DOE Sends Admin Procedures on Natural Gas DFR to OMB – 7-9-25
Yesterday the OMB’s Office of Information and Regulatory Affairs (OIRA) announced that it had received a ‘final rule’ from the DOE’s Office of Fossil Energy on “Administrative Procedures with Respect to the Import and Export of Natural Gas”. A direct final rule (DFR) on the same subject (and RIN - 1901-AB67) was published in the Federal Register (90 FR 20758) on May 16th, 2025.
Direct Final Rule Problem
This rulemaking does not cover a topic that I would normally cover in this blog, but with the increased use of the direct final rule process by the new Administration, this notice provides a view into how that process is supposed to work.
The administrative rulemaking process is described in 5 USC 553. In general, it requires that the public be given an opportunity to be notified of an agency’s intention to introduce a new regulation (or change an existing regulation) and provide the public with an opportunity to comment on the intended rulemaking. Typically, this is done by publishing a notice of proposed rulemaking (NPRM) in the federal register [when only a very small number of people would be affected by a rulemaking, agencies are allowed to directly notify the affected people {§553(b)], but that does not happen very often). The agency is then required to address those comments in the subsequent final rule, modifying the proposed language where appropriate or justifying the failure to make the suggested changes.
In crafting the requirements of §553, Congress noted that there could be circumstances where the publish and public comment process would not be necessary or would be impractical. It set forth two exceptions to that process in §553(b)(A) and (B). The first notes that the notice and comment requirements do not apply to: “to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice”.
The subparagraph (B) exception applies when “when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”
The May 16th DFR does not specifically claim either exception. It does however note that:
“The final rule is effective July 15, 2025, unless significant adverse comments are received by June 16, 2025. Significant adverse comments oppose the rule and raise, alone or in combination, a serious enough issue related to each of the independent grounds for the rule that a substantive response is required. If significant adverse comments are received, notice will be published in the Federal Register before the effective date either withdrawing the rule or issuing a new final rule which responds to significant adverse comments.”
There were two comments (here and here) submitted to the docket for this rulemaking at www.Regulations.gov (Docket #DOE-HQ-2025-0010). Both specifically claimed to be ‘significant adverse comments’. Both note that DOE did not meet the ‘good cause’ standard of §553(b)(B). The first includes a detailed legal discussion (with an appendix) about the application of the ‘good cause’ standard.
Moving Forward
It looks like yesterday’s announcement by OIRA deals with the DOE’s response to the two ‘significant adverse comments’ received by DOE in response to the earlier DFR. If DOE acknowledges that either of the two received comments meets the definition of a ‘significant adverse comment’ under DOE’s administrative procedures, the newly announced rulemaking will:
Withdraw the rulemaking (and perhaps initiate a notice of proposed rulemaking doing the same thing), or
Reissue the rulemaking with new language that specifically addresses how the rulemaking meets the exception requirements of 5 USC 553(b).
I suspect that the second option will be used with the DOE specifically claiming (with some justification) that the revised requirements do not require the application of the ‘good cause’ exception {§553(b)(B)} since they fall under the “rules of agency organization, procedure, or practice” exception under §553(b)(A). The previously issued rulemaking already outlined how the revised procedures would decrease the burden on the regulated community, but did not specifically claim the subparagraph (A) exception.
I do not plan to cover this rulemaking in any depth when it is published, but I do expect to report its publication in the appropriate ‘Short Takes’ post.