FERC Issues Proposed Rule Expanding Scope of Blanket Certificate Authority

On June 16th, the Federal Energy Regulatory Commission (Commission) issued a proposed rule expanding the scope of activities authorized under its blanket certificate regulations by increasing the types of facilities that are eligible for blanket authority and raising the project cost limits for activities authorized under the blanket authority. The proposed rule also clarifies that natural gas pipelines’ incentive rate discounts to foundation shippers are generally not unduly discriminatory, expands notice requirements to landowners, and imposes new environmental compliance conditions.

The proposed rule applies to natural gas companies holding a Natural Gas Act (NGA) Section 7(c) certificate and blanket certificate authority under Part 157, Subpart F of the Commission’s regulations.

Key Issues in the Proposed Rule

Expand Scope of Blanket Certificate Authority. Currently, the blanket certificate provisions apply only to a restricted set of eligible facilities that may be constructed, acquired, altered, or abandoned without the need to obtain case-specific certificate authorization for each project. Mainlines, storage field facilities, and facilities receiving gas from a liquefied natural gas (LNG) plant or a synthetic gas plant are currently ineligible. The proposed rule would expand the category of facilities eligible for construction under blanket certificate authority to include mainline facilities, certain LNG and synthetic gas facilities, and certain storage facilities.

Increase Blanket Project Cost Limits. The Commission’s current regulations impose a cost limit on natural gas facilities that may be constructed, acquired, altered, or abandoned pursuant to blanket authority of $8,200,000 for projects which can be undertaken without prior notice (i.e., self-implementing or automatic authorization projects) and $22,700,000 for projects for which prior notice is required. The proposed rule would increase the project cost limit to $9,600,000 for automatic authorization projects and $27,400,000 for prior notice projects.

Affirm Incentives For Foundation Shippers. The proposed rule confirms that, as a general matter, when all potential shippers have an equal and open opportunity to become foundation shippers through an open-season process, it is not unduly discriminatory for pipelines to provide rate incentives to foundation shippers, because foundation shippers that sign up for service early are not similarly situated to later shippers.

Additional Notice Requirements. The proposed rule increases the notice required for landowners affected by an automatic authorization project from 30 to 45 days prior to construction, and extends the deadline to protest a proposed prior notice project from 45 to 60 days. The proposed regulations also specify the information that the project sponsors must provide in the notice to the landowner.

Environmental Compliance Conditions. The proposed rules modify the environmental compliance conditions of the blanket certificate program to: clarify that “facility sites” include wells and all other aboveground facility sites; clarify that noise levels will be measured at the site property boundary; establish goals for drilling noise limits and require compliance verification surveys; require certain environmental inspection reports to be filed with FERC on a weekly basis; and require more detailed annual reporting on the status of automatic authorization projects.