Presentation | C-1: Revisions to the Blanket Certificate Program

Good morning, Chairman and Commissioners.

I'm Danielle Elefritz with the Office of the General Counsel and with me are Nicole Huang and Kevin Bowman with the Office of Energy Projects, Kent Mottice with the Office of Energy Market Regulation, and Adrian Thomson with the Office of Technical Reporting and Economics.

Item C-1 is a Notice of Proposed Rulemaking (or NOPR) that expands the scope of projects that natural gas companies may complete without a case-specific authorization under section 7 of the Natural Gas Act. The proposed rule aims to streamline infrastructure development while maintaining protections for customers and the environment.

The blanket certificate program was created in 1982 to provide streamlined authorizations for a class of activities, including mandatory standard conditions to ensure consistency with the Natural Gas Act and environmental statutes. The program relies on cost caps and eligibility criteria to differentiate routine activities eligible for the blanket program from major projects which require a case-specific review. There are two categories of blanket projects: (1) automatic authorization projects that may proceed automatically without prior notice; and (2) prior notice projects that require a 60-day notice period that provides an opportunity to protest. As explained in 1982, automatic authorization applies to projects that are so well understood that little scrutiny is required, whereas prior notice applies to projects warranting a greater degree of review.

The last major modification to the blanket certificate program occurred in 2006, when the Commission, among other things, increased the cost limits to align with then-current construction costs, made mainline facilities eligible for the program as prior notice projects, and expanded the standard environmental conditions and notice provisions.

To ensure that infrastructure projects can be developed in a timely manner and save time and money for applicants and the Commission without undue regulatory review, the Commission issued a notice of inquiry in June 2025. The notice followed the filing of a petition by the Interstate Natural Gas Association of America asking the Commission to reexamine the blanket program. The notice solicited stakeholder comment on whether, and if so how, the Commission should modify the blanket certificate program. In response, the Commission received 17 comments: 9 from pipeline companies and related trade associations, 4 from pipeline customer groups, 1 from an environmental organization, 1 from a state government official, and 2 from individuals. The comments addressed a variety of issues, including the appropriate cost limits, the scope of projects that may be constructed, reporting requirements, and the rate treatment for blanket certificate projects.

The NOPR proposes several revisions to the blanket certificate program. First, it proposes to increase the automatic authorization cost limit from 14.5 million dollars to 30 million dollars, the prior notice cost limit from 41.1 million dollars to 86 million dollars, and the annual cost limit for natural gas facilities, including storage wells, used for the testing or development of underground storage reservoirs from 7.9 million dollars to 17 million dollars. Next, the NOPR proposes to use the Handy-Whitman Index, in lieu of the Gross Domestic Product Price Deflator, as the basis for making annual adjustments to the cost caps. The NOPR also proposes to allow natural gas companies to charge incremental rates for prior notice projects and extends the in-service deadline from one year to two.

In addition, the NOPR proposes several project-specific reforms. These include:

• removing cost limits for in-fenceline expansions of existing compressor stations eligible under prior notice procedures;
• harmonizing the treatment of receipt and delivery points by removing cost limits for receipt points eligible under automatic authorization;
• allowing abandonment of facilities based on the actual cost of abandonment rather than the cost to replace the abandoned facilities; and
• allowing for the abandonment of storage wells under automatic authorization if the abandonment does not alter the physical parameters of a storage field.

Finally, the NOPR proposes revisions to reporting and public notification requirements, including:

• requiring disclosure of the purpose and beneficiaries of blanket certificate projects; and
• harmonizing landowner notification requirements with those for section 7 applications by requiring notification of all affected landowners by certified or first-class mail.

The NOPR seeks comment on the proposed changes and specifically on the following discrete issues:

• the analysis to support the increased cost limits;
• the method for annual adjustments to the cost limits;
• rate and accounting practices for projects charging existing transportation rates;
• protest procedures for prior notice projects;
• whether to allow mainline expansions under automatic authorization; and
• the environmental information, specifically air quality and noise information, that should be required for applications to expand existing compressor stations.

We would like to acknowledge and thank the numerous staff from the Offices of Energy Projects, Energy Market Regulation, and Technical Reporting and Economics, as well as staff from the Office of the General Counsel, who worked on the proposed rule.

This concludes our presentation. We're happy to answer any questions.