131 FERC ¶ 61,238 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 342 

[Docket No. RM10-25-000] 

Five-Year Review of Oil Pipeline Pricing Index 

(June 15, 2010) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Notice of Inquiry. 

SUMMARY: The Federal Energy Regulatory Commission (Commission) invites 

comments on its five-year review of the oil pipeline pricing index established in 

Revisions to Oil Pipeline Regulations Pursuant to the Energy Policy Act of 1992, Order 

No. 561, FERC Stats. & Regs. [Regs. Preambles, 1991-1996] ¶ 30,985 (1993). 

Specifically, the Commission proposes to use the Producer Price Index for Finished 

Goods (PPI) plus 1.3 percent (PPI+1.3) as the index for annual changes to the oil pipeline 

rate ceiling over the five-year period commencing July 1, 2011. Commenters are invited 

to submit and justify alternatives to the continued use of PPI+1.3. 

DATES: Written comments on this Notice of Inquiry are due on [Insert date 60 days 

after publication in the FEDERAL REGISTER]. Reply comments must be received by 

the Commission 30 days after the filing date for initial comments. 

ADDRESSES: You may submit comments, identified by docket number by any of the 

following methods: 
Docket No. RM10-25-000 2

 Agency Web Site: http://www.ferc.gov. Documents created electronically using 

word processing software should be filed in native applications or print-to-PDF 

format and not in a scanned format. 

 Mail/Hand Delivery: Commenters unable to file comments electronically must 

mail or hand deliver an original and 14 copies of their comments to: Federal 

Energy Regulatory Commission, Office of the Secretary, 888 First Street, NE, 

Washington, DC 20426. 

FOR FURTHER INFORMATION CONTACT: 

Michael Lacy (Technical Information) 

Office of Energy Market Regulation 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

(202) 502-8843 

Andrew R. Knudsen (Legal Information) 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, NE 

Washington, DC 20426 

(202) 502-6527 

SUPPLEMENTARY INFORMATION: 
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Five-Year Review of Oil Pipeline Pricing Index Docket No. RM10-25-000 

NOTICE OF INQUIRY 

(June 15, 2005) 

1. In this notice of inquiry (NOI), the Commission invites comments on its intended 

utilization of the Producer Price Index for Finished Goods (PPI)1

 plus 1.3 percent 

(PPI+1.3) as the index for determining annual changes to the oil pipeline rate ceiling 

during the next five years beginning July 1, 2011.2

 The index of PPI+1.3 was previously 

adopted by the Commission for the five-year period starting July 1, 2006.3

 The 

 1

 The PPI represents the Producer Price Index for Finished Goods, also written 

PPI-FG. The PPI-FG is determined and issued by the Bureau of Labor Statistics, U.S. 

Department of Labor. Pursuant to 18 C.F.R. section 342.3(d)(2) (2009), "The index will 

be calculated by dividing the PPI-FG for the calendar year immediately preceding the 

index year by the previous calendar year's PPI-FG." Multiplying the rate ceiling on June 

30 of the index year by the resulting number gives the rate ceiling for the year beginning 

the next day, July 1. 

2

 The five-year review process was established in Order No. 561. See Revisions to 

Oil Pipeline Regulations Pursuant to the Energy Policy Energy Policy Act, FERC Stats. 

& Regs. [Regs. Preambles, 1991-1996] ¶ 30,985 (1993); order on reh'g, Order No. 561-

A, FERC Stats. & Regs. [Regs. Preambles, 1991-1996] ¶ 31,000 (1994), affirmed,

Association of Oil Pipelines v. FERC, 83 F.3d 1424 (D.C. Cir. 1996). 

3 Order Establishing Index for Oil Price Change Ceiling Levels, 114 FERC 

¶ 61,293 (2006). 
Docket No. RM10-25-000 2

Commission proposes to continue to apply the index of PPI+1.3 to an oil pipeline’s 

existing rate ceiling level to determine the rate ceiling level for the next year.4

I. Background

2. In Order No. 561, the Commission established an index methodology to regulate 

changes to oil pipeline rates and adopted an index of PPI minus one percent (PPI-1) as 

the most appropriate index to track oil pipeline industry cost changes from one year to the 

next. The Commission also undertook to review every five years the continued 

effectiveness of its index for tracking changes to oil pipeline industry costs. 

3. After its initial five-year review, the Commission adopted PPI, without the (-1) 

percent adjustment, as the appropriate index for tracking oil pipeline industry costs for 

the five-year period beginning July 2001.5

 In its second five-year review of the oil 

pricing index, the Commission adopted an index of PPI+1.3 for the five-year period 

commencing July 1, 2006.6

 

 4

 The Commission publishes the final annual change in the PPI-FG, expressed as a 

percent, after the final PPI-FG becomes available from the Bureau of Labor Statistics, 

U.S. Department of Labor in May of each calendar year. Pipelines are required to 

calculate the new ceiling level applicable to their indexed rates based on this annual 

change. 

 

5 Five-Year Review of Oil Pipeline Pricing Index, 102 FERC ¶ 61,195 (2003), 

affirmed, Flying J Inc., et al., v. FERC, 363 F.3d 495 (D.C. Cir. 2004). 

6 Order Establishing Index for Oil Price Change Ceiling Levels, 114 FERC 

¶ 61,293. 
Docket No. RM10-25-000 3

II. Proposal and Comments

4. The Commission proposes to continue to utilize PPI+1.3 for the next five-year 

period as the index to track changes to the costs of the oil pipeline industry and to apply 

to rate ceiling levels for oil pipeline rate changes. The Commission invites interested 

persons to submit comments on the continued use of PPI+1.3 and to propose, justify, and 

fully support, any alternative indexing proposals. 

III. Comment Procedures

5. The Commission invites interested persons to submit comments on the matters and 

issues proposed in this notice to be adopted, including any related matters or alternative 

proposals that commenters may wish to discuss. Comments are due [Insert Date that is 

60 days after publication in the FEDERAL REGISTER]. Comments must refer to 

Docket No. RM10-25-000, and must include the commenters’ name, the organization 

they represent, if applicable, and their address. 

6. The Commission encourages comments to be filed electronically via the eFiling 

link on the Commission’s web site at http://www.ferc.gov. The Commission accepts 

most standard word processing formats. Documents created electronically using word 

processing software should be filed in native applications or print-to-PDF format and not 

in a scanned format. Commenters filing electronically do not need to make a paper 

filing. 

7. Commenters that are not able to file comments electronically must send an 

original and 14 copies of their comments to: Federal Energy Regulatory Commission, 

Office of the Secretary; 888 First Street, NE, Washington, DC 20426. 
Docket No. RM10-25-000 4

8. All comments will be placed in the Commission’s public files and may be viewed, 

printed, or downloaded remotely as described in the Document Availability section 

below. Commenters on this proposal are not required to serve copies of their comments 

on other commenters. 

IV. Document Availability 

9. In addition to publishing the full text of this document in the Federal Register, the 

Commission provides all interested persons an opportunity to view and/or print the 

contents of this document via the Internet through the Commission’s Home Page 

(http://www.ferc.gov) and in the Commission’s Public Reference Room during normal 

business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, NE, Room 2A, 

Washington, DC 20426. 

10. From the Commission’s Home Page on the Internet, this information is available 

on eLibrary. The full text of this document is available on eLibrary in PDF and 

Microsoft Word format for viewing, printing, and/or downloading. To access this 

document in eLibrary, type the docket number excluding the last three digits of this 

document in the docket number field. 

11. User assistance is available for eLibrary and the Commission’s web site during 

normal business hours from FERC Online Support at (202) 502-6652 (toll free at 1-866-

208-3676) or e-mail at ferconlinesupport@ferc.gov, or the Public Reference Room at 
Docket No. RM10-25-000 5

(202) 502-8371, TTY (202) 502-8659. E-mail the Public Reference Room at 

public.referenceroom@ferc.gov. 

By direction of the Commission. 

( S E A L ) 

Nathaniel J. Davis, Sr., 

Deputy Secretary.