18 C.F.R. § 342.3

Indexing

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(a) Rate changes. A rate charged by a carrier may be changed, at any time, to a level which does not exceed the ceiling level established by paragraph (d) of this section, upon compliance with the applicable filing and notice requirements and with paragraph (b) of this section. A filing under this section proposing to change a rate that is under investigation and subject to refund, must take effect subject to refund.

(b) Information required to be filed with rate changes. The carrier must comply with Part 341 of this title. Carriers must specify in their letters of transmittal required in § 341.2(c) of this chapter the rate schedule to be changed, the proposed new rate, the prior rate, the prior ceiling level, and the applicable ceiling level for the movement. No other rate information is required to accompany the proposed rate change.

(d) Derivation of the ceiling level. (1) A carrier must compute the ceiling level for each index year by multiplying the previous index year's ceiling level by the most recent index published by the Commission. The index will be published by the Commission prior to June 1 of each year.

(2) The index published by the Commission will be based on the change in the final Producer Price Index for Finished Goods (PPI-FG), seasonally adjusted, as published by the U.S. Department of Labor, Bureau of Labor Statistics, for the two calendar years immediately preceding the index year. 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.

(3) A carrier must compute the ceiling level each index year without regard to the actual rates filed pursuant to this section. All carriers must round their ceiling levels each index year to the nearest hundredth of a cent.

(4) For purposes of computing the ceiling level for the period January 1, 1995 through June 30, 1995, a carrier must use the rate in effect on December 31, 1994 as the previous index year's ceiling level in the computation in paragraph (d)(1) of this section. If the rate in effect on December 31, 1994 is subsequently lowered by Commission order pursuant to the Interstate Commerce Act, the ceiling level based on such rate must be recomputed, in accordance with paragraph (d)(1) of this section, using the rate established by such Commission order in lieu of the rate in effect on December 31, 1994.

(5) When an initial rate, or rate changed by a method other than indexing, takes effect during the index year, such rate will constitute the applicable ceiling level for that index year. If such rate is subsequently lowered by Commission order pursuant to the Interstate Commerce Act, the ceiling level based on such rate must be recomputed, in accordance with paragraph (d)(1) of this section, using the rate established by such Commission order as the ceiling level for the index year which includes the effective date of the rate established by such Commission order.

(e) Rate decreases. If the ceiling level computed pursuant to § 342.3(d) is below the filed rate of a carrier, that rate must be reduced to bring it into compliance with the new ceiling level; provided, however, that a carrier is not required to reduce a rate below the level deemed just and reasonable under section 1803(a) of the Energy Policy Act of 1992, if such section applies to such rate or to any prior rate. The rate decrease must be accomplished by filing a revised tariff publication with the Commission to be effective July 1 of the index year to which the reduced ceiling level applies.

[Order 561, 58 FR 58779, Nov. 4, 1993, as amended by Order 561-A, 59 FR 40256, Aug. 8, 1994; 59 FR 59146, Nov. 16, 1994; Order 606, 64 FR 44405, Aug. 16, 1999; Order 650, 69 FR 53801, Sept. 3, 2004]

Notes of Decisions

Cited in 12 cases (1 in the last 5 years), 1996–2024 · leading case: Frontier Pipeline Co. v. Fed. Energy Regulatory Comm'n, 452 F.3d 774 (D.C. Cir. 2006).

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Frontier Pipeline Co. v. Fed. Energy Regulatory Comm'n, 452 F.3d 774 (D.C. Cir. 2006). · cites it 8× “18 C.F.R. § 342.3 (c), (d). The original ceiling level from which this process begins is determined either by reference to the rate in effect on December 31, 1994 (which became the ceiling for the first six months of 1995), 18 C.”

Sw. Airlines Co. v. Fed. Energy Regulatory Comm'n, 926 F.3d 851 (D.C. Cir. 2019). · cites it 2× “" 18 C.F.R. § 342.3 (c), (d)(1), (d)(2). So, for example, the Commission recently calculated the index for the twelve-month period spanning July 1, 2019, to June 30, 2020, by comparing the 2018 PPI-FG to the 2017 PPI-FG.”

United Airlines, Inc. v. Fed. Energy Regulatory Comm'n, 827 F.3d 122 (D.C. Cir. 2016). · cites it 2× “at 58,760; see also 18 C.F.R. § 342.3 (d)(2). Importantly, “the index establishes a ceiling on rates — it does not establish the rate itself.”

Markwest Michigan Pipeline Co. v. Fed. Energy Regulatory Comm'n, 646 F.3d 30 (D.C. Cir. 2011). · cites it 4× “Pursuant to 18 C.F.R. § 342.3 (d)(5), a pipeline owner can set a new initial rate using one of three “method[s] other than indexing”: (1) by showing *33 that it has experienced cost increases that exceed the rate increases indexing would allow, id.”

Ass'n of Oil Pipe Lines v. Fed. Energy Regulatory Comm'n, 876 F.3d 336 (D.C. Cir. 2017). · cites it 2× “18 C.F.R. § 342.3 (a), (d). The Commission also provided that, in limited circumstances, pipelines-may increase their rates pursuant to .”

Exxonmobil Oil Corp. v. Fed. Energy Regulatory Comm'n & United States of Am., W. Refining Co., L.P., Intervenors, 487 F.3d 945 (D.C. Cir. 2007). “See 18 C.F.R. § 342.3 . 4 . Although shippers are entitled to reparations beginning two years prior to the filing date of their complaints, it is not clear from the record whether the Commission indexed the 1994 rates to claims for prior years because the indexing regulations…”

Tesoro Refining & Mktg. Co. v. Fed. Energy Regulatory Comm'n, 552 F.3d 868 (D.C. Cir. 2009). “2 , a regulation that permits challenges to pipeline rates adjusted for inflation under 18 C.F.R. § 342.3 . Such complaints “must allege .”

Ass'n of Oil Pipe Lines v. Fed. Energy Regulatory Comm'n, Kaneb Pipe Line Operating P'ship, L.P., Intervenors, 83 F.3d 1424 (D.C. Cir. 1996). “561-A at 31,099; see also 18 C.F.R. § 342.3 (e). Insofar as the PPI-1% declined twice during the twenty-five years since 1970, falling to a negative 2.”

Mobil Pipe Line Co. v. Fed. Energy Regulatory Comm'n, 676 F.3d 1098 (D.C. Cir. 2012). “18 C.F.R. § 342.3 . FERC’s indexing system allows oil pipelines to adjust their rates to account for inflation, while protecting shippers from large rate increases.”

Husky Mktg. & Supply Co. v. FERC, 105 F.4th 418 (D.C. Cir. 2024). “See 18 C.F.R. § 342.3 . Under another Commission regulation, however, an oil pipeline may charge its customers “market-based” rates that exceed its “ceiling” rate if the pipeline first establishes it does not have market power in the relevant geographic origin and destination…”

in Re: Enter. Crude Oil, LLC (Tex. App. 2018). · cites it 2× “The Initial Incentive Magellan Rate may be increased by Magellan beginning on July 1, 2012, and each July 1st of thereafter during the Term (the ~'TaritT Escalation"); provided, however, that (A) any Tariff Escalation will not exceed the amount of any increase permiued in…”

ExxonMobil Oil Corp v. FERC (D.C. Cir. 2007). “See 18 C.F.R. § 342.3 . 4 Although shippers are entitled to reparations beginning two years prior to the filing date of their complaints, it is not clear from the record whether the Commission indexed the 1994 rates to claims for prior years because the indexing regulations were…”

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