Managing NEPA’s “Manageable Line” and Immediate Review of FERC Predetermination Denials: The Fifth Circuit’s Framework in Gas Transmission NW v. FERC

Introduction

In Gas Transmission NW v. FERC (5th Cir. Oct. 28, 2025), the Fifth Circuit consolidated multiple petitions challenging the Federal Energy Regulatory Commission’s approvals and determinations surrounding a capacity expansion on the Gas Transmission Northwest (GTN) pipeline and earlier replacements of three compressor units along the same system. The petitioners included GTN (challenging FERC’s denial of a predetermination that would favor “rolled-in” rates for expansion costs), two states (Washington and Oregon), and environmental groups (Columbia Riverkeeper and Rogue Climate). The court denied all petitions.

The opinion addresses four interlocking regimes and decisions: (1) when a pipeline expansion qualifies for a certificate of public convenience and necessity under § 7 of the Natural Gas Act; (2) how initial rates are set for expansion capacity and whether FERC must predetermine rolled-in versus incremental pricing; (3) the status of prior compressor replacements approved under FERC’s § 2.55(b) (automatic authorization for certain in-right-of-way replacements) and whether those replacements are “connected actions” under NEPA; and (4) the adequacy of FERC’s environmental review under NEPA, including the treatment of a no-action alternative and public safety risks.

Beyond resolving the parties’ disputes, the decision crystallizes two consequential legal principles. First, under Article III and ripeness doctrines, a pipeline can immediately seek judicial review of FERC’s denial of a predetermination to apply rolled-in rates at the § 7 stage, notwithstanding that final rates will later be set in a § 4 proceeding. Second, applying the Supreme Court’s 2025 decision in Seven County Infrastructure Coalition v. Eagle County, the Fifth Circuit strongly endorses agency discretion to draw a “manageable line” in defining the scope of an EIS, holding that § 2.55(b) compressor replacements were not “connected actions” that had to be analyzed with the later expansion.

Summary of the Opinion

The Fifth Circuit:

Held that GTN had standing and its petition was ripe to challenge FERC’s denial of a predetermination favoring rolled-in rates, based on cognizable financial harms from construction delays, increased transaction costs, and weakened bargaining leverage with shippers.
Affirmed FERC’s refusal to grant GTN a predetermination for rolled-in rates, emphasizing cost-causation and distinguishing prior FERC precedents because (i) all new capacity was subscribed by expansion shippers, and (ii) the replacement compressors were not in-kind and created substantial excess horsepower.
Upheld FERC’s § 7 certificate finding that the expansion was in the public convenience and necessity, relying heavily on long-term precedent agreements and explaining that § 7 rates are designed to “hold the line” pending § 4/§ 5 adjudications.
Approved FERC’s use of the depreciation rate from the most recent § 4 case to set initial § 7 rates, rejecting arguments that projected future demand decline compelled deviation.
Rejected NEPA challenges, concluding FERC reasonably: (a) addressed the no-action alternative by using a resource-by-resource baseline; (b) drew a “manageable line” excluding § 2.55(b) replacements from the scope of the EIS; and (c) treated public safety risks adequately by relying on Department of Transportation (PHMSA) standards and project-specific mitigations.

Analysis

Precedents Cited and Their Influence

The court’s analysis is framed by a series of well-known precedents:

Natural Gas Act and rate cases: PennEast Pipeline Co. v. New Jersey; Consolidated Edison Co. v. FERC; Brooklyn Union Gas Co. v. FERC; Gulf South Pipeline Co. v. FERC; Missouri Public Service Commission v. FERC; Myersville Citizens for a Rural Community, Inc. v. FERC; City of Oberlin v. FERC. These establish FERC’s § 7 certificate framework, the role of the Certificate Policy Statement, the use of precedent agreements as evidence of need, and that § 7 rates are interim mechanisms preceding § 4 and § 5 proceedings.
Rate allocation and cost-causation: El Paso Electric Co. v. FERC; Fairless Energy v. FERC; ANR Pipeline Co.; Transcontinental Gas Pipe Line decisions. These guide when rolled-in versus incremental rates are appropriate, underscoring that costs should be allocated to those who cause or benefit from them.
NEPA doctrine and deference: The Supreme Court’s Seven County Infrastructure Coalition v. Eagle County provides the controlling framework emphasizing (a) NEPA’s procedural character, (b) substantial agency discretion within a “broad zone of reasonableness,” and (c) an agency’s authority to draw a “manageable line” in defining the scope of analysis, including connected actions. The court also referenced Robertson v. Methow Valley Citizens Council; Baltimore Gas & Electric Co. v. NRDC; Department of Transportation v. Public Citizen.
Administrative law standards: FCC v. Prometheus Radio Project (reasoned decisionmaking); Motor Vehicle Manufacturers Ass’n v. State Farm (consider important aspects); BP America v. FERC and APA substantial evidence review.
Article III and ripeness: Lujan v. Defenders of Wildlife; Clapper v. Amnesty International USA; Book People, Inc. v. Wong; Inclusive Communities Project; Cochran v. SEC; Energy Transfer Partners v. FERC; Brooklyn Union Gas; Tennessee Valley Municipal Gas Ass’n v. FERC. These inform injury-in-fact, causation, redressability, and when preliminary agency determinations are reviewable.

The opinion weaves these strands to produce two especially salient holdings: (1) immediate review of a predetermination denial can be both justiciable and ripe; and (2) post-Seven County, courts should defer to FERC’s decision to exclude § 2.55(b) replacements from the EIS for a later expansion as a reasonable “manageable line.”

Legal Reasoning

Standing and Ripeness for Predetermination Review

The court rejected the States’ and Riverkeeper’s contention that GTN suffered no cognizable injury until a later § 4 rate case. The denial of a predetermination at the § 7 stage imposed present, concrete harms: increased transaction costs and lost revenues from construction delays (quantified at approximately $1.3 million per month), reduced bargaining leverage with expansion shippers, and diminished market competitiveness. Those are not mere self-inflicted responses to speculative risks; the court deemed them compelled by the practical Hobson’s choice created by FERC’s orders.

Causation and redressability were satisfied because the denial was a contributing cause of these harms and favorable judicial relief would lessen them by removing the burden GTN would otherwise face in the § 4 case. Importantly, the court measured standing at the time of filing and allowed GTN’s affidavit submitted in response to the motion to dismiss to establish the necessary record.

On ripeness, the court found the challenge fit for review: the denial of a predetermination was final on that discrete issue and did not require further factual development. Distinguishing Energy Transfer Partners and similar cases where FERC ordered an evidentiary hearing to resolve fact disputes, the panel noted that here FERC had already denied the predetermination as a matter of policy-application based on undisputed facts (removal of horsepower restrictions and use of replacement horsepower to support the expansion). Hardship was also established: beyond uncertainty, GTN showed immediate, concrete effects on negotiations and project timing, and it retained a $50 million stake even after a settlement with existing shippers.

Natural Gas Act: Predetermination for Rolled-In Rates

GTN argued that FERC departed from a longstanding practice of presumptively granting rolled-in ratemaking for § 2.55(b) replacements and a broader policy favoring rolled-in treatment for reliability-driven replacements. The Fifth Circuit disagreed on both counts, carefully parsing FERC’s prior orders:

Those cases either involved in-kind replacements or divided replacement capacity among existing and expansion customers. Here, by contrast, the Solar Titan compressor replacements materially increased horsepower (approximately 6,000 HP more than the 1970s units), and the entire additional capacity was contracted for by expansion shippers under 30-year precedent agreements.
Rolling the full replacement costs into existing rates in this posture would allocate costs for excess, unused replacement capacity to existing shippers who would not receive the benefit—running afoul of the cost-causation principle.
GTN’s own submissions acknowledged that smaller replacement units were available that could have addressed reliability with far less incremental horsepower; FERC was entitled to consider this in rejecting a predetermination favoring rolled-in treatment.

Because a predetermination would have put a thumb on the scale before the § 4 case, and because GTN’s cited precedents were distinguishable, the court held FERC reasonably denied the request and left allocation issues to the later § 4 proceeding without a pro-rolled-in presumption.

Natural Gas Act: Public Convenience and Necessity and Initial § 7 Rates

On the certificate, the court reaffirmed that long-term precedent agreements are “important, and sometimes sufficient” evidence of market need. GTN had secured three unaffiliated expansion shippers for 100 percent of the added capacity for thirty years. FERC could rely on those contracts and need not resolve at the § 7 stage the ultimate rate allocation questions or post-contract demand projections raised by the States; § 7 rates “hold the line” pending §§ 4 and 5 adjudication.

The panel also rejected a collateral attack on FERC’s earlier § 2.55(b) approvals, reminding challengers that complaints about § 2.55(b) authorizations must be brought directly in the appropriate proceeding, not smuggled into a later § 7 certificate review.

On initial rates, the court upheld FERC’s use of the depreciation rate from GTN’s most recent § 4 case, consistent with longstanding policy to seed § 7 initial rates with the latest cost-of-service determinants. While the States urged a higher depreciation rate based on anticipated demand decline over a 47-year horizon, the panel held FERC reasonably declined case-by-case depreciation analyses at the § 7 stage to avoid undue delay, especially because initial rates are temporary placeholders.

NEPA: No-Action Alternative, Connected Actions, and Safety

Applying Seven County’s “broad zone of reasonableness” and deference to agency scoping judgments:

No-action alternative. FERC’s EIS acknowledged that if the project did not proceed, the project’s environmental effects would not occur, and it presented a resource-by-resource baseline (the existing condition) against which project impacts were evaluated. Although Riverkeeper argued FERC should have provided a fuller standalone analysis, the court held that NEPA leaves such depth-and-breadth calls to the agency’s discretion so long as the baseline is intelligible and the purpose-and-need framing is respected.
Connected actions and § 2.55(b) replacements. FERC drew a “manageable line” by excluding the earlier compressor replacements—which were approved under § 2.55(b) and sited within existing footprints—from the expansion’s EIS. Even if functionally interrelated, Seven County cautions against mechanical “interdependence” tests and forbids but-for causation as the measure of scope. The court endorsed FERC’s policy and rationale: § 2.55(b) replacements are generally reviewed (and often exempted) under FERC’s NEPA rules because they stay within previously authorized workspaces and are limited maintenance/repair work with minimal incremental effects.
Public safety. FERC addressed reasonably foreseeable safety risks by requiring compliance with Department of Transportation/PHMSA standards and considering the remoteness of sites. While NEPA requires consultation with agencies with relevant expertise, the opinion emphasizes that the extent and manner of consultation is a discretionary, context-specific choice. On this record, directing compliance with PHMSA and referencing applicable standards sufficed.

Impact

The ruling carries notable implications across three fronts.

1) Litigation posture and timing

Pipelines: Developers may immediately challenge a FERC denial of a rolled-in rate predetermination at the § 7 stage when they can show concrete harms from delay and negotiation dynamics, even though the final rate design will be set later under § 4. Affidavits documenting monthly cost impacts and commercial leverage effects can establish standing and ripeness.
Opponents: Environmental groups and states should challenge § 2.55(b) authorizations directly when granted, rather than waiting to attack them in a later § 7 certificate proceeding. Collateral challenges will not be entertained.

2) Ratemaking strategy

Rolled-in predeterminations are not presumed simply because facilities were replaced under § 2.55(b). Where replacements are not in-kind and create substantial excess horsepower and all incremental capacity is dedicated to expansion shippers, FERC may deny a rolled-in presumption and leave allocation to the § 4 case in the first instance.
Developers should carefully document why a given replacement size is necessary for existing shippers’ reliability needs if they intend to preserve rolled-in treatment; evidence that smaller units could suffice can undermine a predetermination request.
Initial § 7 rates will continue to follow the “hold the line” principle, typically using the last § 4 cost-of-service determinants (including depreciation), with finer calibration deferred to §§ 4/5.

3) NEPA scope after Seven County

Courts will afford substantial deference to an agency’s scoping of “connected actions” and its treatment of the no-action alternative. The “manageable line” framing replaces rigid multi-factor connected-action tests, and but-for causation is out of bounds for defining scope.
For pipeline operators, § 2.55(b) replacement projects that stay in existing rights-of-way and workspaces will generally remain outside an EIS for later expansions, absent extenuating circumstances. That encourages careful sequencing and documentation of independent utility.

Complex Concepts Simplified

Section 7 vs. Section 4 (Natural Gas Act). Section 7 is about whether a pipeline or expansion serves the public convenience and necessity; it also sets temporary “initial rates” that merely “hold the line.” Section 4 is where permanent, just-and-reasonable rates are set after full record development.
Predetermination. A § 7-stage, rebuttable presumption from FERC that, in a later § 4 case, the expansion costs will be “rolled in” to the pipeline’s general rate base and shared by all customers. Without it, the applicant must prove rolled-in treatment in § 4 without a presumption.
Rolled-in vs. incremental rates. Rolled-in rates spread costs of new facilities across all customers; incremental rates charge only the expansion shippers. FERC’s policy typically favors incremental rates unless rolled-in treatment won’t significantly burden existing shippers.
Cost-causation principle. A ratemaking norm that costs should be borne by those who cause them or receive the benefit—allocating costs for unused or excess capacity to non-beneficiaries is disfavored.
Section 2.55(b) replacements. FERC’s regulation allowing in-right-of-way replacements of deteriorated or obsolete facilities with substantially equivalent design delivery capacity, generally without prior approval and typically without NEPA review beyond what was already analyzed for the original facilities.
NEPA “manageable line.” Post–Seven County, agencies have latitude to draw the line around what a “proposed action” includes in an EIS. Courts defer so long as the agency’s scope is reasonable; they avoid imposing but-for causation to sweep in separate projects.
No-action alternative. NEPA requires agencies to compare the project to a scenario in which the project does not occur; this often appears as a baseline description of the existing environment and a qualitative statement that the project’s direct effects would not occur under “no action.”
PHMSA/DoT safety standards. Pipeline safety standards administered by the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration; FERC can incorporate compliance with these standards as mitigation in NEPA analyses.

Conclusion

Gas Transmission NW v. FERC delivers a cohesive, practical framework for pipeline certification disputes at the intersection of the Natural Gas Act and NEPA. The Fifth Circuit:

Confirmed that a pipeline’s challenge to FERC’s refusal to grant a rolled-in predetermination is both justiciable and ripe at the § 7 stage when the denial imposes immediate, concrete harms.
Clarified that rolled-in predeterminations are not presumed for § 2.55(b) replacements, especially where replacements materially increase horsepower and expansion shippers take all incremental capacity.
Reaffirmed FERC’s reliance on long-term precedent agreements to establish need and its policy of using the last § 4 cost-of-service determinants to set initial § 7 rates.
Adopted, with vigor, the Supreme Court’s Seven County deference for NEPA scoping decisions—upholding exclusion of § 2.55(b) replacements from the expansion’s EIS, a succinct treatment of the no-action alternative, and reliance on PHMSA standards to address safety risks.

The decision signals to developers, regulators, and opponents alike: litigate § 2.55(b) replacement approvals in their own time and forum; expect heavy reliance on precedent agreements and established rate determinants at the certificate stage; and anticipate a highly deferential judicial posture toward agency scoping and alternatives analyses under NEPA. In short, the Fifth Circuit’s opinion consolidates a predictable, agency-deference–heavy baseline for future certificate and NEPA challenges, while preserving a robust § 4 venue for granular rate design and cost allocation debates.