Rule2025-13131
Procedures for Acquisition of Petroleum for the Strategic Petroleum Reserve
Primary source
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Published
July 14, 2025
Effective
August 13, 2025
Issuing agencies
Energy Department
Abstract
The Department of Energy ("DOE") is publishing this document to respond to comments received on the May 16, 2025, direct final rule. As a result, DOE delays the effective date of the direct final rule on the procedures for acquisition of petroleum for the Strategic Petroleum Reserve (SPR) to require index-priced contracts.
Full Text
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<title>Federal Register, Volume 90 Issue 132 (Monday, July 14, 2025)</title>
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[Federal Register Volume 90, Number 132 (Monday, July 14, 2025)]
[Rules and Regulations]
[Pages 31134-31136]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-13131]
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DEPARTMENT OF ENERGY
[DOE-HQ-2025-0009]
10 CFR Part 626
RIN 1901-AB66
Procedures for Acquisition of Petroleum for the Strategic
Petroleum Reserve
AGENCY: Office of Cybersecurity, Energy Security, and Emergency
Response, Department of Energy.
ACTION: Direct final rule; delay of effective date; response to
comments.
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SUMMARY: The Department of Energy (``DOE'') is publishing this document
to respond to comments received on the May 16, 2025, direct final rule.
As a result, DOE delays the effective date of the direct final rule on
the procedures for acquisition of petroleum for the Strategic Petroleum
Reserve (SPR) to require index-priced contracts.
DATES: As of July 14, 2025, the effective date of the direct final rule
published May 16, 2025, at 90 FR 20764, is delayed until August 13,
2025.
FOR FURTHER INFORMATION CONTACT: Mr. Jeffrey Novak, U.S. Department of
Energy, Office of the General Counsel, Acting General Counsel, 1000
Independence Avenue SW, Washington, DC 20585-0121; (202) 586-5281 or
<a href="/cdn-cgi/l/email-protection#4f0b000a082a212a3d2e230c203a213c2a230f273e612b202a61282039"><span class="__cf_email__" data-cfemail="2c6863696b4942495e4d406f4359425f49406c445d02484349024b435a">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. General Discussion
DOE is amending part 626 of title 10 of the Code of Federal
Regulations in this rule. Part 626 contains rules that govern the
procedures for acquiring petroleum products for, and deferring
contractually scheduled deliveries to, the SPR. On October 25, 2022,
DOE amended the part 626 regulations for the first time since being
promulgated by DOE in 2006. See 87 FR 64369. The 2022 revisions were
intended to provide more clarity, including by using more consistent
language throughout the regulation; better reflect the underlying
statutory authorities, which had changed since the rule's promulgation
in 2006; better reflect the operational practices and realities of the
SPR; and provide additional flexibility in structuring acquisitions,
including by allowing fixed-price contracts. While most of these
changes were sorely needed, the changes to permit the use of fixed-
price contracts--added under claims of increased flexibility--have only
served to unnecessarily create confusion in the industry, which uses
index-price contracts, with no
[[Page 31135]]
recognizable benefit. For this reason, DOE amends the language
contemplating fixed-price contracts to revert to the regulation's prior
standard requiring index-price contracts.
II. Response to Comments
DOE received four comments \1\ in response to the direct final rule
published on May 16, 2025. 90 FR 20764 (``May 2025 DFR'').
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\1\ DOE received a fifth comment that was outside of the scope
of this rulemaking.
Table II.1--List of Commenters From the May 2025 DFR
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Comment No. in
Commenter Reference in this rule the docket Commenter type
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TP..................................... TP........................ 3 Anonymous.
Employ America......................... Employ America............ 5 Advocacy Organization.
Bridget Dooling........................ Dooling................... 6 Individual.
Center for Biological Diversity........ CBD....................... 4 Conservation Organization.
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Employ America, Dooling, and CBD all had procedural objections to
DOE's use of a direct final rule. Employ America and Dooling stated
that the May 2025 DFR did not satisfy the good cause exemption from
notice and comment rulemaking under the Administrative Procedure Act
(``APA''). (Employ America, No. 5 at pp. 10-11; Dooling, No. 6 at pp.
3-4). CBD also stated that DOE should have engaged in a full notice-
and-comment rulemaking process. (CBD, No. 3 at p. 1).
In response, DOE notes that the APA requires that agencies provide
all interested persons with fair notice and an opportunity to comment
on the rulemaking. See 5 U.S.C. 553(b) & (c). The May 2025 DFR provided
the public with fair notice of DOE's changes to its own petroleum
acquisition regulations for the SPR. See 90 FR 20764 (discussing DOE's
return to its historic practice of using index-price contracts). DOE
also requested comments on the May 2025 DFR, and stated, if the
Department received significant adverse comments, the Department would
withdraw the rule or issue a new final rule that responds to such
comments. Id. Thus, DOE has provided interested persons with fair
notice and an opportunity to comment as required by the APA. So, the
lack of discussion of a good cause exemption under 5 U.S.C. 553(b)(B)
in the DFR is irrelevant as the notice and comment procedures under 5
U.S.C. 553(b) and (c) have been observed before this rule takes effect.
Commenters cannot argue they were denied fair notice and an opportunity
to comment solely based on how the notice was labeled. See Little
Sisters of the Poor Saints Peter & Paul Home v. Pennsylvania, 140 S.
Ct. 2367, 2384 (2020) (holding that ``[f]ormal labels aside, the
[interim final rules] contained all of the elements of a notice of
proposed rulemaking as required by the APA'').
In addition to its procedural comment, Employ America also urged
the Department to withdraw the direct final rule and leave the existing
rule in place. (Employ America, No. 5 at p. 2). DOE has properly
considered the comment from Employ America and provides the following
response. The Department notes that on October 25, 2022, DOE amended
the part 626 regulations expressly to include the ability to allow
fixed-price contracts. At that time, Employ America provided the only
comment within the scope of the proposed rule. In 2025, Employ
America's comment mirrors its 2022 comment that DOE should utilize
fixed-price contracts with sufficient flexibility to achieve the
objectives and procedural needs defined in the SPR's governing statute.
See Acquisition of Petroleum for the Strategic Petroleum Reserve, 87 FR
64369, DOE-HQ-2022-0022.
Significantly, outside of the procedural questions, the difference
between the 2022 and 2025 comments is that Employ America now bases
much of its comments on a misunderstanding of DOE's recent use of the
fixed-price and index-based methods. In its argument that requiring
index-price contracts for all acquisitions would undermine statutory
objectives and procedural requirements, it states that index-based
pricing introduces budgetary and operational risks for DOE, alternative
methods can deliver more certainty, and that logistical and
infrastructure constraints require contractual flexibility. It further
states in its argument that the justification for the direct final rule
does not hold up to scrutiny that the direct final rule is unnecessary
because DOE retains the ability to utilize index-price contracts under
the existing regulation, DOE acquired over 60 million barrels of crude
oil through fixed-price contracting, undermining claims it created
confusion, and it is incorrect that the industry only uses index-price
contracts; contracts with fixed prices are used to hedge or minimize
exposure to price risk. However, to support their arguments, Employ
America relies on an inaccurate claim that recent SPR contracts have
been based on fixed pricing. For example, in its argument that the
justification for the direct final rule does not hold up to scrutiny,
it notes that ``given successful fixed-price contracts executed to
acquire over sixty million barrels, the evidence that it created
sufficient confusion to warrant the change is weak.'' Further, it
states that that ``DOE acquired over 60 million barrels of crude oil
though fixed-price contracting, undermining claims it created
confusion,'' and although a ``pilot acquisition to test the fixed-price
failed to result in successful bids, . . . the problems were
recognizable and were ultimately corrected.'' They also state that
``DOE issued 20 successful solicitations, for which they received over
500 responses, and ultimately acquired over 60 million barrels of oil.
. . . Any initial confusion was rectified by subsequent
solicitations.'' However, DOE utilized the index-based pricing method
in the referenced purchase of 60 million barrels of crude oil. While
changes to permit the use of fixed-price contracts were added under
claims of increased flexibility, it only served to unnecessarily create
confusion in industry, which uses index-price contracts. The use of
fixed-price contracts provided no recognizable benefit, as the only
attempt by DOE to use the fixed-price method failed to obtain bids.
Further, Employ America admits in its comment that index-based pricing
is the norm. Thus, Employ America's above arguments and endorsement of
the use of fixed-pricing
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as a method that works better than the index-based pricing fails based
on the Department's past experience and due to Employ America's
inaccurate premise regarding recent purchases. Further, its support of
those purchases actually supports the use of index-based pricing
method.\2\
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\2\ Employ America's misunderstanding further supports DOE's
statement in the May 16, 2025, direct final rule that the changes
made to DOE regulations to permit the use of fixed-price contracts
have only served to create confusion.
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Finally, DOE received a comment from a member of the public
(Comment DOE-HQ-2025-0009-0003) that raises procedural objections
regarding Executive Order 14192 requiring identification of 10
regulations to be repealed and an analysis of such repeal and a claim
that the rulemaking is subject to the National Environmental Policy Act
(NEPA). However, as discussed in the May 2025 DFR, this rule is an E.O.
14192 deregulatory action, and therefore, the repeal of additional
regulations is not required. 90 FR 20764, 20766. Further, this rule is
a procedural rule that is excepted from NEPA review under appendix A to
subpart D of 10 CFR part 1021.
III. Conclusion
For the reasons discussed in the preceding sections of this
document, DOE is not withdrawing the May 2025 DFR, which finalizes an
amendment to part 626 of title 10 of the Code of Federal Regulations to
require index-priced contracts.
DOE also notes, to the extent that 5 U.S.C. 553 applies to the
delay of effective date, it is exempt from notice and comment because
it constitutes a rule of procedure under 5 U.S.C. 553(b)(A) and for
which no notice or hearing is required by statute. Additionally, this
action is not a ``substantive rule'' for which a 30-day delay in
effective date is required under 5 U.S.C. 553(d)
Signing Authority
This document of the Department of Energy was signed on July 9,
2025, by Chris Wright, the Secretary of Energy. That document with the
original signature and date is maintained by DOE. For administrative
purposes only, and in compliance with requirements of the Office of the
Federal Register, the undersigned DOE Federal Register Liaison Officer
has been authorized to sign and submit the document in electronic
format for publication, as an official document of the Department of
Energy. This administrative process in no way alters the legal effect
of this document upon publication in the Federal Register.
Signed in Washington, DC, on July 10, 2025.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
[FR Doc. 2025-13131 Filed 7-11-25; 8:45 am]
BILLING CODE 6450-01-P
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