Overview
On May 21, 2026, the Federal Energy Regulatory Commission unanimously approved a Notice of Proposed Rulemaking that would substantially expand the Part 157, Subpart F blanket certificate program for interstate natural gas pipelines. The proposal widens both the types and sizes of projects eligible for streamlined authorization and recalibrates cost limits that have been frozen in real terms since 2006. Comments are due 60 days after Federal Register publication.
The NOPR is worth reading not for what it proposes in isolation, but for what it reveals about the Commission’s current regulatory philosophy. The blanket certificate program has always been a barometer of FERC’s appetite for categorical deregulation of routine gas infrastructure. The 2006 revision was incremental; this one is not. And the questions FERC left open, particularly on mainline automatic authorization, suggest the final rule may go further still.
What the Blanket Certificate Program Does (and Why It Matters)
The blanket certificate program, created in 1982, allows interstate pipelines holding an NGA Section 7(c) certificate to undertake certain routine construction and abandonment activities under a one-time blanket authorization rather than filing individual certificate applications. The program sorts eligible activities into two tiers:
- “Automatic authorization” projects may proceed without any filing, subject to environmental conditions and cost limits.
- “Prior notice” projects require a filing with FERC and a 60-day notice period during which Commission staff and affected parties may protest.
The practical effect is significant. A project that qualifies for blanket treatment avoids the full Section 7 certificate process, which can take a year or more for even modest facilities. The NOPR would widen the aperture of both tiers considerably.
Key Proposals
Substantially Higher Cost Limits
FERC proposes to increase the per-project cost limits as follows:
- Automatic authorization projects: from approximately $14.5 million to $30 million.
- Prior notice projects: from approximately $41.1 million (or $61.65 million under the existing temporary waiver) to $86 million.
- Storage testing projects: from approximately $7.9 million to $17 million.
The Commission based these figures on INGAA’s analysis of Exhibit K data from Section 7 certificate applications, which showed a median 257% increase in cost per inch-mile and a 173% increase in cost per horsepower between 2006 and 2024. FERC staff verified the methodology and found no analytical flaws. The Commission declined, however, to add a further cushion for projected future cost trends, reasoning that prospective adjustments would be speculative.
The practical significance is less about the dollar figures themselves than about the category of work they bring inside the program’s perimeter. At the current limits, a straightforward compressor addition or pipeline loop serving incremental load can exceed the cap on materials and labor alone, requiring the project to go through a full Section 7 proceeding that adds months of review for what is, functionally, routine construction. The proposed limits would bring the program back into alignment with the scale of work it was designed to authorize.
New Inflation Adjustment Methodology
FERC proposes to replace the GDP implicit price deflator with the Handy-Whitman Index of Public Utility Construction Costs for annual adjustments to the blanket certificate cost limits. The GDP deflator has failed to keep pace with actual pipeline construction cost inflation, which is precisely why the Commission found itself needing to reset the limits in this rulemaking. The Handy-Whitman Index tracks gas utility construction costs more narrowly and should reduce the need for future one-time corrections.
This change matters more than it may appear. The shift from the GDP deflator to the Handy-Whitman Index is an implicit admission that the Commission’s own annual adjustment formula was structurally inadequate. Had the Handy-Whitman Index been in use since 2006, the cost limits would have tracked actual construction cost inflation, and this rulemaking may not have been necessary.
No Cost Limit for Compressor Station Expansions Within the Fence Line
The NOPR would remove cost limits entirely for expansions of existing compressor stations where the project remains within the station’s existing fence line, and the pipeline owns or leases all project land. These projects would proceed under prior notice procedures (not automatic authorization), preserving the opportunity for staff and affected parties to protest. Applicants would be required to file the full suite of environmental information required by Section 380.12(k), and the existing noise condition (55 dBA Ldn at any preexisting noise-sensitive area) would continue to apply.
Within-the-fence-line compression work involves no new right-of-way acquisition, no new landowner impacts, and a narrower environmental footprint than greenfield construction. By removing the cost cap and relying instead on the prior notice protest mechanism and the existing noise and air quality conditions, FERC is effectively treating the fence line as the proxy for the regulatory screening that cost limits were designed to approximate. That is a meaningful conceptual shift, and one worth watching as a potential template for future categorical expansions of the program.
Incremental Rates Now Available for Blanket Certificate Projects
Under current policy, FERC does not allow incremental rates for blanket certificate projects, meaning all capacity built under the program is priced at the pipeline’s existing system rate. The NOPR would change this for prior notice projects. A pipeline proposing incremental rates would file a rate exhibit with its application, and Commission staff and affected parties would have the 60-day notice period to evaluate and, if warranted, protest.
This change addresses a longstanding tension in the program. A pipeline with a creditworthy anchor shipper willing to pay an incremental rate for new capacity had no way to use that commercial arrangement under the blanket certificate, even if the project was otherwise routine. The only path was a full Section 7 proceeding. By opening the door to incremental rates under prior notice, FERC is acknowledging that rate treatment and project complexity are distinct questions that should not be conflated.
Receipt Points Treated Like Delivery Points
Currently, construction of receipt points (taps and metering facilities to receive gas onto a pipeline system) is subject to cost limits, while delivery points (the analogous facilities for delivering gas) are not. FERC proposes to eliminate the cost limitation on receipt points and allow them to proceed under automatic authorization, matching the treatment of delivery points. The facilities involved are functionally identical, and the Commission found no basis to differentiate treatment.
Abandonment Eligibility Based on Actual Cost
Under the current rules, FERC determines whether an abandonment project qualifies for blanket treatment based on the hypothetical cost to construct a modern replacement of the facility being abandoned, rather than the actual cost of the abandonment itself. The NOPR would reverse this approach. Because abandonment activities typically involve less construction and fewer environmental impacts than new construction, measuring eligibility by the actual cost of removal or decommissioning aligns more logically with the program’s framework.
Automatic Authorization for Storage Well Abandonments
Storage well abandonments currently require prior notice procedures regardless of cost. The NOPR would allow automatic authorization of storage well abandonments that do not alter the physical parameters of the storage field. The Commission found these abandonments to be routine and often driven by safety compliance requirements.
Two-Year In-Service Deadline
FERC proposes to extend the deadline for placing blanket certificate projects in service from one year to two years, consistent with its current practice in Section 7 proceedings and reflecting the reality that permitting delays, workforce constraints, and supply chain issues routinely push timelines beyond 12 months.
Mainline Automatic Authorization: An Open Question
The Commission stopped short of proposing this change but went further than simply asking whether it should. FERC directed staff to evaluate the proposal in its NEPA review, which means the environmental analysis that accompanies the final rule will include a scenario in which mainline projects qualify for automatic authorization. That is not the posture of a Commission that considers the question closed. FERC’s decision to include this scenario in the NEPA analysis suggests it is seriously weighing the option, and parties with a stake in this outcome, whether they favor expedition or want to preserve the prior notice process for mainline work, should treat the comment period as their primary opportunity to shape the result.
Additional Housekeeping and Clarifications
The NOPR includes several additional proposals worth noting. FERC would eliminate the separate prior notice requirement for facilities transporting synthetic gas or revaporized LNG, allowing these facilities to proceed under either tier subject to cost limits. FERC would clarify that the half-mile construction exclusion zone around nuclear facilities applies to “nuclear power reactor facilities” rather than “nuclear power plants,” a distinction that excludes nuclear storage facilities from the restriction. Landowner notification for prior notice projects would be required both at the start of easement negotiations and within three business days of docket assignment. Notification would be required by certified or first-class mail, replacing the current “good faith effort” standard.
What FERC Declined to Propose
Several significant requests were left on the table. FERC declined to expand the blanket program to projects receiving a “no adverse effect” finding from a State Historic Preservation Officer, concluding that doing so would require a nationwide programmatic agreement under the NHPA and would delay this rulemaking. FERC also declined to modify the temporary workspace rules under Section 2.55 to allow pipelines to use newly negotiated workspace for replacement projects, finding that the environmental protections of the existing rule warranted preservation. And FERC rejected proposals for a rolling three-year cumulative spending cap, finding that the existing prohibition on project segmentation adequately addresses the concern.
Practical Implications
If this rule is finalized as proposed, a substantial category of gas infrastructure work that currently requires a year or more of regulatory review would be eligible for authorization in 60 days or less, and some of it would require no filing at all. Development timelines would compress, capital deployment would accelerate, and the risk of regulatory delay on routine projects would drop materially. The removal of cost limits for within-the-fence-line compression work alone could facilitate maintenance and capacity additions that have faced extended timelines in Section 7 proceedings.
The availability of incremental rates under the blanket program is also a significant commercial development. Projects backed by creditworthy anchor shippers can now be structured with dedicated rate support and still move on an expedited timeline, which should improve returns on incremental capacity investment and make project-level financing more straightforward.
On the shipper side, the higher cost limits and broader scope of blanket-eligible projects warrant attention to cost allocation. The Commission’s proposal to require disclosure of project beneficiaries is a step toward transparency, but it remains to be seen whether that disclosure will provide enough information to evaluate rolled-in rate treatment at the next rate case. The evidentiary standard for demonstrating that a mainline expansion “benefits existing customers” is undefined, and how the Commission fills that gap in the final rule will determine how much protection existing shippers actually have.
The data center buildout adds a less obvious dimension. Much of the gas-fired generation being developed to serve co-located and behind-the-meter data center load depends on upstream pipeline capacity to deliver fuel. To the extent the revised blanket program accelerates lateral connections, compression additions, and receipt point construction, it may remove a supply-chain bottleneck that is not always visible in the data center permitting conversation but is very much present in practice.
The comment period is the moment to engage. The Commission left several questions open, most notably on mainline automatic authorization, the inflation methodology, and the evidentiary standard for rolled-in rate treatment, and a unanimous vote suggests the final rule will move quickly once comments close.
This alert is intended to provide a general overview of the Commission’s proposed revisions to the blanket certificate program for interstate natural gas pipelines. It does not constitute legal advice, and the appropriate approach will depend on the specific facts, jurisdiction, and circumstances applicable to each project or filing.
RJ Colwell is a senior associate at Davis Graham & Stubbs LLP in the Energy & Mining Group. He advises pipeline companies, gas-fired generation developers, data center developers, and their investors and lenders on FERC regulatory matters, energy transactions, and infrastructure permitting. RJ can be reached at rj.colwell@davisgraham.com.