On October 15, 2026, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) in Docket No. RM26-2-001 taking the next key deregulatory leap under its Natural Gas Act (NGA) sections 3 and 7 authority.  The NOPR follows FERC’s May 2026 proposed expansion of its existing Part 157 gas blanket program in Docket No. RM25-12-001.  Tracking the long-established gas blanket program, the NOPR proposes to establish a similar regulatory program to allow certain activities and expansions of existing liquified natural gas (LNG) facilities without the need for a case-specific NGA section 3 or 7 authorization.  The NOPR follows a Notice of Inquiry issued in November 2025 that sought comment on whether, and if so how, FERC should establish blanket authorization procedures for targeted activities at LNG plants.

Since 1982, interstate natural gas pipeline companies subject to FERC’s jurisdiction under NGA section 7 have benefited from a blanket certificate program, which streamlines the permitting process for well understood, routine, lower-impact activities at mainline pipeline, compressor station, and gas storage facilities.  Under the existing gas blanket program, interstate pipelines that hold a certificate of public convenience and necessity under NGA section 7 and a Part 157 blanket certificate may undertake, without a case-specific authorization, certain activities automatically and other activities after prior notice, both subject to cost caps.  The gas blanket program allows for pipeline construction, modification, replacement, acquisition, operation, and abandonment activities below a cost cap to be quickly built.  Until now, FERC has declined to extend the gas blanket program to include NGA section 7 LNG facilities such as peak shavers.  FERC’s NOPR proposes an LNG blanket program that will streamline maintenance, repairs, upgrades, and expansions of both section 3 and 7 LNG facilities.

The proposed LNG blanket program will automatically authorize replacements and abandonments of components within and auxiliary systems at existing LNG plants provided the changes do not increase capacity.  More extensive activities and those that would increase capacity require “prior notice,” either a 60-day or 90-day notice period that provides stakeholders and FERC staff an opportunity to protest the project.  Eligible activities subject to a 60-day prior notice period include facility modifications and capacity uprates.  The 90-day prior notice period category would allow new LNG facilities to be built adjacent to an existing LNG plant on previously disturbed land provided the new facility does not permanently occupy more than 25 acres.  Prior notice projects could begin construction relatively quickly if the protests were resolved, or if no protests were filed, without a FERC order authorizing the activity. 

The NOPR does not impose a cost cap on eligible LNG blanket activities, but any section 7 LNG blanket activity would be subject to the rate treatment requirements in FERC’s existing Part 157 blanket regulations.  Under the NOPR, the costs for section 7 LNG activities completed under the automatic authorization category would be presumptively eligible for rolled-in rate treatment because those eligible activities are deemed to support facility reliability and safety and may not create incremental capacity.  For activities under the 60-day and 90-day prior notice categories, FERC proposes that those costs could be recovered through incremental rates, which issue is pending in the Part 157 gas blanket rulemaking proceeding in Docket No. RM25-12-001.

FERC also proposes to sunset the existing replacement and auxiliary installation authority for section 7 LNG plants under section 2.55 of FERC’s regulations, 18 C.F.R. § 2.55, for any LNG blanket certificate holder.  Currently, section 7 certificate holders can replace facilities that “have or will soon become physically deteriorated or obsolete” or construct auxiliary installations for more efficient or economical operation under section 2.55 of FERC’s regulations, subject to certain limitations.  FERC notes that eligible activities under section 2.55 are duplicative of the activities under the proposed LNG blanket authorization program and thus proposes to exclude LNG blanket certificate holders from using section 2.55.  LNG blanket certificate holders would instead exclusively use the provisions of the LNG blanket program for replacements and auxiliary installations.  The NOPR proposes to delay the effective date for the amendments to section 2.55 for two years to allow any LNG facility with planned projects under section 2.55 to complete those projects without disruption.

The FERC-regulated interstate pipeline system hosts approximately 70 active peak shaving facilities making pipeline industry engagement in this NOPR critical to ensure that FERC implements a legally durable and effective streamlined permitting tool.  Areas likely to be the focus for gas pipeline companies include:  (i) supporting the proposal to not impose a cost cap for section 7 LNG facilities; (ii) whether the 25-acre limit for construction of new LNG facilities adjacent to an existing LNG plant is appropriate; and (iii) removing the availability of section 2.55 authority for LNG blanket certificate holders.  Comments will be due 60 days after Federal Register publication. 

For more information, please contact Karin Larson or Ryan Collins.