Ms. Liz Klein, Director, Bureau of Ocean Energy Management (November 20, 2023)

Summary

A letter dated November 20, 2023, from the House Committee on Small Business to Director Liz Klein of the Bureau of Ocean Energy Management (BOEM), regarding BOEM's policy to not discuss proposed rules with Congress. The letter says the Committee disagrees with BOEM's position and cites House Rule X as the basis of the Committee's oversight duty. The letter reiterates requests from the August 3, 2023 and October 12, 2023 letters and asks for further information no later than December 4, 2023, including copies of BOEM's policies on sharing information with Congress. The questions cover credit ratings, decommissioning bonds, Rice's Whale protections and a settlement agreement with the Sierra Club. The signature block names Roger Williams, Chairman.

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Issuer: Congressional materials
Document type: 2023 11 20 Housesbc Majority To Boem Letter To Boem Re Insufficient Reply
Date: 2023-11-20
Case: 2023 11 20 Housesbc Majority To Boem Letter To Boem Re Insufficient Reply

Cite this document

“Ms. Liz Klein, Director, Bureau of Ocean Energy Management (November 20, 2023).” Original at smallbusiness.house.gov, dated 2023-11-20. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2023-11-20-2023-11-20-housesbc-majority-to-boem-letter-to-boem-re-insufficient-reply/, SHA-256 c0f7aebc0688e8713a263d74a58219879efb87e68e2b0aad697224169311295f.

Full text

November 20, 2023

Ms. Liz Klein
Director
Bureau of Ocean Energy Management
1849 C Street NW
Washington, DC 20240

Dear Director Klein:

The House Committee on Small Business (the Committee) writes regarding the Bureau of
Ocean Energy Management’s (BOEM) policy to not discuss its proposed rules with Congress.
As part of the Committee’s investigation into how agencies comply with the Regulatory
Flexibility Act (RFA), the Committee sent the BOEM letters seeking a deeper explanation of two
recently proposed rules’ impact on small businesses.1 In response to the Committee’s first letter,
the BOEM indicated it would not discuss proposed rules with Congress, and the Committee
expects the BOEM’s response to our second letter will be substantially similar.2 The Committee
vehemently disagrees with the BOEM’s position and seeks a deeper explanation of how the
BOEM complies with Congressional requests for information.

In response to letters from the Committee, the BOEM indicated it was against their policy
to comply with Congressional requests for information on its proposed rules.3 The BOEM also
indicated in their response that they would submit the Committee’s letter as a comment on its
rule, and may address the Committee’s concerns in the preface to its final rule.4 Leaving a
comment on this proposed rule was not the Committee’s intent when sending our
communications, and our questions were not rhetorical comments for the record; the Committee
is well aware of the process it should go through to submit comments on rules. The Committee
disagrees with the BOEM’s conclusion that communications regarding this rule constitute
comments for the record, and the BOEM’s belief that a nonspecific response included in the
preamble to its final rule is a sufficient response to this Committee.

Pursuant to House Rule X, this Committee has a duty to the House of Representatives
and the American people to legislate and conduct oversight on “the problems of all small

1
Letter from Roger Williams, et al., Chairman, H. Comm. on Small Bus., to Liz Klein, et al. Director, U.S. Bureau
of Ocean Energy Mgmt. (Aug. 3, 2023); Letter from Roger Williams, et al., Chairman, H. Comm. on Small Bus., to
Liz Klein, et al. Director, U.S. Bureau of Ocean Energy Mgmt. (Sept. 12, 2023).
2
Letter from Liz Klein, Director, U.S. Bureau of Ocean Energy Mgmt., to Roger Williams, et al., Chairman, H.
Comm. on Small Bus. (Oct. 13, 2023).
3
Id.
4
Id.
Ms. Liz Klein
November 20, 2023
Page 2 of 5

business.”5 The Committee cannot conduct oversight if the BOEM continues to withhold
requested information. Similarly, the Committee cannot draft adequately informed legislation
without the BOEM’s input on substantive questions. As a general rule, ex parte communications
between federal agencies and Congress are encouraged for Notice-and-Comment rulemakings
such these.6 Courts have found that better legislation and rules are created when agencies and
Congress work together to create rules which implement legislation correctly.7 This is valuable
since agencies are tasked with implementing laws and have subject matter expertise in the
relevant field, while Congress is responsible for passing the laws, thus having a better
understanding of its intent and purpose.

In your responses to the Committee, you indicated “[t]he Regulatory Impact Analysis for
this proposed rule addresses impacts on small businesses.”8 While it is reassuring the BOEM
claims to have considered these interests, the purpose of our letter was to ensure that the BOEM
was, indeed, complying with their obligations to small businesses. Congress' authority to conduct
oversight is inherent in Article I, sec. 1 which states: "All legislative powers herein granted shall
be vested in a Congress of the United States." The United States Supreme Court has consistently
affirmed Congress’s authority to conduct oversight and investigations, holding that “the power of
inquiry—with process to enforce it—is an essential and appropriate auxiliary to the legislative
function.”9 Rule X of the Rules of the United States House of Representatives delegates this
responsibility to standing committees.10

Denying the Committee the requested information prevents it from upholding and acting
in furtherance of its legislative function, namely reviewing regulatory burdens imposed on small
businesses by federal agencies and determining how they may be alleviated.11 This includes the
ability of this body to initiate investigations to inform itself about how existing laws function,
whether new laws are necessary and if old laws should be repealed or altered. Responding
substantively to the Committee’s letter using information available in the docket, or information
BOEM makes available prior to the final rule, would in no way undermine the completeness of
the docket or effectiveness of this rulemaking.12

It is important for agencies to examine small businesses interests—which make up 99.9
percent of all businesses in the United States—when passing any new rule. America’s small
businesses deserve to have their voices heard and considered. Seeing no valid reason for the
BOEM to withhold information on this rule, we reiterate our requests from our August 3, 2023

5
Rules of the House of Representatives, Rule X(1), 118th Cong. (2022).
6
MAEVE P. CAREY, ET AL., CONG. RESEARCH SERV., IF12368, COMMUNICATIONS BETWEEN CONGRESS AND
FEDERAL AGENCIES DURING THE RULEMAKING PROCESS (Mar. 30, 2023).
7
Sierra Club v. Costle, 657 F.2d 298, 409 (D.C. Cir. 1981).
8
Letter from Liz Klein, Director, U.S. Bureau of Ocean Energy Mgmt., to Roger Williams, et al., Chairman, H.
Comm. on Small Bus. (Oct. 13, 2023).
9
McGrain v. Daugherty, 273 U.S. 135, 174 (1927).
10
Trump v. Mazars USA, LLP, 140 S. Ct. 2019 (2020); McGrain v. Daugherty, 273 U.S. 135 (1927).
11
Rules of the House of Representatives, Rule X(1)(q)(1), 118th Cong. (2022).
12
Administrative Procedure Act (APA), 5 U.S.C. § 553; See also JONATHAN GAFFNEY, CONG. RESEARCH SERV.,
LSB10558, JUDICIAL REVIEW UNDER THE ADMINISTRATIVE PROCEDURE ACT (APA) (Dec. 8, 2020).
Ms. Liz Klein
November 20, 2023
Page 3 of 5

and October 12, 2023 letters as well as request the following additional information as soon as
possible but no later than December 4, 2023:

1. A copy of BOEM’s policy with regard to sharing information with Congress generally.

a. An explanation of when this policy was implemented, and any policy which may
have predated BOEMs current policy regarding sharing information with
Congress.

2. A copy of BOEM’s policy with regard to responding to Congressional oversight requests
related to a proposed rule.

a. An explanation of when this policy was implemented, and any policy which may
have predated BOEMs current policy regarding sharing information with
Congress.

3. An explanation of the legal reason the BOEM believes sharing information with
Congress regarding proposed rules is improper.

4. An explanation for BOEM’s rationale for not engaging in ex parte communications with
Congress about proposed rules.

5. All training and supplemental support materials provided by the BOEM to its employees
regarding the Regulatory Flexibility Act.

6. An explanation for how the BOEM accounts for the disparate costs incurred by small
businesses compared to larger businesses, when conducting rulemaking.

For your convenience, the requests from the August 3, 2023 and October 12, 2023 letters are
copied below:

7. Will this rule, by establishing tiers largely based on credit ratings, disproportionately
impact small businesses?13

a. Will the BOEM’s proxy credit ratings also adversely rate small entities based on
their size?

8. Since this rule relies on ratings from credit ratings agencies, did the BOEM include the
costs associated with a small business receiving a rating when drafting this rule?

9. Are there readily accessible resources for small entities to assist them in appealing a
supplemental financial assurance demand?

13
Id.
Ms. Liz Klein
November 20, 2023
Page 4 of 5

10. The BOEM’s analysis indicates that non-investment grade companies will pay four times
more for decommissioning bonds than investment grade companies.14 What alternatives
did BOEM consider?

a. This rule discusses alternative rules that are similar to this standard but are
slightly more or less restrictive. Did the BOEM only consider these options, or
did it consider any alternatives which were more narrowly tailored to meet the
needs of small businesses?

11. Since 2009, most bankruptcy filings by OCS lease and grant holders did not result in cost
to the taxpayer, for what reason does the BOEM believe there is substantial risk of
needing taxpayer dollars to cover decommissioning expenses?15

12. Studies into the Rice’s Whale’s extended habitat have repeatedly proved difficult.16 If
scientists in the field are generally unable to locate Rice’s Whales in these areas when
they are intentionally looking for them, for what reason does the BOEM believe regular
ships conducting business on regular trade routes will encounter Rice’s Whales?

13. In its 2022 Supplemental Environmental Impact Study, the BOEM concluded that a
vessel striking a Rice’s Whale was “extremely unlikely.”17 Given this conclusion, why
did the BOEM include speed limits and nighttime travel bans within the Rice’s Whales
protective zone?

14. What would be the impact on small entities if the terms of the settlement agreement were
implemented through the rulemaking process—a process which allowed for small
businesses to have input—instead of a notice document?

15. The RFA requires the consideration of not just small businesses, but also local
governments and other small entities.18 This rule would likely have a tremendous impact
on ports along the Gulf of Mexico, increasing port traffic in the daytime, and reducing
nighttime traffic; additionally, local governments have expressed concerns that this rule
will drive down demand for their ports along the Gulf.19 What does the BOEM expect the
impact on small entities and local governments would be if this decision were made
through proper formal or informal rulemaking?

14
Bureau of Ocean Energy Mgmt., Risk Management Financial Assurance and Loss Prevention Initial Regulatory
Impact Analysis (Jun. 29, 2023).
15
Risk Management and Financial Assurance for OCS Lease and Grant Obligations, 88 Fed. Reg. 42136, 42139 (to
be codified at 30 C.F.R. 550, 556, 590).
16
Louisiana v. Haaland, No. 2:23-CV-01157, 2023 U.S. Dist. LEXIS 175998, 14 (5th Cir. Sep. 21, 2023).
17
Id.
18
The Regulatory Flexibility Act, 5 U.S.C. §§ 601-612 (2011).
19
Benjamin Zycher, Biden Administration Continues its Anti-Democratic Sue and Settle Masquerade, THE HILL
(Sep. 14, 2023); Sue and Settle: Regulating Behind Closed Doors, U.S. CHAMBER OF COM. (Mar. 6, 2018).
19
Kelsey Brugger, EPA revokes Trump-era ‘sue and settle’ memo, E&E NEWS (Mar. 24, 2022).
Ms. Liz Klein
November 20, 2023
Page 5 of 5

16. Is it accurate to describe BOEM’s agreement with the Sierra Club as a “sue and settle”
arrangement?

a. If so, does BOEM intend to continue making decisions through “sue and settle”
tactics?

b. How can the Committee attain confidence that the BOEM is considering the
interest of small businesses in its decision-making when its decisions are made
behind closed doors with special interest groups?

17. In Louisiana v. Haaland, BOEM argued that the compliance costs described by industry
representatives were too speculative.20 Given that BOEM did not describe the anticipated
compliance costs in its updated terms sheet, what does BOEM believe is the compliance
costs associated with the terms it added in Lease Sale 261?

a. What are the additional costs a small business may incur that other larger entities
may not?

To schedule the delivery of your response or ask any related follow-up questions, please
contact Committee on Small Business Majority Staff at (202) 225-5821. The Committee on
Small Business has broad authority to investigate “problems of all types of small business” under
House Rule X. Thank you in advance for your cooperation with this inquiry.

In God We Trust,

Roger Williams
Chairman
Committee on Small Business

cc: The Honorable Nydia M. Velasquez, Ranking Member
Committee on Small Business

20
Louisiana v. Haaland, No. 2:23-CV-01157, 2023 U.S. Dist. LEXIS 175998, 14 (5th Cir. Sep. 21, 2023).

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