Commissioner James Danly Statement
May 6, 2022
Docket No. RM20-14-002
I concur with the Commission’s decision to deny rehearing and agree that it was appropriate for the Commission to direct in its January 2022 Order that the recomputed ceiling levels become effective March 1, 2022.[1] I write separately to make two points.
First, I would like to reiterate my view that the Commission’s decision in its January 2022 Order, to depart from the December 2020 Order,[2] amounted to a collective judgment call. As I have previously stated, in some cases, the Commission, acting within its authority, may take any number of approaches so long as it adequately explains its decision under the Administrative Procedure Act.[3] That being the case, a robust record may provide substantial evidence for several legitimate approaches in this proceeding. And one such legitimate approach was that taken in the December 2020 Order, which was to trim the data set to the middle 80% of cost changes and to not incorporate the effects of the Commission’s 2018 income tax policy change for Master Limited Partnership-owned pipelines (Income Tax Policy Change). Although I would have preferred that the Commission reaffirm that approach in its January 2022 Order, I acknowledge that the decision made in the January 2022 Order to trim the data set to the middle 50% of cost changes and to incorporate the effects of the Income Tax Policy Change will likely withstand judicial review.[4]
Second, I disagree with the argument presented on rehearing that allowing retroactive relief is appropriate because the January 2022 Order corrected a legal error.[5] Had there been a legal error, the Commission would have discretion to provide retroactive relief.[6] I remain convinced, however, that there was no legal error: had the January 2022 Order instead reaffirmed the approach taken in the December 2020 Order, it too would have resulted in just and reasonable indexed rates.
For these reasons, I respectfully concur.
[1] See Five-Year Rev. of the Oil Pipeline Index, 178 FERC ¶ 61,023, at P 106 (2022) (“Consistent with the Commission’s action in this order, oil pipelines must recompute their ceiling levels and rates to be effective March 1, 2022.”) (January 2022 Order).
[2] Five-Year Rev. of the Oil Pipeline Index, 173 FERC ¶ 61,245 (2020) (December 2020 Order).
[3] January 2022 Order, 178 FERC ¶ 61,023 (Danly, Comm’r, concurring in part and dissenting in part at P 2).
[4] See id. (Danly, Comm’r, concurring in part and dissenting in part at P 7).
[5] See Rehearing Request at 10-12. I acknowledge that the January 2022 Order suggests that the changes made were needed to ensure just and reasonable rates, but I disagree. See January 2022 Order, 178 FERC ¶ 61,023 at P 17 (“The index must reflect the Income Tax Policy Change in order to produce just and reasonable oil pipeline rates.”); id. (“Because indexing is the Commission’s primary oil pipeline ratemaking methodology and because indexed oil pipeline rates must be just and reasonable, we conclude that the index calculation must now address the Income Tax Policy Change.”).
[6] See Exxon Co., U.S.A. v. FERC, 182 F.3d 30, 49 (D.C. Cir. 1999) (“As we have stated, ‘when the Commission commits legal error, the proper remedy is one that puts the parties in the position they would have been in had the error not been made.’ . . . This is not to say that FERC must do so in every case if the other considerations properly within its ambit counsel otherwise.”) (quoting Pub. Utils. Comm’n of Cal. v. FERC, 988 F.2d 154, 168 (D.C. Cir. 1993)).