Key Takeaways
- FERC proposes to stop generally requiring air dispersion modeling from applicants for natural gas pipeline compressor station and LNG projects.
- Compliance with all applicable Clean Air Act requirements would serve as evidence that a project’s air quality effects are not “significant” under NEPA.
- The changes could reduce data requests, regulatory burden and the likelihood that a project requires a full Environmental Impact Statement.
- Comments on the Draft Policy Statement are due Nov. 16, 2026.
On Oct. 15, 2026, the Federal Energy Regulatory Commission (FERC) issued a Draft Policy Statement to streamline its review of proposed natural gas projects under the Natural Gas Act (NGA), consistent with its obligations under the National Environmental Policy Act (NEPA). Under the Draft Policy Statement, the Commission would (i) no longer generally require NGA project applicants to submit air dispersion modeling or rely on such modeling to assess whether the air quality effects of facility operations are “significant” for purposes of FERC’s analysis under NEPA; and (ii) treat a project’s compliance with all applicable Clean Air Act (CAA) permitting and regulatory requirements as evidence that its air quality effects are less than “significant” for purposes of NEPA.
FERC states that these changes will align its air quality analysis with its statutory obligations under the NGA and NEPA, reduce regulatory burden and risk for project developers and streamline its NEPA review.
Comments to FERC on the Draft Policy Statement are due Nov. 16, 2026.
Additional FERC Action to Streamline and Expedite LNG Terminal Modifications: Readers may also be interested in FERC’s Notice of Proposed Rulemaking (also issued on Oct. 15, 2026) proposing to establish a three-tiered blanket authorization process for certain modifications to liquefied natural gas facilities (LNG Blanket NOPR). Comments on the LNG Blanket NOPR are due Dec. 21, 2026.
FERC regulates natural gas facilities under sections 3 and 7 of the NGA. Section 3 covers the siting, construction, expansion and operation of liquefied natural gas (LNG) import and export facilities, while section 7 governs the construction, extension, acquisition and operation of interstate natural gas pipeline and storage facilities. When reviewing a project under either section, FERC must comply with NEPA, which requires federal agencies to consider the environmental effects of their proposed actions. Under NEPA, the Commission must prepare either a detailed Environmental Impact Statement (EIS) or a more limited Environmental Assessment (EA) identifying a project’s potential environmental impacts, unless a Categorical Exclusion applies or the project is otherwise exempt from NEPA review.
FERC considers natural gas pipeline and LNG export facility projects’ air quality impacts as part of its NEPA analysis and requires applicants to submit certain information under its regulations. In addition to the regulations, the Commission staff’s Guidance Manual for Environmental Report Preparation, last revised in February 2017, recommends additional environmental information applicants should consider providing, including air emissions. For new or modified pipeline compressor stations and LNG facilities, this includes a screening or refined air dispersion model comparing projected emissions to the EPA’s National Ambient Air Quality Standards. As a result, applicants generally submit air dispersion modeling and often must respond to numerous related data requests, as part of FERC’s determination of whether a project’s criteria pollutant emissions are “significant” under NEPA. That determination, in turn, dictates whether FERC must prepare an EIS rather than an EA.
Citing the U.S. Supreme Court’s discussion of NEPA in Seven County Infrastructure Coal. v. Eagle County, Colorado, FERC proposes to eliminate air dispersion modeling from its NEPA review, reasoning that such modeling is neither necessary nor consistent with its statutory mandates under the NGA and NEPA. FERC states that it is primarily an economic regulator and that “[e]nvironmental considerations in toto are just one subsidiary element in the Commission’s overall decision-making.” The Draft Policy Statement also reaffirms the Supreme Court’s statement that NEPA is a “procedural statute” and that it requires the Commission to consider a project’s environmental impacts and prepare an adequate report on its air quality “to ensure that ‘important effects will not be overlooked’” in its decision-making. Accordingly, the Commission concludes that reviewing air dispersion modeling is unnecessary to discharge its NEPA duties and duplicates air quality regulation by EPA and the states.
The Draft Policy Statement further provides that the Commission will treat a project’s compliance with all applicable CAA permitting and regulatory requirements as evidence that its air quality effects are less than “significant” for purposes of NEPA. In support, FERC points to the “extensive protections and mitigation requirements built into the CAA’s highly reticulated scheme of air quality regulation, which reflect the expertise and scientific judgment of agencies like the EPA and designated state agencies.”
Despite these changes, FERC will continue to address air quality impacts in its NEPA analysis, disclose any reasonably foreseeable environmental effects, and consider those effects “as subsidiary elements in [its] substantive decision-making under the NGA.”
McGuireWoods is available to assist with questions regarding the Draft Policy Statement or FERC natural gas regulation generally. For more information, contact the authors or a member of the firm’s Federal Energy Regulatory Commission team.