Power & Pipes

FERC, CFTC, and State Energy Law Developments

A recent policy statement from the Office of Management and Budget (OMB) instructs departments and agencies—including independent agencies like FERC—to submit “guidance documents, general statements of policy, and interpretive rules” to the OMB’s Office of Information and Regulatory Affairs (OIRA) for prepublication review. It also establishes guidelines for the OIRA to apply to properly classify regulatory actions and determine whether they are “major” rules for purposes of the Congressional Review Act (CRA). This major determination process will take full effect on May 11, 2019.

The broad applicability of the OMB’s action may increase the volume of rules and other agency issuances that require OIRA review and potentially result in regulatory gridlock and rulemaking delays. As an agency that is subject to the OMB memorandum, FERC will need to submit proposed rules, guidance documents, policy statements, and other interpretive rules that fall within the special category of “major rules” to Congress to ensure compliance with the CRA requirements. This may introduce additional delays in FERC rulemaking proceedings and in the issuance of policy statements and other guidance documents. It could also potentially result in FERC paring back certain regulatory requirements to comply with the directives.

The stated purpose of the memorandum is to reinforce the obligations of departments and agencies under the CRA to ensure “more consistent compliance with its requirements” by federal regulators. Under the CRA, Congress can invalidate a “major” rule with a joint resolution of disapproval signed by the president or enacted over the president’s veto. OIRA designates whether a rule is “major” based on its relative importance, significant adverse effects, and annual economic impact (at least $100 million). A “major” designation by OIRA will trigger a report by the US Government Accountability Office and delay the rule’s effective date while Congress considers whether to disapprove the rule.

Federal agencies have been inconsistent in providing information to OIRA for making major rule determinations, according to the OMB. To that end, the memorandum outlines a process that departments and agencies must implement for OIRA review, along with a requirement that regulators coordinate with OIRA “irrespective of whether a rule would otherwise be submitted for regulatory review.” The memorandum provides that “[a]gencies should not publish a rule—major or not major—in the Federal Register, on their websites, or in any other public manner before OIRA has made the major determination and the agency has complied with the requirements of the CRA.” However, the memorandum remains silent on what happens if federal regulators choose not to comply with it.

It remains to be seen whether the OMB memorandum will result in more congressional scrutiny, and utilization of the joint resolution disapproval process, or otherwise result in delays to regulatory rulemaking processes. But, as administrative agencies attempt to implement larger policy initiatives through the rulemaking process, the OMB memorandum is a reminder that the CRA presents requirements designed to furnish a congressional “check” on their actions.