Originally published for customers November 21, 2025.
What’s the issue?
At Chairman Swett’s first meeting, FERC advanced a blanket authorization proposal for LNG facilities and aimed to resolve long-standing oil index disputes while opening the next five-year review.
Why does it matter?
An LNG blanket program could streamline routine LNG and gas facility work. Persistent years-long oil-indexing disputes have created uncertainty and exposure for pipelines and shippers alike.
What’s our view?
The fully seated Commission looks aligned towards lower procedural friction. Pipelines benefit most from the current oil index outcomes, but additional challenges are likely and the methodology remains open for debate in the next review cycle.
Chairman Swett tackled a lot in her first meeting at the helm. All five commissioners underscored the significance of having a fully seated Commission for the first time in more than a year. Swett identified some of her broad priorities as supporting the AI race by powering data centers, streamlining permitting, and encouraging both maintenance and new construction of energy infrastructure by reducing regulatory red tape.
These themes set the tone for the day’s two major areas of action: blanket authorization for LNG and gas facilities, and final resolution of oil pipeline indexing.
Today’s actions sit squarely in the policy conversation that began earlier this fall. As discussed in Could LNG Get a Blanket Certificate Program?, Commissioner See first introduced the concept of a blanket-style authorization pathway for LNG facilities at September’s meeting, drawing on lessons from the pipeline blanket certificate program. She carried through the theme in her opening remarks at yesterday’s meeting by pointing to an order involving a methane-producing compressor addition at an LNG facility as the type of predictable, low-risk activity that should not require a full-blown Section 3 authorization.
Commissioner LaCerte added examples of several past LNG approvals that could be blanket-eligible under an expanded program, including authorizations that required no new construction like increasing export capacity, installing liquid-nitrogen vaporizers, approvals for extended 24-hour construction, and upgrades that reduce emissions by switching to electric motors.
FERC formalized that discussion today with the release of a comprehensive blanket-authorization Notice of Proposed Rulemaking (NOPR) for LNG and gas-facility activities. The proposal poses more than 50 questions across five categories — Process, Project Eligibility, Statutory/Regulatory Compliance, Conditions of Authorization, and Cost Impacts — reflecting the scope of what a durable Section 3 blanket program may require. Comments are due 60 days after publication in the Federal Register.
The Commission ended another chapter in the epic of disputes over how oil pipeline ceiling rates are indexed. As discussed in Oil Index Still an Open Question, the industry has faced uncertainty since FERC’s 2022 index revision triggered protracted litigation in the D.C. Circuit, marking the beginning of prolonged index uncertainty and contention between shippers and oil pipelines.
At the center of that dispute is the structure of the index itself — a formula adopted by the Commission pursuant to Congressional directive in the Energy Policy Act of 1992 — combining inflation based on the Producer Price Index for Finished Goods (PPI-FG) with a FERC-determined “adder” that adjusts for pipeline-specific cost changes. The index formula confirmed by the Commission in yesterday’s orders is the result of years of litigation. The adder is recalculated every five years using Form 6 cost data, typically filtered to a “middle” band (either the middle 50% or 80%, depending on the year).
Because both components directly determine allowable rate growth, any change to the adder or the underlying dataset can have major consequences. As you can see from the timeline below, the rate for the 2021-2026 index has changed back and forth between two indexes leading to pipelines using index rates to file new tariffs each time. (We can attest to how challenging this was, since we collect, structure, and digitally deliver this tariff data to our liquids customers. But the gyrations were even more consequential for the pipes and shippers with big financial stakes in the index.)
Against this backdrop, the meeting delivered four significant oil-indexing actions in pursuit of closure to the 2021 – 2026 index period, and to initiate the already behind schedule process for determining what the index will be for the 2026 – 2031 period:
These actions addressed two core issues…
This is a long-running dispute between shippers and pipelines centered on which portion of the industry’s Form 6 cost data should be used to calculate the adder. The middle 80% would trim the dataset by removing the top and bottom 10% of pipelines, and the middle 50% similarly would trim the top and bottom 25% of pipelines.
The Commission’s orders confirmed its use of the middle 80% dataset both for finalizing the current period and for proposing the next five-year index. The results change the adder across these two periods:
For the 2021–2026 period, the Commission justified maintaining the original 2020 index by pointing to compliance with the D.C. Circuit decision, LEPA v. FERC, and emphasizing that any action it could take would need to follow notice-and-comment rulemaking and could only be applied prospectively. As a result, readopting the rehearing index and applying it retroactively as requested by the shippers “would contradict the court’s holding.”
Beyond 2026, the methodology is again subject to review and comment. For the 2026–2031 period, the NOPR specifically invites comments on the Commission’s proposal to use the middle 80% dataset, and “any alternative methodologies” for calculating the index level for the five year period commencing July 1, 2026.”
A central dispute since 2022 has been whether pipelines could recover revenues for the period March 1, 2022, when the now-vacated Rehearing Order took effect, setting the index at PPI-FG -0.21%, and September 17, 2024, when the Commission reinstated the Initial Order and associated index rate of (PPI-FG +0.78%) pursuant to LEPA v. FERC. This is referred to as the “Locked-In Period.” The Commission’s most recent order granted full retroactive billing relief, allowing pipelines to recover the difference between the lower index they actually used during that period, and the corrected higher index level affirmed by the Commission.
In granting retroactive billing relief to pipelines, the Commission again leaned on the LEPA v. FERC decision, which “rendered void” the Rehearing Order. The Commission reasoned that because, it “must give retroactive effect to the judicial vacatur of a final rule,” and “cannot issue a new rule that applies retroactively,” the proper remedy is to “place the parties in the position they would have been in” had the Rehearing Order not been issued.
The debate (settled for now) on this section of the order is focused on the “filed rate doctrine.” We’ll skip the specifics on this for now, since we’ll undoubtedly return to them in future Insights articles. For now, this order allows pipelines to re-bill, and directs those that haven’t already billed retroactively for this period to notify shippers within 90 days about the assessments and invoicing approach.
The Commission has now clarified its court-directed position after several years of litigation and reversals, but this long-standing channel conflict will continue most likely with rehearing requests and more litigation. The issues underpinning the Commission’s chosen indexing methodology will all be rehashed in the just released NOPR for the next period.
As we discussed in Oil Pipelines Press for Major Increase in Rates and the Impact of New Commissioners back in 2020, selecting the middle 80% is easy to implement but perhaps challenging to justify. Arbo will sharpen its pencil to run all these numbers again for a future ArView. As the saying goes, the decision has been made, now let the debate begin.
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