FERC Clears the Deck on Lingering Oil Pipeline Matters and Issues New Indexing NOPR for the Next Five-Year Review

Indexing is the Primary Means in Which Oil Pipelines Increase Rates – 2026 Index NOPR

2026-2031 Index: PPI-FG minus 1.42%

The 2026 Index NOPR was issued approximately four months after it normally would have been issued. It proposes an index of PPI-FG minus 1.42% for the period July 1, 2026 to June 30, 2031. The 2026 Index NOPR seeks comment on four major determinations made by the Commission, with Initial Comments due December 24, 2025, and Reply Comments are due January 14, 2026.⁵ The Commission seeks comments on its proposed index level and any alternative methodologies to calculate the index. The Commission also invites commenters to address other issues including: “(i) different data trimming methodologies; (ii) whether, and if so how, the Commission should adjust the data set to address the effects of the change in Commission policy regarding return on equity (“ROE”); and (iii) whether, and if so how, the Commission’s calculation of the index level should incorporate recently resubmitted page 700 data for 2019.”⁶

Data Set: the Middle 80%

The Commission reached its proposed index by using the middle 80% of all oil pipelines because this data set “provid[es] a robust sample of industry cost experience.”⁷ This data set only excludes 40 out of 196 oil pipelines in the full data set, while the Commission declined to use the middle 50% because it would have excluded 98 out of the 196 oil pipelines and 12% of industry-barrel miles.⁸ The Commission also concluded that using the middle 80% will alleviate concerns of an unrepresentative sample by prematurely discarding data before determining central tendencies.⁹ The Commission invites commenters to address whether it should continue to trim the data to the middle 80%, and if not, explain why an alternative trimming approach is superior to the Commission’s proposed approach.¹⁰

Treatment of ROE in the Data Set: Unadjusted ROE Calculation

The Commission declined to incorporate its 2020 revised methodology for determining ROE for oil pipelines. The 2020 ROE methodology averages the discounted cash flow (“DCF”) and Capital Asset Pricing Model (“CAPM”) analyses.¹¹ The Commission defended its decision to not implement the ROE Policy Change because “it has never adjusted ROE in a prior index proceeding” and such an adjustment would be inconsistent with indexing’s purpose as simplified, streamlined process.¹² The Commission invites commenters to opine on whether and how the Commission should address the ROE Policy Change and how any adjustment to the data set is consistent with the Energy Policy Act of 1992’s “dual mandates for just and reasonable rates and simplified and streamlined ratemaking.”¹³

Resubmitted Form No. 6s: Rely on Original Form No. 6 Submissions

Since April 2025, 61 oil pipelines have resubmitted FERC Form No. 6 cost data for 2019 to change the calculation of the ROE as well as other modifications.¹⁴ Nevertheless, FERC used the pipelines’ originally submitted FERC Form No. 6 cost data.¹⁵ The Commission explained that these resubmissions were filed five years after the cost data was originally due and submitted with limited explanations for the changes.¹⁶ The Commission also voiced its concern with including updated data that could introduce biases in the index calculations because only a subset of pipelines updated their data, and thus did not include the resubmitted data in the NOPR index rate calculations.¹⁷ The Commission seeks comment on whether and how the Commission’s calculation of index level should incorporate the recently submitted FERC Form No. 6, Page 700 data for 2019.¹⁸

In light of the almost-five years of uncertainty surrounding the index, FERC Chairman Laura Swett stated that ”[i]t is critical for the industry that FERC provide certainty on our [index] review process.”¹⁹ Similarly, Commissioner David Rosner explained at the November Open Meeting that the 2020 index changed three times and observed that it will be “wonderful to have the certainty and predictability” from a stable oil pipeline index.²⁰

Return to the Lawful 2020 Index

Rehearing Order

As we described in our October 18, 2024 client alert, the D.C. Circuit vacated the 2020 index which set the index for the period July 1, 2021 – June 30, 2026. Then, on September 17, 2024, the Commission reinstated the lawful oil pipeline index level of PPI-FG plus 0.78%,²¹ as directed by the D.C. Circuit in Liquid Energy Pipeline Association v. FERC.²² After various entities sought rehearing, the Commission resolved both of those issues in its November 20, 2025 Rehearing Order.²³

Rehearing Denied    

The Rehearing Order declined to “take any further action” on the various rehearing requests.²⁴ In doing so, the Commission declined to readopt the PPI-FG minus 0.21% Rehearing Index established in the vacated order because of the D.C. Circuit’s order finding that such action would be “impermissibly retroactive.”²⁵ The Commission also pointed out that those who sought rehearing had an opportunity to file comments in its Supplemental NOPR docket which was the appropriate forum for addressing the issues raised in the rehearing requests. In doing so, the Commission decided not to modify the index level.²⁶

Pipeline Remedial Relief

The Rehearing Order also addressed the issue of whether pipelines are entitled to remedial relief for the Locked-In Period (March 1, 2022 to September 17, 2024) when the lower index was effective under the prior, now-vacated rehearing order.²⁷ The Commission stated that it sought to put parties in the position they would have been had the now-vacated rehearing order not been issued.²⁸

To this end, the Commission ruled that “pipelines that charged the maximum rates permitted” under the Vacated Rehearing Order during the Locked-In Period “may recover up to the full amounts that would have been chargeable under the Initial Order during that period.”²⁹ But for the Commission’s Vacated Rehearing Order, the Commission presumes that “pipelines would have charged rates in excess” of the maximum rehearing index rates.³⁰ Accordingly, these pipelines may “recover the difference between the amounts charged under the Maximum Rehearing Index Rates and the amounts that would have been chargeable applying Initial Index Rates to those shipments.”³¹ Pipelines must inform shippers of any such assessments and how they will be invoiced within 90 days of the issuance of the order (i.e., by February 18, 2026).

The Commission declined to allow pipelines that charged below the maximum rehearing index rate the right to charge its shippers. It did so because FERC presumes that those pipelines “were not impacted by the Commission’s adoption” of the lower index level.

Supplemental NOPR Withdrawn

After the D.C. Circuit’s vacatur, on October 17, 2024, the Commission issued a supplemental NOPR to amend the index level.³² The Supplemental NOPR requested comment regarding (a) changing the 2020-2025 index level of PPI-FG plus 0.78% (“Initial Index”) to PPI-FG minus 0.21% (“Rehearing Index”) and (b) other issues related to the appropriate index level following the D.C. Circuit’s vacatur. On November 20, the Commission exercised its discretion to withdraw the Supplemental NOPR and terminate the rulemaking proceeding.³³

The Commission explained that considering the late stage of the five-year review period that began July 1, 2021, concluding June 30, 2026, it was not persuaded to proceed with the Supplemental NOPR.³⁴ Nonetheless, it addressed the Supplemental NOPR’s proposals regarding (1) recalculation of prospective ceiling levels, (2) the Income Tax Policy Change, (3) statistical data trimming, and (4) the appropriate source of 2014 Page 700 data.³⁵

To this end, the Commission declined to recalculate the pipeline ceiling levels for the preceding four years of the five-year period recognizing that “the benefit of rate certainty at this late stage of the current five-year index cycle generally counsels” against the Supplemental NOPR’s proposal to revise the index going back more than four years.³⁶ Likewise, the Commission declined to modify the index level to incorporate the income tax policy change.³⁷ Similarly, the Commission declined to adopt the Supplemental NOPR’s proposal to modify the index level by using the middle 50% instead of the middle 80% of cost changes.³⁸ Finally, seeking to avoid the disruption that would result from it modifying the index level for a fourth time at this late stage in the five-year period, it declined to adjust the 2014 Page 700 data.³⁹

Enforcement Matters

Standards of Conduct Petition Denied

In 2018, Airlines for America and the National Propane Association submitted a petition requesting that the Commission initiate a rulemaking to establish affiliate standards of conduct regulations for FERC-jurisdictional oil pipelines.⁴⁰ Acknowledging the Interstate Commerce Act’s (“ICA”) already strong prohibition against a pipeline conferring undue preference on a marketing affiliate or offering special rates or rebates and causing undue discrimination or giving undue preference to specific shippers, the Commission denied the petition.⁴¹ The Commission pointed out that shippers were not without recourse, and it specifically noted that the ICA provides shippers with multiple methods to invoke existing protections against affiliate abuse, including filing a complaint, contacting FERC’s Enforcement Hotline, or protesting.

Upcoming Deadlines

• 2020 Remedial Relief: Pipelines seeking assessments from shippers for the Locked-In Period must inform shippers of any such assessment and how they will be invoiced by February 18, 2026.
• 2026 Index Comments: Initial Comments are due December 24, 2025, and Reply Comments are due January 14, 2026.

¹ Five-Year Review of the Oil Pipeline Index, 193 FERC ¶ 61,145 (2025) (“2026 Index NOPR”).

² Revisions to Oil Pipeline Regulations Pursuant to the Energy Policy Act of 1992, 193 FERC ¶ 61,137 (2025) (“Rehearing Order”).

³ Supplemental Review of the Oil Pipeline Index Level, 193 FERC ¶ 61,136 (2025) (“Supplemental NOPR”), withdrawing and terminating Supplemental NOPR, 189 FERC ¶ 61,030 (2024).

⁴ Airlines for America and National Propane Gas Association, 193 FERC ¶ 61,138 (2025) (“SOC Petition”).

⁵ The NOPR was published in the Federal Register on November 24, 2025. See Five-Year Review of the Oil Pipeline Index, 90 Fed. Reg. 224 (published Nov. 24, 2025).

⁶ 2026 Index NOPR at P 7.

⁷ Id. at P 9.

⁸ Id.

⁹ Id. at P 10.

¹⁰ Id. at P 11.

¹¹ Id. at P 12, citing Inquiry Regarding the Comm’n’s Pol’y for Determining Return on Equity, 171 FERC ¶ 61,155, at PP 18, 28, 50 (2020) (“ROE Policy Change”).

¹² Id.

¹³ Id. at 14.

¹⁴ Id. at P 15, Appendix.

¹⁵ Id. at P 15.

¹⁶ Id. at P 16.

¹⁷ Id.

¹⁸ Id.

¹⁹ FERC Open Meeting (Nov. 20, 2025).

²⁰ See id.

²¹ Revisions to Oil Pipeline Reguls. Pursuant to the Energy Pol’y Act of 1992, 188 FERC ¶ 61,173 (2024).

²² 109 F.4th 543, 549 (D.C. Cir. 2024).

²³ Rehearing Order.

²⁴ Id. at P 17.

²⁵ Id. at P 19.

²⁶ Id. at P 20.

²⁷ Id. at PP 21-36.

²⁸ Id. at P 22.

²⁹ Id.at P 23.

³⁰ Id. (PPI-FG plus 0.78% rather than PPI-FG minus 0.21%).

³¹ Id.

³² Supplemental NOPR.

³³ Id. at P 2.

³⁴ Id. at PP 19-21.

³⁵ Id.

³⁶ Id. at PP 22-29.

³⁷ Id. at PP 30-36.

³⁸ Id. at PP 37-39.

³⁹ Id. at PP 40-41.

⁴⁰ SOC Petition.

⁴¹ Id. at PP 10-12.