Key Takeaways

• Existing LNG terminals gain a fast track. Under the proposed blanket authorization rule, LNG plants could add capacity within their footprint on 60 days’ notice, and could add new trains, tanks, and berths on up to 25 acres of adjacent land on 90 days’ notice, with no cost limits.
• New LNG projects still need a full proceeding. Blanket authority would be available only to holders of a Section 3 or Section 7 authorization, so a greenfield LNG project must obtain its initial authorization first, through the traditional application process. It may request blanket authority for future projects in the same application.
• The most often litigated piece of FERC’s NEPA analysis would go away. FERC would treat compliance with Clean Air Act permits as evidence that a project’s air emissions impacts are not significant under NEPA, which should shorten reviews and narrow the grounds for appeal.
• Commissioner Chang dissented on the air policy statement and warned of appellate risk, so early orders applying the policy may draw challenges.

The LNG Blanket Authorization Program

FERC excluded LNG plants from its pipeline blanket certificate program in 1982 and again in 2006, reasoning that LNG facilities required case-by-case review.³ FERC now says that its experience suggests that this sort of review is no longer necessary in many instances. FERC reports that it has evaluated more than 100 LNG applications since 2006, and notes that seven large-scale export terminals are operating with eight more in construction.⁴ Today, routine changes at an operating plant, including some equipment replacements, can require a case-specific order.

• The proposed rule creates three tiers of LNG project activities, with different authorization requirements applicable to each:
• The first tier – which will be eligible for automatic authorization – covers replacements, upgrades, and modifications within the authorized LNG facility footprint and design limits that do not increase authorized capacity and have minor or no environmental effects. These activities would require no advance notice or notice to proceed and would be reported in the existing semiannual operational reports LNG project operators must file.
• The second tier covers changes in LNG facilities that increase authorized capacity but stay within the existing LNG project footprint and design limits, including capacity uprates, on 60 days’ prior notice. FERC declined to allow uprates automatically because increased throughput can generate new hazards and may require new letters from PHMSA and the Coast Guard, Department of War concurrence, and Endangered Species Act consultation.⁵
• The third tier covers new LNG facilities and auxiliary systems that would be constructed outside the existing project footprint, such as liquefaction trains, storage tanks, and marine berths, on 90 days’ prior notice. Those projects must be located within or adjacent to the existing plant boundaries, permanently occupy no more than an additional 25 acres of previously disturbed or developed land in industrial or unzoned areas, comply with the environmental and engineering conditions imposed by the underlying authorization, and be of the same type as facilities already authorized at that plant. FERC staff estimated that 25 acres could accommodate two LNG tanks, a single large train of about 7.8 MTPA, or roughly ten smaller liquefaction blocks totaling about 12.5 MTPA.⁶ Segmenting a project to stay under the acreage limit is prohibited.

Under the prior notice tiers, anyone, including Commission staff, may protest. If a protest is filed and not withdrawn or dismissed, the project will be reviewed as a case-specific application. Otherwise it is deemed authorized at the end of the notice period. FERC is seeking comment now on whether to limit protests that can lead to case-specific review to persons with a substantial interest and on whether to set a deadline for resolving them.⁷

Unlike the pipeline blanket certificate program, the LNG blanket authorization program would carry no cost limits. FERC concluded that cost is a poor proxy for the effects of LNG work and that Section 3 terminals do not raise the ratepayer concerns that originally motivated its adoption of the pipeline project cost limits, because FERC does not regulate rates under Section 3.⁸ Section 7 LNG plants, such as peak shaving facilities, would be eligible for blanket authorization for the same activities as those LNG terminal facilities could undertake under the new blanket authorization, without limits as to cost. Such Section 7 LNG facilities would be subject to the same rate treatment that applies under the pipeline program. That is, the costs of Section 7 LNG activities completed under the automatic authorization category would be presumptively eligible for rolled-in rate treatment because those activities would be undertaken to enhance reliability and safety.

Several features deserve attention.

• Operators must first apply for a blanket authorization, which the Director of the Office of Energy Projects could grant under delegated authority and which FERC could rescind for noncompliance.
• A new applicant may request blanket authority in its initial Section 3 or Section 7 application.⁹
• FERC would waive its prefiling requirements for blanket activities.
• Operators would notify affected landowners and the local municipality at least 45 days before automatic authorization work that involves ground disturbance or changes to air or noise emissions, and within three business days of docketing for prior notice requests.

• Prior notice projects would still need a PHMSA letter of determination, a Coast Guard letter of recommendation, Department of War concurrence, a state safety letter, and emergency responder letters, and each would receive its own NEPA review through an environmental assessment or a categorical exclusion determination.
• FERC proposes no new categorical exclusions.
• Blanket projects must be in service within five years.
• Nothing in the proposal changes the Department of Energy’s separate authority over the export of the commodity, so a holder whose expansion would increase export volumes above those specified in its DOE authorization would still need DOE approval.

The Draft Air Policy Statement

FERC’s regulations do not require air dispersion modeling, but staff guidance has recommended it for new or modified compressor stations and LNG facilities since at least 2017, and in practice it has become mandatory. Under the draft policy statement, FERC would no longer ordinarily ask applicants to prepare or submit that modeling, nor rely on it to decide whether a project’s operational air impacts are significant under NEPA. FERC would instead use emissions data for the project’s equipment, the applicable federal and state air requirements, would assume the applicant’s compliance with them, and would treat compliance with Clean Air Act permitting as evidence that air emissions impacts of a project would be less than significant.¹⁰ Because that significance finding drives whether FERC prepares an environmental impact statement or an environmental assessment, the change in policy could shorten time required for the environmental review as a whole, not only the data request cycle. Applicants may still submit modeling prepared for their state air permits, and FERC would continue to disclose air emissions impacts in its NEPA documents and weigh them under the NGA. The draft policy statement does not change any Clean Air Act obligations; the state permit, and the modeling it requires, would remain.

FERC rests the proposed change on the Supreme Court’s 2025 decision in Seven County, which described NEPA as a procedural statute and directed courts to give agencies substantial deference on their determinations as to the scope of their NEPA reviews, and on the view that modeling duplicates work Congress assigned to EPA and the states.¹¹ Chairman Swett called the modeling an “unnecessary source of confusion, delay, and litigation risk.” The point has a record behind it. In City of Port Isabel, the D.C. Circuit faulted FERC for failing to explain why its air analysis for two Brownsville terminals omitted data from a nearby monitor, and the projects spent years awaiting FERC action on remand.¹²

Commissioner Chang dissented from the draft statement. She argued that modeling is the best available tool for understanding local air impacts, that state permitting focuses on regional attainment rather than local effects, and that orders applying the policy will face substantial appellate risk. She also noted that the policy affects only proceedings in which FERC would otherwise have required modeling. Commissioner Rosner concurred and invited comment on whether applicants should file in FERC’s docket the materials they submit to state air regulators. FERC is seeking comment now on implementation of the policy.

What This All Means for LNG Developers

The two actions favor different parts of the natural gas infrastructure development sector. The blanket LNG project authorization program rewards developers that already hold a FERC authorization. An operating or under construction terminal could add capacity, a train, or a berth on a 60 or 90 day clock without going through prefiling (a minimum 180-day process), having to file a full application, and awaiting a Commission order, and without being constrained by a dollar cap. That is a meaningful advantage over a greenfield LNG project developer competitor, which must still complete a full Section 3 proceeding, obtain a DOE export authorization, and receive the required state permits before it can use the program.

The air policy statement cuts the other way. It applies to every natural gas project applicant and removes the element of FERC’s environmental review most often attacked on appeal. For a new project, that should mean fewer rounds of data requests, a shorter path to a NEPA document, and a narrower target for opponents. It does not remove the modeling cost itself, which the state air permit still requires. And because a policy statement binds no one until applied in an order, the first orders that rely on it will test Commissioner Chang’s prediction in court.

What to Do Now

• Comment. The policy statement comment deadline is November 16, 2026, and the rule comment deadline is December 21, 2026. FERC has asked specific questions on the 25 acre limit, protest standing, and a timeline for resolving protests. Concrete examples of delayed amendments should carry weight in the Commission’s consideration of the proposals.
• Map planned work to the tiers. Operators should sort their project pipelines into automatic, 60 day, and 90 day categories and identify work that would fall outside each envelope.
• Request blanket authority early. Applicants with pending or planned Section 3 applications should consider asking for blanket authority in the same filing.
• Revisit the air emissions evaluation strategy. Applicants should align their FERC filings with their state air permit schedules and decide whether to submit state modeling voluntarily.
• Check deal documents. Expansion rights, milestone dates, and regulatory approval conditions in offtake, EPC, and financing agreements may assume a case specific order that may no longer be needed.

King & Spalding’s Energy practice advises LNG developers, operators, offtakers, and lenders on FERC and DOE authorizations, project development, and the commercial agreements that depend on them. We would be glad to discuss how these proposals affect a specific project or transaction.

Contacts

Jim Bowe | RJ Colwell