Court Upholds FERC Approval of GTN Xpress Pipeline Expansion in Pacific Northwest

A federal appeals court upheld FERC’s handling of the GTN Xpress pipeline expansion serving the Pacific Northwest and California, rejecting environmental challenges while leaving a key $250 million compressor cost dispute for a future rate case.

(P&GJ) — The U.S. Court of Appeals for the Fifth Circuit has upheld the Federal Energy Regulatory Commission’s approach to approving the GTN Xpress pipeline expansion project, rejecting challenges related to cost allocation and environmental review.

The case, Gas Transmission NW, LLC v. FERC, centers on Gas Transmission Northwest’s plan to increase capacity on its pipeline system delivering natural gas from Western Canada into the U.S. Pacific Northwest and California.

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The GTN Xpress project includes replacing aging compressor units and expanding system throughput to meet growing demand in the region.

A key issue in the dispute involved how nearly $250 million in compressor replacement costs should be allocated. Gas Transmission Northwest sought to spread those costs across all pipeline shippers under a “rolled-in” rate structure, while FERC declined to make a cost allocation decision during the certificate proceeding.

Instead, the agency determined that the issue should be addressed in a future rate case under Section 4 of the Natural Gas Act.

The Fifth Circuit agreed with FERC’s approach, finding the agency’s decision to defer the cost allocation determination reasonable and consistent with established regulatory practice.

Environmental and state petitioners also argued that FERC violated the National Environmental Policy Act (NEPA) by treating compressor replacements and capacity expansion as separate actions rather than a single project requiring a broader environmental review.

The court rejected those arguments, concluding that FERC reasonably evaluated the expansion and reliability upgrades separately.

The ruling also affirmed FERC’s reliance on precedent agreements with expansion shippers as sufficient evidence of market demand to support the project.

The decision reinforces long-standing regulatory practice allowing pipeline operators to structure reliability upgrades separately from capacity expansions while addressing detailed rate issues later in the regulatory process.