reasonably drew a “manageable line” excluding § 2.55(b) replacements from the EIS scope. Those replacements were previously authorized work within existing rights‑of‑way and workspaces, subject to FERC’s established NEPA treatment for § 2.55(b). They were not merely “Phase I” of a single coordinated federal action; rather, they were separate, independent projects. Under Seven County, courts should not re‑scope based on but‑for interdependence.
• Public safety and significance: FERC analyzed incremental safety risks and rationally relied on DOT pipeline safety standards and the context (e.g., station locations). Although NEPA requires consultation, the extent and nature of interagency consultations remain within agency discretion absent a clear statutory mandate to do more. FERC’s EIS and certificate conditions requiring compliance with DOT standards passed muster.

Impact

Columbia Riverkeeper v. FERC sets several practical markers for future pipeline certifications, rate proceedings, and NEPA litigation:

• NEPA after Seven County:
  • Agencies receive wide latitude to define the “proposed action” and to draw a “manageable line” around connected actions. Segmentation claims will face an uphill battle, especially where an agency has an established regulatory approach (e.g., § 2.55(b) replacements confined to existing rights‑of‑way/workspaces with prior environmental review).
  • Concise “no‑action” baselines are acceptable if the EIS describes the status quo and compares project impacts against it.
  • Safety and other significance factors are evaluated under a deferential standard; referencing applicable safety regimes and tailoring the analysis to reasonably foreseeable risks generally suffices.
• Predeterminations and cost causation:
  • Pipelines cannot assume a predetermination favoring rolled‑in treatment merely because facilities were replaced under § 2.55(b). Where replacements materially increase horsepower and the expansion capacity is dedicated to expansion shippers, FERC may refuse a predetermination and leave allocations to the § 4 record.
  • Developers seeking rolled‑in treatment should build a record showing in‑kind replacement or shared use of replacement capacity by existing shippers, and carefully document why more powerful replacements were necessary just to maintain existing service reliability.
• Certificate-stage rates remain “hold‑the‑line”:
  • FERC may continue to use the pipeline’s most recent § 4 cost-of-service determinants (including depreciation from black‑box settlements) for initial § 7 rates without a bespoke depreciation study at certification.
  • Arguments about long‑term demand decline and consumer impacts belong primarily in § 4/§ 5 ratemaking, not in § 7’s threshold certification analysis.
• Litigation posture and timing:
  • Developers can establish standing and ripeness to challenge FERC denials of predeterminations before § 4 proceedings, where they can show concrete project‑level harms (delays, renegotiations, lost revenues, transaction costs).
  • Opponents cannot collaterally attack § 2.55(b) approvals in a later § 7 appeal; they must challenge those approvals directly and timely.
  • Precedent agreements for full capacity, particularly with unaffiliated shippers, remain powerful evidence of need that can carry the § 7 “public convenience and necessity” finding.
• CEQ regulatory backdrop:
  • Although CEQ’s regulations were in flux in 2025, the court assumed—without deciding—that “connected actions” analysis applies and still upheld FERC’s scoping decisions under Seven County. Agencies should continue to document scoping lines with that deference standard in mind.

Complex Concepts Simplified

• § 2.55(b) replacements: A FERC rule allowing pipelines to replace old facilities in the same right‑of‑way/workspace, without new certificate proceedings, if the replacement has substantially equivalent delivery capacity and does not reduce service. FERC typically treats such work as already covered in prior environmental review.
• Expansion vs. replacement: Expansion (new or added capacity) requires a § 7 certificate and an EIS if significant impacts are possible. Replacement under § 2.55(b) is maintenance/repair work within existing footprints and usually does not need a new EIS.
• Rolled‑in vs incremental rates: Rolled‑in spreads costs across all customers; incremental charges only the new (expansion) customers. FERC favors incremental rates to avoid subsidies unless the expansion benefits existing customers without significantly affecting their rates.
• Predetermination: A presumption FERC may grant at certification that, in the future § 4 case, rolled‑in treatment will be appropriate. It is discretionary, rebuttable, and not a guarantee; denial just means the § 4 case proceeds without a presumption.
• Cost‑causation principle: Those who cause or benefit from costs should bear them. If the added capacity benefits only expansion shippers, the costs should ordinarily be incremental.
• “Hold‑the‑line” initial rates: Temporary rates set at certification to protect the public until permanent just‑and‑reasonable rates are set under §§ 4/5. FERC often uses the pipeline’s latest § 4 cost-of-service inputs (including depreciation) for this purpose.
• Precedent agreements: Long‑term contracts for the project’s capacity, often viewed as strong or sufficient evidence of market need for certification.
• No‑action alternative: The scenario in which the agency does not take the proposed action; provides a baseline for comparing environmental impacts. Agencies need not analyze speculative outcomes beyond that baseline if the project simply wouldn’t happen.
• Connected actions / segmentation: Agencies should review together actions that are part of a single federal action. Under Seven County, agencies have broad discretion to draw a reasonable scoping line; “but‑for” interdependence does not compel consolidation.
• JPML lottery and § 2112: When multiple petitions challenging an agency action are filed in different circuits, a lottery may determine venue and consolidation. Here, GTN’s timely petition led to consolidation in the Fifth Circuit.

Conclusion

Columbia Riverkeeper v. FERC is a comprehensive reaffirmation of FERC’s established frameworks for pipeline certification, initial rate setting, and NEPA compliance—now refracted through the Supreme Court’s 2025 guidance in Seven County. The Fifth Circuit:

• Confirmed that developers can obtain judicial review of predetermination denials pre‑§ 4 where concrete project harms exist.
• Clarified that § 2.55(b) replacement work does not automatically justify a predetermination for rolled‑in rates when replacements are not in‑kind and their excess capacity is dedicated to expansion shippers.
• Reinforced that precedent agreements remain potent evidence of market need, that § 7 initial rates properly “hold the line” using prior § 4 determinants, and that complex cost allocation questions belong in § 4/§ 5 rate proceedings.
• Applied Seven County’s deferential NEPA standard to uphold FERC’s concise no‑action baseline, its “manageable line” excluding § 2.55(b) replacements from the EIS, and its safety analysis grounded in DOT standards.

Taken together, the decision strengthens regulatory predictability. For project proponents, it underscores the importance of aligning replacement scope with in‑kind needs if they seek rolled‑in rate treatment, and of securing robust precedent agreements. For challengers, it signals that NEPA scoping and minimal no‑action baselines will be upheld if reasonably explained, and that collateral attacks on § 2.55(b) approvals must be directly and timely pursued. Above all, the opinion cements that, in the post‑Seven County era, courts will afford agencies substantial leeway to draw reasonable lines and to reserve granular ratemaking for the proper forum.