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Federal Register / Vol. 86, No. 29 / Tuesday, February 16, 2021 / Rules and Regulations
security-based swap dealers or major security-based swap participants pursuant to section 15Fb of the Securities Exchange Act of 1934 15
U.S.C. 78o10b shall become effective sooner than the normal 60 day waiting period provided in Rule 15Fb32b 240.15Fb32b of this chapter.

By the Commission.
Dated: December 22, 2020.
Vanessa A. Countryman, Secretary.
FR Doc. 202028819 Filed 21221; 8:45 am BILLING CODE 801101P

DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
I. Background A. Establishment of the Indexing Methodology
18 CFR Part 342
Docket No. RM2014000

Five-Year Review of the Oil Pipeline Index Federal Energy Regulatory Commission, Department of Energy.
ACTION: Order establishing index level.
AGENCY:

The Federal Energy Regulatory Commission Commission issues this Final Order concluding its five-year review of the index level used to determine annual changes to oil pipeline rate ceilings. The Commission establishes an index level of Producer Price Index for Finished Goods plus 0.78% PPIFG+0.78% for the five-year period commencing July 1, 2021.
DATES: This order is effective February 16, 2021.
FOR FURTHER INFORMATION CONTACT:
Evan Steiner Legal Information, Office of the General Counsel, 888 First Street NE, Washington, DC 20426, 202 5028792
Monil Patel Technical Information, Office of Energy Market Regulation, 888 First Street NE, Washington, DC
20426, 202 5028296
SUPPLEMENTARY INFORMATION:
1. On June 18, 2020, the Commission issued a Notice of Inquiry initiating its five-year review to establish the oil pipeline index level for the July 1, 2021
to June 30, 2026 time period.1 The NOI
requested comment regarding: a The proposed index level of Producer Price Index for Finished Goods plus 0.09%
PPIFG+0.09%; and b any alternative
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SUMMARY:

1 Five-Year Review of the Oil Pipeline Index, 171
FERC 61,239, at P 1 2020 NOI.

VerDate Sep<11>2014

15:57 Feb 12, 2021

methodologies for calculating the index level.
2. For the reasons discussed below, we adopt an index level of PPI
FG+0.78%. The departure from the NOI
results from: a Trimming the data set to the middle 80% of cost changes; b adopting Designated Carriers 2 proposal to adjust the data set to remove the effects of the Commissions 2018
income tax policy change for Master Limited Partnership MLP-owned pipelines; and c updated Form No. 6
filings and other corrections to the data set. The Commissions indexing calculations and other data analysis are contained in Attachment A to this order.
As discussed below, we decline to adopt other changes to the index calculation proposed by commenters.

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3. The Energy Policy Act of 1992
EPAct 1992 required the Commission to establish a simplified and generally applicable ratemaking methodology 3
that was consistent with the just and reasonable standard of the Interstate Commerce Act ICA.4 To implement this mandate, the Commission issued Order No. 561 5 establishing an indexing methodology that allows oil pipelines to change their rates subject to certain ceiling levels as opposed to making cost-of-service filings.6
4. In Order No. 561, the Commission committed to review the index level every five years to ensure that it adequately reflects changes to industry 2 Designated
Carriers include Buckeye Partners, L.P., Colonial Pipeline Company, Energy Transfer LP, Enterprise Products Partners L.P., and Plains All American Pipeline, L.P.
3 Public Law 102486 1801a, 106 Stat. 3010
Oct. 24, 1992. This mandate to establish a simplified and generally applicable ratemaking methodology specifically excluded the TransAlaska Pipeline System TAPS, or any pipeline delivering oil, directly or indirectly, into TAPS. Id.
18042B.
4 49 U.S.C. app. 1 et seq.
5 Revisions to Oil Pipeline Regulations Pursuant to Energy Policy Act of 1992, Order No. 561, 58 FR
58753 Nov. 4, 1993 FERC Stats. & Regs. 30,985
1993 cross-referenced at 65 FERC 61,109, order on rehg, Order No. 561A, FERC Stats. & Regs.
31,000 1994 cross-referenced at 68 FERC
61,138, affd sub nom. Assn of Oil Pipe Lines v.
FERC, 83 F.3d 1424 D.C. Cir. 1996 AOPL I.
6 Pursuant to the Commissions indexing methodology, oil pipelines change their rate ceiling levels effective every July 1 by multiplying the previous index years ceiling level by the most recent index published by the Commission. 18
CFR 342.3d1. Oil pipelines may adjust their rates to the ceiling levels pursuant to Commissions regulations so long as no protest or complaint demonstrates that the index rate change substantially diverges from the pipelines cost changes. Id. 343.2c1.

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costs.7 The Commission conducted fiveyear index reviews in 2000,8 2005,9
2010,10 and 2015.11 In the 2015 review, the Commission established the index level of PPIFG+1.23%, to be effective for the five-year period beginning July 1, 2016.12 The index level established herein results from the Commissions fifth five-year review of the index level.
B. The Kahn Methodology 5. In Order No. 561 and each successive five-year review, the Commission has calculated the index level based upon a methodology developed by Dr. Alfred E. Kahn.13 The Kahn Methodology uses pipeline data from Form No. 6, page 700 from the prior five-year period to determine an appropriate adjustment to be applied to PPIFG. The calculation is as follows.
Each pipelines cost change on a perbarrel mile basis over the prior five-year period e.g., the years 20142019 in this proceeding is calculated. In order to remove statistical outliers and spurious data, under the Kahn Methodology, the resulting data set is trimmed to those oil pipelines in the middle 50% of cost changes middle 50%. The Kahn Methodology then calculates three measures of the middle 50%s central tendency: The median, the mean, and a weighted mean.14 The Kahn Methodology calculates a composite by averaging these measures of central tendency and measures the difference between the composite and the PPIFG
over the prior five-year period. The Commission then sets the index level at PPIFG plus or minus this differential.
C. The 2020 Five-Year Review 6. On June 18, 2020, the Commission issued the NOI initiating its five-year 7 Order No. 561, FERC Stats. & Regs. 30,985 at 30,941.
8 Five-Year Review of Oil Pipeline Pricing Index, 93 FERC 61,266 2000, affd in part and remanded in part sub nom. Assn of Oil Pipe Lines v. FERC, 281 F.3d 239 D.C. Cir. 2002 AOPL II, order on remand, 102 FERC 61,195 2003, affd sub nom. Flying J Inc. v. FERC, 363 F.3d 495 D.C.
Cir. 2004.
9 Five-Year Review of Oil Pipeline Pricing Index, 114 FERC 61,293 2006 2005 Index Review.
10 Five-Year Review of Oil Pipeline Pricing Index, 133 FERC 61,228 2010 2010 Index Review, rehg denied, 135 FERC 61,172 2011.
11 Five-Year Review of the Oil Pipeline Index, 153
FERC 61,312 2015 2015 Index Review, affd sub nom. Assn of Oil Pipe Lines v. FERC, 876 F.3d 336 D.C. Cir. 2017 AOPL III.
12 2015 Index Review, 153 FERC 61,312 at P 9.
13 The United States Court of Appeals for the District of Columbia Circuit has affirmed the Commissions use of the Kahn Methodology. AOPL
I, 83 F.3d at 143337; Flying J Inc. v. FERC, 363
F.3d at 497500.
14 The weighted mean assigns a different weight to each pipelines cost change based upon the pipelines total barrel-miles.

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