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Federal Register / Vol. 86, No. 29 / Tuesday, February 16, 2021 / Rules and Regulations
1. Comments 21. AOPL argues that the Commission should calculate the index level by trimming the data set to the middle 80%.40 AOPL asserts that absent errors in the data, it is preferable to use more
data points because this makes the measurement of industry-wide cost changes more precise.41 AOPL contends that using the middle 50% in this proceeding would go beyond excluding statistical outliers by removing valuable data from the analysis, resulting in a less accurate measurement of industry cost changes.42
22. In addition, AOPL maintains that considerations the Commission has previously found to support trimming the data set to the middle 50% should not control here. It states that whereas the Commission found in Order No. 561
that data reporting errors supported restricting the analysis to the middle 50%, subsequent improvements in reporting accuracy obviated these concerns.43 Furthermore, AOPL states that contrary to the Commissions finding in the 2015 Index Review, the fact that pipelines in the middle 80%
are further removed from the median does not support excluding their cost data unless that data is anomalous or spurious.44 Designated Carriers, Kinder Morgan, and EIC support AOPLs proposal to rely solely upon the middle 80%.45
23. Shippers oppose use of the middle 80% and argue that the record does not provide a sufficient basis for departing from the Commissions practice in the 2015 and 2010 Index Reviews of relying solely upon the middle 50%.46 Shippers cite the Commissions findings in the 2015 and 2010 Index Reviews that using the middle 50% provides a simple and effective method of excluding outlying data from the sample and minimizes the need to analyze individual pipeline data. Here, Shippers argue that the middle 80% contains outlying data and that AOPL did not undertake a company-by-company review of the incremental data included in the middle 80% to prove otherwise.47 Joint Commenters also contend that the
37 MLP pipelines therefore would not have benefitted from these policies unless they established an initial cost-based rate under 18 CFR
342.2a of the Commissions regulations or changed an existing rate pursuant to the cost-of-service methodology under 18 CFR 342.4a while these policies were in effect. 18 CFR 342.2a, 342.4a.
38 See 2018 Income Tax Policy Statement, 162
FERC 61,227 at PP 4546.
39 As the Commission has explained, investors in MLP pipelines and C-Corporation pipelines incur an investor-level income tax cost that is reflected in the pipelines rate of return. SFPP, L.P., Opinion No. 511C, 162 FERC 61,228, at PP 2224 2018, order on rehg and compliance, Opinion No. 511
D, 166 FERC 61,142, at PP 1011 2019, affd, SFPP, L.P. v. FERC, 967 F.3d 788, 79597 D.C. Cir.
2020. However, unlike MLPs, corporations incur an additional corporate income tax liability prior to the distributions to investors. See Opinion No. 511
C, 162 FERC 61,228 at PP 22 n.44, 25 n.53.
40 AOPL Initial Comments at 1724; AOPL Reply Comments at 79.

41 AOPL Initial Comments at 18 quoting Shehadeh Initial Decl. at 23; AOPL Reply Comments at 9.
42 AOPL Initial Comments at 19. Trimming the data set to the middle 50% would exclude 80 of the 160 pipelines in the data set, whereas trimming to the middle 80% would exclude 32 pipelines.
43 AOPL Initial Comments at 2122 citing AOPL
I, 83 F.3d at 1433.
44 Id. at 23 citing AOPL II, 281 F.3d at 24546.
45 Designated Carriers Initial Comments at 7;
Kinder Morgan Initial Comments at 3; EIC
Comments at 78, 17.
46 Joint Commenters Initial Comments at 1516;
Joint Commenters Reply Comments at 57; Liquids Shippers Reply Comments at 17; CAPP Reply Comments at 1516.
47 Joint Commenters Reply Comments at 10
citing Brattle Group Report at 1320; Brattle Group Report at 22; Liquids Shippers Reply Comments at 1921 citing Crowe Reply Aff. at 4
5.

the index.37 Because no prior index calculation incorporated the policies allowing MLP pipelines to recover an index tax allowance, it is not necessary to reflect the policy change denying those pipelines an income tax allowance in the calculation here.
20. Accordingly, we adopt Designated Carriers proposal to adjust the historical page 700 data for 2014 to remove the effects of the Income Tax Policy Change for all pipelines that were MLPs in 2014, including those that later converted to a business form such as a C-Corporation eligible to recover an income tax allowance. This approach is broader than AOPLs more limited proposal to adjust the data for only those pipelines that were MLPs in 2014
and that continued to be MLPs for the remainder of the 20142019 period.
Because the Commissions revised income tax allowance policy applies equally to all MLP pipelines,38 we conclude that it is appropriate to make these adjustments for all pipelines that were MLPs in 2014, regardless of subsequent changes in corporate form.
By applying these adjustments to all pipelines subject to the Income Tax Policy Change, we will ensure that the entirety of the page 700 data reflects the same MLP income tax allowance policy for both 2014 and 2019. Furthermore, those pipelines that converted from the MLP form to the corporate form incurred increased tax costs as a result of the change in business form. This cost change, just like any other cost change, should be reflected in the index.39

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middle 80% is more dispersed than the middle 50% in this proceeding and the middle 80% in prior index reviews, indicating that it contains cost changes that are not representative of typical experience.48 Moreover, Shippers assert that it is unnecessary to use the middle 80% in this proceeding to obtain a representative sample of industry cost changes because the middle 50%
contains a greater percentage of barrelmiles subject to the index 82% than in the 2015 Index Review 56% or the 2010 Index Review 76%.49
24. Shippers further argue that AOPLs arguments for using the middle 80% are unavailing and inconsistent with the Commissions findings in the 2015 Index Review.50 Joint Commenters maintain that the Commission has previously rejected the argument that using the middle 50% will bias the index calculation downwards.51 Liquids Shippers state that AOPL incorrectly argues that the sole purpose of statistical data trimming is to remove inaccurate data and statistical outliers. According to Liquids Shippers, data trimming also serves to exclude data that, while accurate, fails to represent normal industry cost experience.52
2. Commission Determination 25. Based upon our review of the instant record, we calculate the index level by trimming the data set to the middle 80%. We recognize that this is a departure from the Commissions practice in the 2015 and 2010 Index Reviews of trimming the data set to the middle 50%.53 An agency may change its position in light of experience or further analysis so long as it articulates a satisfactory explanation for its new position.54 Thus, notwithstanding the 48 Joint Commenters Reply Comments, Brattle Group Report at 1720.
49 Joint Commenters Reply Comments at 78;
Liquids Shippers Reply Comments at 26.
50 Joint Commenters Reply Comments at 911
quoting 2015 Index Review, 153 FERC 61,312 at P 42 n.80 citing 2015 Index Review, 153 FERC
61,312 at P 43; Liquids Shippers Reply Comments at 2325 citing 2015 Index Review, 153
FERC 61,312 at PP 40, 43.
51 Joint Commenters Reply Comments, Brattle Report at PP 4648 citing 2015 Index Review, 153
FERC 61,312 at P 43; Order No. 561A, FERC
Stats. & Regs. 31,000 at 31,098.
52 Liquids Shippers Reply Comments at 2223
citing Order No. 561A, FERC Stats. & Regs.
31,000 at 31,097.
53 2015 Index Review, 153 FERC 61,312 at PP
4244; 2010 Index Review, 133 FERC 61,228 at PP
6063.
54 E.g., Encino Motorcars, LLC v. Navarro, 136 S.
Ct. 2117, 212526 2016 Agencies are free to change their existing policies so long as they provide a reasoned explanation for the change. . . .
But the agency must at least display awareness that it is changing position and show that there are good
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