FERC Proposes Streamlined Environmental Review for Natural Gas Projects

The Federal Energy Regulatory Commission (FERC or the Commission) on October 15, 2026, issued a Draft Policy Statement on Efficient Environmental Reviews of Natural Gas Project Applications in Docket No. PL26-3-000. The proposal would significantly change how FERC evaluates operational air emissions from interstate natural gas pipeline and liquefied natural gas (LNG) projects under the National Environmental Policy Act (NEPA) as part of its broader effort to streamline environmental reviews following recent statutory amendments and the U.S. Supreme Court's decision in Seven County Infrastructure Coalition v. Eagle County, 605 U.S. 168 (2025).

FERC would no longer ordinarily require air-dispersion modeling as part of its NEPA review. Instead, it would evaluate quantified operational emissions, existing air quality, applicable Clean Air Act (CAA) requirements and permits, and proposed mitigation. FERC also would generally treat compliance with applicable CAA requirements as sufficient support for concluding that operational air emissions are not "significant" for purposes of determining whether an environmental impact statement (EIS) is required.

The proposal could reduce a recurring source of data requests, costs, delay and litigation for compressor station and LNG projects. It would not, however, eliminate FERC's review of operational air emissions or change applicants' CAA permitting obligations.

FERC's Current Approach

FERC reviews interstate natural gas pipeline facilities under Sections 7(c) and 7(e) of the Natural Gas Act (NGA) and LNG import and export facilities under Section 3, and NEPA generally requires the Commission to prepare an environmental assessment (EA) or EIS addressing a project's reasonably foreseeable environmental effects.

Applicants for new or modified compressor stations and LNG facilities typically provide air-dispersion modeling estimating how operational emissions will interact with existing ambient pollution and nearby sources. FERC compares the results to EPA's National Ambient Air Quality Standards (NAAQS) to help determine whether air-quality effects are significant enough to warrant an EIS rather than an EA. Although FERC's regulations do not expressly require such modeling, the Commission acknowledges that it has effectively become a requirement for many projects.

FERC now concludes that this practice is unnecessarily burdensome and disconnected from its substantive NGA responsibilities, noting that modeling can require multiple rounds of data requests, delay reviews and duplicate analyses performed by EPA and state air-permitting agencies.

The Proposed Streamlined Review

No Routine Requirement for Air-Dispersion Modeling

Applicants would continue to provide equipment-specific information and quantitative emissions data for criteria pollutants, hazardous air pollutants and greenhouse gases, along with information on applicable air-quality regulations, permits and mitigation measures. FERC staff would use this information to assess the scale and context of a project's operational emissions.

FERC also would continue to consider existing air quality, facility location, proximity to other emission sources, potentially affected communities and proposed emission controls. Applicants could voluntarily submit more detailed information, including dispersion modeling prepared for state air permitting.

Greater Reliance on CAA Compliance

FERC concludes that the CAA already comprehensively regulates emissions from compressor stations, LNG facilities and other stationary sources through the NAAQS, state implementation plans, New Source Review, Prevention of Significant Deterioration, New Source Performance Standards and hazardous air pollutant regulation.

Accordingly, when compliance with applicable CAA permitting and regulatory requirements demonstrates that emissions increases remain within CAA limits, FERC generally would find the project's air-quality effects less than "significant" for NEPA purposes and not independently sufficient to require an EIS.

Seven County Provides the Legal Foundation

FERC relies heavily on Seven County, reading the decision as directing agencies to apply a "rule of reason" in setting the depth and breadth of NEPA review and to focus on whether additional information will be useful to the agency's substantive decision-making.

Commissioner Views and Litigation Risk

Chairman Laura Swett described the proposal as a targeted implementation of the Supreme Court's call for a NEPA "course correction," emphasizing that FERC is not the substantive air regulator and that complex modeling has driven expense, delay and litigation without materially influencing NGA determinations.

Commissioner David Rosner called the proposal a measured step, reasoning that emissions data, operating schedules, existing air quality, facility location and enforceable permit terms can adequately inform FERC without duplicating state air-permitting models. Commissioner Rosner invited comments on whether applicants should be required to file in the FERC docket the materials they submit to state air regulators.

Commissioner Chang dissented, arguing that emissions inventories cannot substitute for dispersion modeling in assessing local ambient air quality because facilities with the same annual emissions can produce materially different localized concentrations depending on design, meteorology, topography and existing pollution. Commissioner Chang warned that the change could expose individual project authorizations to NEPA and Administrative Procedure Act challenges.

What Would Not Change

• Applicants would still provide substantial information on operational emissions, applicable standards and permits, existing air quality and mitigation measures.
• FERC would still disclose reasonably foreseeable air-quality effects in its NEPA documents and consider them in its NGA analysis.
• Applicants would remain responsible for obtaining all required CAA permits from EPA and state and local agencies.
• FERC's General Conformity approach would not change and staff could still require modeling where needed to satisfy separate CAA obligations.

Conclusion

The Draft Policy Statement is another significant step in FERC's post-Seven County reassessment of NEPA. If finalized, it could shorten review timelines for certain pipeline and LNG projects, but Commissioner Chang's dissent previews the arguments likely to be raised against authorizations relying on it. For developers, the practical question may be less whether modeling is required than whether existing or voluntary modeling would strengthen the record in a particular proceeding. Comments on the Draft Policy Statement are due by November 16, 2026.

Holland & Knight is available to help clients evaluate the proposal and prepare comments. For more information or questions, please contact the authors.

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