FERC Proposes Expansion Of The Blanket Certificate Program

On May 21, 2026, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) in Docket No. RM25-12-001 proposing the most consequential overhaul of its regulations governing natural gas pipeline permitting in 20 years. If finalized, the NOPR’s proposals would expand the scope of FERC’s regulations governing Part 157, Subpart F blanket certificates, which authorize construction of pipeline facilities without the need for a case-specific Natural Gas Act (NGA) section 7 authorization, as long as the operator provides “prior notice.”

The NOPR is expressly deregulatory: the proposed changes include more than doubling of the dollar threshold governing blanket certificate eligibility, the right for operators to charge incremental rates for prior notice projects, and a modernization of the indexing methodology used to set future cost thresholds. Comments are due 60 days after publication in the Federal Register, and the Commission has invited input on several discrete proposals it characterizes as “illustrative.”

The NOPR comes at a time when FERC is facing calls to advance infrastructure development to meet growing needs for natural gas-fired power generation supporting the electric grid and large loads, like data centers, and to speed feed gas supply for liquefied natural gas (LNG) export facilities. For pipeline developers, the proposals are materially favorable, but they are likely to face scrutiny from environmental and landowner groups concerned about changes to permitting guardrails and by ratepayer representatives seeking to prevent cost shifts to captive customers.

Background

FERC first established the blanket certificate program in 1982 in Order No. 234 to create a new mechanism under NGA section 7(c) for interstate natural gas pipelines to obtain “blanket” authorization covering specified categories of future activities in an effort to streamline the certification process for routine, lower-impact activities. It permitted certain pipeline construction, modification, replacement, acquisition, operation and abandonment activities, provided they occurred within prescribed limits, with eligibility caps on total project costs. Certain activities below the lowest dollar thresholds were automatically authorized and reported to FERC in annual reports. More costly activities that still fell below a prescribed cap required “prior notice” with protest rights to preserve stakeholder protections. Those projects, however, could begin construction relatively quickly if the protests were resolved, or if no protests were filed, without a FERC order authorizing the activity. FERC categorically excludes blanket certificate activities from the preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act (NEPA). Most recently, the cost limit for prior notice projects was $41.1 million, which FERC had temporarily increased to $61.65 million in 2025 for projects placed in service prior to May 31, 2027.

The blanket certificate program has been revised since its inception, most recently in Order No. 686, which was issued in 2006. Through each revision, FERC expanded the scope and limits of the program, rather than altering the core design introduced in 1982.

The NOPR would continue FERC’s historical practice of expanding the program’s scope, rather than contracting it. It follows a petition for rulemaking filed by the Interstate Natural Gas Association of America (INGAA) for a temporary waiver to increase the cost limitations of this program from $41.1 million to $82.2 million. While FERC ultimately issued the waiver on June 18, 2025, it capped the cost threshold temporarily at $61.65 million, but initiated a Notice of Inquiry (NOI) seeking comments on the cost threshold as well as broader reforms to the blanket certificate program. The comments led to the NOPR’s issuance, as well as a one-year extension of the temporary waiver, applying it to projects placed in service by May 31, 2028.

Increased Cost Thresholds and a New Indexing Methodology

The NOPR recognizes that the current cost threshold of $41.1 million, absent the temporary waiver cap of $61.65 million, as well as the methodology used to arrive at that threshold, may be outdated. Citing data submitted by INGAA, FERC demonstrates that natural gas infrastructure construction costs have outpaced the annual gross domestic product (GDP) deflator adjustments it currently uses to adjust blanket certificate thresholds. The INGAA data showed a 256.98% median increase in cost per inch-mile and a 172.76% increase in cost per horsepower for compressor stations from 2006 through 2024, compared with only a 50–51% increase in the cost limits over the same period.

In line with this data, the NOPR proposes to substantially raise the dollar thresholds that govern blanket certificate eligibility:

• Automatic authorization would increase from $14.5 million to $30 million.
• Prior notice would increase from $41.1 million (subject to a temporary waiver to $61.65 million through May 31, 2028, pursuant to a concurrently issued FERC order) to $86 million.

FERC also proposes to abandon the GDP implicit price deflator in favor of the Handy-Whitman Index for Gas Compressors and Gas Transmission Line Pipe, averaged across all regions on a year-over-year January-to-January basis, with the Director of the Office of Energy Projects authorized to compute and publish future-year limits. FERC has invited comment on whether a three-year rolling average would better dampen volatility. However, FERC declined INGAA’s request for a further upward adjustment to account for projected (rather than historical) cost trends, viewing it as speculative.

Elimination of Cost Caps for Receipt Points and Compressor Station Expansions

Two of the NOPR’s most consequential proposals remove cost caps altogether for discrete categories of work:

• Receipt points would be treated the same as delivery points­—eligible for automatic authorization with no cost limit—on the rationale that the underlying facilities (taps, meters, heaters, gas conditioning, odorization) are functionally identical. A new definition of “Receipt Point” would be added at § 157.202(b)(14).
• A new § 157.210 would authorize, under prior notice procedures, construction, modification, replacement and operation of compression and other facilities within the fence line of an existing compressor station with no cost limit, provided the pipeline owns or leases all project land. Applicants must submit the full Resource Report 9 (air and noise quality) information required by § 380.12(k), and applications must be complete when filed given the compressed 60-day environmental review window.

Mainline Facilities — Comment Invited

One of the single most impactful changes in the NOPR is FERC’s proposal to incorporate mainline facilities (compression and looping that are not “eligible facilities” under § 157.202(b)(2)(i)) into § 157.208(a)(3) for automatic authorization. FERC seeks comment on whether such projects have minimal impacts on ratepayers and pipeline operations and whether automatic predeterminations of rolled-in rate treatment should apply. At present, any mainline projects must be reviewed under the prior notice procedures, even if they fall below the automatic authorization cost threshold.

Streamlined Abandonment and Facility-Specific Reforms

• Storage well abandonments that do not alter the storage field’s certificated physical parameters (total inventory, reservoir pressure, reservoir and buffer boundaries, certificated capacity) would qualify for automatic authorization rather than prior notice.
• The abandonment cost calculation would be based on the actual cost of abandonment rather than the hypothetical modern-day cost of replicating the facility, freeing more abandonment activity to proceed under blanket authority.
• Synthetic gas and revaporized LNG facility projects would no longer be channeled into prior notice review under the current § 157.212; instead, they could proceed under either automatic authorization or prior notice subject to the applicable cost limits, reflecting FERC’s accumulated post-2006 experience and existing gas-quality tariff protections.
• Delivery point abandonments would be permitted under automatic authorization where the certificate holder obtains written customer consent for service in the prior 12 months, or where the point has not provided service for 12 months and is no longer covered by a firm contract.

Incremental Rates on Prior Notice Projects — A First

In a significant policy shift, FERC proposes to permit pipelines to charge incremental rates on projects constructed under prior notice procedures, reversing a longstanding prohibition. Applications must include a rate calculation supported by the exhibits required for NGA section 7 project-specific applications located § 157.14(a)(14)–(19) to enable FERC staff and parties to evaluate the rate within the 60-day notice period. If unprotested, the incremental rate effectively would be approved through the prior notice proceeding, with a subsequent NGA section 4 filing to implement the tariff record before service commences. Applications must be complete when filed; incomplete applications risk rejection or staff protest.

The Commission proposes to continue automatic predeterminations of rolled-in rate treatment for blanket projects charging existing system rates, but applicants for prior notice mainline expansions seeking rolled-in treatment must provide evidence of no major impact on existing customers—responsive to cost-shifting concerns raised in the NOI comment period by certain trade associations representing investor owned and municipal natural gas public utilities. A new § 157.208(c)(7) also would require applications seeking to implement an incremental rate to include a statement explaining how the public convenience and necessity requires approval, including the project’s purpose and beneficiaries.

Two-Year In-Service Deadline

Currently, all prior notice projects must be in service within one year of the authorization taking effect. FERC proposes to extend this time limit to two years, consistently with its practice for project-specific NGA section 7 authorizations to accommodate permitting delays, supply-chain disruptions and seasonal construction windows. Director-level extensions remain available. If delay is attributable to end-user/shipper unreadiness, the certificate holder must notify the Commission within 10 days after expiration of the two-year period.

Environmental Compliance

While prior notice projects are categorically excluded under NEPA, they remain subject to consultations under the Endangered Species Act (ESA) and National Historic Preservation Act (NHPA). In the NOPR, FERC proposes to streamline the ESA process and make certain changes to the NHPA process. For ESA purposes, if the certificate holder determines (using federal databases such as the United States Fish and Wildlife Service’s Information for Planning and Consultation tool) that a project will have no effect on listed species or critical habitat, only documentation of the finding is required and no informal consultation is necessary. Projects that “may affect” species would still require informal consultation, and projects “likely to adversely affect” species would continue to require a case-specific order.

The NOPR did not adopt INGAA’s proposal to change the blanket certificate eligibility standard from “no effect” to “no adverse effect” on properties listed or eligible for listing in the National Register of Historic Places (defined as historic properties). FERC was concerned that such a change could not be easily implemented and remain compliant with the NHPA. However, FERC proposed changes to the program that would designate the certificate holder as FERC’s non-federal representative for NHPA compliance upon acceptance of the blanket certificate, paralleling existing ESA practice.

Expanded Landowner Notification

Landowner notifications are one area in which FERC proposes more onerous regulations for blanket certificate projects. FERC would require certificate holders to contact all affected landowners using certified or first class mail, both for automatic authorization and prior notice projects, replacing the subjective “good faith effort” standard and harmonizing with section 7 practice. In the case of prior notice projects, landowner notifications would be required both at initiation of easement negotiations and within three business days of docket number assignment, closing the gap where easement negotiations may precede docket assignment by months. FERC declined to expand the “affected landowner” definition, mandate electronic notice or require Office of Public Participation meetings during the notice period.

General Takeaways

The prior notice program’s popularity has grown in part due to growing opposition to pipeline infrastructure. In part because Part 157, Subpart F authorized projects are categorically excluded from the preparation and review of time-consuming NEPA documents, pipeline operators are able to deploy capital faster with greater commercial flexibility and increase their customer base. Projects that may not have penciled out because of the permitting timeline may become economic if they can fall into the revised prior notice project category. Hence, it did not escape notice by the FERC Commissioners that their proposed reforms were in alignment with more general permitting reform efforts currently under review in Congress and at other federal agencies. Indeed, the NOPR represents a generational opportunity for interstate natural gas pipelines to expand the universe of projects executable under blanket authority, thereby expanding the size of the pipeline grid at a time when natural gas demand is rising.

Engagement in this NOPR will be crucial for pipeline industry participants interested in reforms that do not require statutory changes at the Congressional level. We expect priorities for industry engagement to include (i) the proposed automatic authorization for mainline facilities; (ii) the proposed new indexing methodology; (iii) the rolled-in rate evidentiary showing for prior notice mainline expansions; and (iv) preserving the deregulatory thrust of the package against anticipated opposition. Comments will be due 60 days after Federal Register publication. Hence, we expect a final rule prior to the end of the year.

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