FERC proposes sweeping changes to approval process to speed gas pipeline construction

The US Federal Energy Regulatory Commission (FERC) May 21 proposed sweeping reforms to its blanket permitting process for natural gas infrastructure, a move it expects would streamline the permitting process and speed up pipeline construction.

The blanket certificate process allows companies to avoid a long, case-by-case application process for routine upgrades or smaller, lower-impact projects.

The proposed reforms would permanently expand the types, sizes, scope, and scale of infrastructure projects eligible for the streamlined process, “empowering companies to build much-needed critical infrastructure without the delay of case-by-case approvals,” the commission said in a statement. 

“These changes should dramatically accelerate construction by cutting through red tape and driving progress for the nation’s energy future,” FERC said.

The Notice of Proposed Rulemaking (NOPR) seeks to more than double the dollar threshold governing blanket certificate eligibility to $30 million from $14.5 million for small projects.

FERC’s prior-notice threshold used for medium-sized projects would increase to $86 million from $41.1 million.

The NOPR also would allow pipeline companies to charge incremental rates for routine projects. Incremental rates require only the shippers that directly benefit from and subscribe to new, expanded capacity to pay for construction costs. Currently, only major projects, subject to FERC’s more stringent certificate policy, are eligible for incremental rates.

A pipeline company often chooses to seek incremental rates rather than rolled-in rates, in which all shippers on the pipeline—both legacy and new—pay the cost of expansion, because it protects corporate revenues from being diluted by massive expansion costs.

“One of the single most impactful changes in the NOPR is FERC’s proposal to incorporate mainline facilities, including compression and looping, for automatic authorization,” law firm Akin Gump Strauss Hauer & Feld said in a client note.

Currently, any mainline projects must be reviewed under the prior-notice procedures, even if they fall below the automatic authorization cost threshold.

The NOPR also proposes extending blanket authorization procedures to certain activities including maintenance, repairs, and upgrades at LNG plants, a category historically subject to full certificate review.

The NOPR comes as FERC faces calls to advance infrastructure development to meet a growing need for natural gas-fired power generation to support data centers, and to speed projects to supply gas to LNG export plants.

The plan could face opposition from environmental and landowner groups concerned about changes to permitting guardrails and by ratepayer representatives seeking to prevent cost shifts to captive customers.

The NOPR was published as a proposed rule on May 27, opening a 60-day comment period that closes on July 27.