Securing Updated and Necessary Statutory Evaluations Timely

Federal RegisterJan 19, 2021

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 6

Public Health Service

42 CFR Part 1

Centers for Medicare and Medicaid Services

42 CFR Part 404

Office of the Inspector General

42 CFR Part 1000

Office of the Secretary

45 CFR Part 8

Administration for Children and Families

45 CFR Parts 200, 300, 403, 1010, and 1390

[Docket No. HHS-OS-2020-0012]

RIN 0991-AC24

Securing Updated and Necessary Statutory Evaluations Timely

AGENCY:

Department of Health and Human Services (HHS).

ACTION:

Final rule.

SUMMARY:

The Regulatory Flexibility Act (RFA) requires agencies to publish plans to conduct periodic reviews of certain of their regulations. Multiple Executive Orders also require agencies to submit plans for periodic reviews of certain regulations. To further comply with the RFA and Executive Orders, and to ensure the Department's regulations have appropriate impacts, the U.S. Department of Health and Human Services (HHS or the Department) issues this final rule amending its regulations to set expiration dates for the Department's regulations (subject to certain exceptions), unless the Department periodically assesses the regulations to determine if they are subject to the RFA, and if they are, performs a review that satisfies the criteria in the RFA.

DATES:

This final rule is effective on March 22, 2021.

FOR FURTHER INFORMATION CONTACT:

James Lawrence, 200 Independence Avenue SW, Washington, DC 20201; or by email at

reviewnprm@hhs.gov;

or by telephone at 1-877-696-6775.

SUPPLEMENTARY INFORMATION:

This final rule is organized as follows:

Table of Contents

I. Summary

II. Background

III. Statutory Authority and Legal Basis for This Final Rule

IV. Provisions of Proposed Rule and Response to Public Comments

V. Regulatory Impact Analysis

I. Summary

On November 4, 2020, HHS published in the

Federal Register

a notice of proposed rulemaking titled “Department of Health and Human Services Securing Updated and Necessary Statutory Evaluations Timely” (hereinafter, “proposed rule”).

On November 23, 2020, the Department held a public hearing on the proposed rule.

For the reasons described herein, after considering public comments on the proposed rule, HHS now finalizes the proposed rule as amended. This final rule will enhance the Department's implementation of section 3(a) of the Regulatory Flexibility Act (RFA), 5 U.S.C. 610, and various executive orders, and improve accountability and the performance of its regulations.

The RFA requires federal agencies to publish in the

Federal Register

“a plan for the periodic review of the rules issued by the agency which have or will have a significant economic impact upon a substantial number of small entities” in order “to determine whether such rules should be continued without change, or should be amended or rescinded, consistent with the stated objectives of applicable statutes, to minimize any significant impact of the rules upon a substantial number of small entities.” 5 U.S.C. 610(a). In conducting this retrospective review, agencies must consider a variety of factors, including the continued need for the rule, legal issues, public input, overlap and duplication with other federal or State and local governmental rules, and technological, economic, or other changes. 5 U.S.C. 610(b). Agency compliance with 5 U.S.C. 610 may be subject to judicial review.

See

5 U.S.C. 611(a).

85 FR 70096 (Nov. 4, 2020).

The transcript of the public hearing is available on the docket for the proposed rule.

See https://beta.regulations.gov/docket/HHS-OS-2020-0012/document.

Unless otherwise indicated, all references to HHS in this proposed rule include HHS' constituent agencies and other components.

Several Executive Orders have also directed agencies to submit plans for the periodic review of certain of their regulations.

See, e.g.,

Exec. Order No. 12866 of Sept. 30, 1993, 58 FR 51735 (Oct. 4, 1993), Exec. Order No. 13563 of Jan. 18, 2011, 76 FR 3821 (Jan. 21, 2011).

The Department has tried to carry out the evidence-based approach to regulation prescribed by Congress and the executive orders, but HHS' efforts have met varying levels of success. Several States, as well as jurisdictions outside the United States, have experimented with different ways of ensuring agencies engage in retrospective regulatory reviews so that legal requirements are updated in view of emerging evidence and changed circumstances. Among the lessons that have emerged is that while statutory mandates are helpful, one of the most important factors for ensuring agencies conduct retrospective reviews of their regulations is to provide for the sunset or automatic expiration of certain regulatory requirements after a period of time unless a retrospective review determines that the regulations should be maintained.

Therefore, in order to ensure evidence-based regulation that does not become outdated as conditions change, HHS finalizes this rule to provide that, subject to certain exceptions, all regulations issued by the Secretary or his delegates or sub-delegates in Titles 21, 42, and 45 of the CFR shall expire at the end of (1) five calendar years after the year that this final rule first becomes effective, (2) ten calendar years after the year of the Section's promulgation, or (3) ten calendar years after the last year in which the Department Assessed and, if required, Reviewed

the Section, whichever is latest. The RFA and executive orders have only resulted in limited retrospective review by the Department. The Department believes this final rule will effectuate the desire for periodic retrospective reviews expressed in the RFA and Executive Orders, as well as ensure the Department's regulations are having appropriate impacts and have not become outdated. The literature and the Department's experience suggest that many regulations are having estimated impacts that, over time, differ from what was estimated at the time the regulations were promulgated. This final rule will enhance both (1) the fulfillment of the existing policies that led to the Department's regulations and (2) the Department's longstanding desire

to comply with the RFA and periodically review its regulations.

“Section,” “Assess,” and “Review” are capitalized in this preamble where those terms have the definitions ascribed to them in the text of this final rule.

II. Background

A. The Regulatory Flexibility Act

In 1980, Congress enacted the Regulatory Flexibility Act (RFA), Public Law 96-354, 94 Stat. 1164 (1980) (codified as amended at 5 U.S.C. 601-612). Congress stated that “the purpose of this Act [is] to establish as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation.” 94 Stat. at 1165. Consistent with this purpose, section 3(a) of the RFA requires agencies to publish in the

Federal Register

a “plan for the periodic review of rules which have or will have a significant economic impact upon a substantial number of small entities.” 5 U.S.C. 610(a). The “purpose of the review shall be to determine whether such rules should be continued without change, or should be amended or rescinded . . . to minimize any significant economic impact of the rules upon a substantial number of small entities.”

Id.

In conducting this review, Congress provided that agencies “shall consider the following factors”:

(a) The continued need for the rule;

(b) The nature of complaints or comments received concerning the rule from the public;

(d) The extent to which the rule overlaps, duplicates or conflicts with other Federal rules, and, to the extent feasible, with State and local governmental rules; and

(e) The length of time since the rule has been evaluated or the degree to which technology, economic conditions, or other factors have changed in the area affected by the rule.

5 U.S.C. 610(b)(1)-(5). Congress required agencies to conduct an initial review within ten years of the effective date of the RFA, as well as subsequent reviews “within ten years of the publication of” future final rules. 5 U.S.C. 610(a).

The retrospective review provided for in 5 U.S.C. 610 is a congressional mandate. Under the plain terms of the Act, having a plan for such reviews is not optional. Congress fashioned a private right of action for small entities to ensure agencies satisfy 5 U.S.C. 610.

See

5 U.S.C. 611(a)(1) (“For any rule subject to this chapter, a small entity that is adversely affected or aggrieved by final agency action is entitled to judicial review of agency compliance with the requirements of sections 601, 604, 605(b), 608(b), and 610 in accordance with chapter 7.”). Originally, as one commentator explained, the RFA “contain[ed] an extremely qualified and ambiguous provision for judicial review.”

In 1996, Congress amended the RFA to more clearly provide for judicial review of violations of 5 U.S.C. 610.

As one House Committee report explained, the lack of judicial review made “agencies completely unaccountable for their failure to comply with its requirements,” a problem the amendment attempted to solve.

Paul R. Verkuil,

A Critical Guide to the Regulatory Flexibility Act,

1982 Duke L.J. 213, 259 (1982).

Contract with America Advancement Act of 1996, Public Law 104-121, 110 Stat. 847, 865-66 (1996).

H.R. Rep. No. 104-500, at 3 (1996).

B. Executive Orders Directing Agencies To Review Existing Regulations

Other efforts to conduct retrospective regulatory review both predate and have continued after passage of the RFA. In 1978, President Carter issued an executive order on improving federal regulations.

The order directed agencies to “periodically review their existing regulations.”

In determining which existing regulations to review, the order required agencies to consider, among other things, whether “technology, economic conditions or other factors have changed in the area affected by the regulation.”

The Executive Order considered suggestions from the public that all regulations be reviewed, usually 3-5 years after issuance. But the Carter Administration instead instructed that, due to agency resource limitations, agencies should concentrate their reviews on those regulations which no longer serve their intended purpose, that have caused administrative difficulties, or that have been affected by new developments.

The executive order also considered, but rejected, the idea of including a sunset provision in regulations on the ground that agencies cannot entirely eliminate regulations unless the law that authorized the regulations allows it.

However, the Department believes that executive order did not consider that the authorizing statutes for many regulations permit those regulations to be rescinded. Moreover, as discussed below, experience since 1978 has shown it is difficult to adequately conduct retrospective regulatory review if regulations do not contain sunset provisions.

Exec. Order No. 12044 of Mar. 23, 1978, 43 FR 12661 (Mar. 24, 1978) (revoked by Exec. Order No. 12291 of Feb. 17, 1981, 46 FR 13193 (Feb. 19, 1981)).

43 FR at 12663.

Id.

at 12669. As discussed below, the Department is reviewing a different subset of its regulations than was directed by Exec. Order No. 12044, in part because the RFA's directive to review regulations that have a significant economic impact upon a substantial number of small entities had not yet been enacted at the time of Exec. Order No. 12044. Moreover, Exec. Order No. 12044 was responding to suggestions that the review be performed every three to five years. The Department's reviews will be performed every ten years (except for regulations that have already been in effect for ten years), which should lessen the burden on the Department's resources.

Id.

at 12669.

Like the Carter Administration, every subsequent administration has directed agencies to engage in retrospective review of existing regulations. In 1981, President Reagan ordered agencies to “review[ ] existing regulations” in view of cost-benefit principles and potential alternatives.

In 1992, President George H.W. Bush issued a memorandum instructing agencies to conduct a 90-day review “to evaluate existing regulations and programs and to identify and accelerate action on initiatives that will eliminate any unnecessary regulatory burden or otherwise promote economic growth.”

President Clinton similarly called for review of existing regulations to determine whether they have become “unjustified or unnecessary as a result of changed circumstances,” and “to confirm that regulations are both compatible with each other and [are] not duplicative or inappropriately burdensome in the aggregate.”

Specifically, that Executive Order required agencies to submit to the Office of Information and Regulatory Affairs (OIRA) a program under which the agency “will periodically review its existing significant regulations to determine whether any such regulations should be modified or eliminated so as to make the agency's regulatory program more effective in achieving the regulatory objectives, less burdensome, or in greater alignment with the President's priorities and the principles set forth in this Executive Order.”

The George W. Bush Administration's Acting OIRA Administrator noted that the Bush Administration was “in the

process of reviewing a variety of existing regulations and regulatory programs in an effort to identify areas where sensible changes will yield greater benefits for the public at lower costs.”

Exec. Order No. 12291 of Feb. 17, 1981, 46 FR 13193, 13193 (Feb. 19, 1981) (revoked by Exec. Order 12866 of Sept. 30, 1993, 58 FR 51735 (Oct. 4, 1993));

see also

Exec. Order 12498 of Jan. 4, 1985, 50 FR 1036 (Jan. 8, 1985) (creating annual regulatory planning program), revoked by Exec. Order 12866 of Sept. 30, 1993, 58 FR 51735 (Oct. 4, 1993).

Memorandum on Reducing the Burden of Government Regulation (Jan. 28, 1992).

Exec. Order No. 12866 of Sept. 30, 1993, 58 FR 51735 (Oct. 4, 1993).

Id.

Draft Report to Congress on the Costs and Benefits of Federal Regulations Introduction, 66 FR 22041, 22054 (May 2, 2001).

President Obama also instructed agencies to engage in retrospective regulatory review. In 2011, President Obama issued an executive order ordering agencies “[t]o facilitate the periodic review of existing significant regulations . . . to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.”

Similarly, in 2012, President Obama noted that retrospective review has particular relevance “[d]uring challenging economic times,” and that agencies should consider whether regulations “should be modified or streamlined in light of changed circumstances, including the rise of new technologies.”

Exec. Order No. 13563 of Jan. 18, 2011, 76 FR 3821, 3822 (Jan. 21, 2011);

see also

Exec. Order No. 13579 of July 11, 2011, 76 FR 41587, 41587 (July 14, 2011) (applying the same requirement to independent regulatory agencies).

Exec. Order No. 13610 of May 10, 2012, 77 FR 28469, 28469 (May 14, 2012).

President Trump has attempted to identify existing undue regulatory burdens and facilitate retrospective review of regulations. For example, in January 2017, President Trump issued an executive order requiring agencies to identify at least two regulations to be repealed for every one regulation proposed or otherwise promulgated.

Similarly, a 2017 OIRA report to Congress explained, “Rules should be written and designed to facilitate retrospective analysis of their effects, including consideration of the data that will be needed for future evaluation of the rules' ex post costs and benefits.”

In May 2020, in response to the COVID-19 pandemic, President Trump ordered agencies to “identify regulatory standards that may inhibit economic recovery” and to “consider taking appropriate action, consistent with applicable law,” including modifying, waiving, or rescinding those regulatory requirements.

Exec. Order No. 13771 of Jan. 30, 2017, 82 FR 9339, 9339 (Feb. 3, 2017).

Office of Mgmt. & Budget, 2017 Report to Congress on the Benefits and Costs of Federal Regulations and Agency Compliance with the Unfunded Mandates Reform Act at 5 (2017),

https://www.whitehouse.gov/wp-content/uploads/2019/12/2019-CATS-5885-REV_DOC-2017Cost_BenefitReport11_18_2019.docx.pdf; see also id.

at 16 (“[I]t is important to consider retrospective, as opposed to ex ante, estimates of both benefits and costs.”).

Exec. Order No. 13924 of May 19, 2020, 85 FR 31353, 31354 (May 22, 2020).

In addition to the executive orders, other executive branch actions have sought to spur agencies to conduct the reviews called for by 5 U.S.C. 610. One example was the Regulatory Review and Reform (r3) initiative, which the Small Business Administration launched in part to improve compliance with 5 U.S.C. 610 and further the goals of periodic reviews. The r3 initiative was a long-term project to help agencies pinpoint existing federal rules that warrant review—and to revise those rules if they are found to be ineffective, duplicative, out of date, or otherwise deficient.

Testimony of The Hon. Thomas M. Sullivan, Chief Counsel for Advocacy, U.S. SBA, U.S. House of Representatives Comm. on Small Bus. Subcomm. on Reg.'s, Health Care and Trade (July 30, 2008),

https://www.sba.gov/sites/default/files/files/test08_0730.pdf

(“Historically, federal agency compliance with section 610 has been limited.”).

Consistent with these actions, HHS has conducted retrospective reviews of some of its regulations. For example, pursuant to Executive Order 13563, HHS published a list of regulations the Department identified as candidates for retrospective review.

The Department also took action. For example, HHS, citing Executive Order 13563, eliminated certain restrictions on the use of telemedicine in rural areas.

See also Retrospective Review of Existing Rules,

U.S. Dept. of Health & Human Servs.,

https://www.hhs.gov/open/retrospective-review/index.html.

See

Medicare and Medicaid Programs: Changes Affecting Hospital and Critical Access Hospital Conditions of Participation: Telemedicine Credentialing and Privileging, 76 FR 25550 (May 5, 2011);

see also

Medicare and Medicaid Programs; Regulatory Provisions To Promote Program Efficiency, Transparency, and Burden Reduction; Part II, 79 FR 27106 (May 12, 2014) (finalizing several rules to remove unnecessary regulatory and reporting requirements previously imposed on hospitals and other health care providers).

Nonetheless, the Department has only conducted retrospective review of regulations to a very limited extent. One academic analysis determined that, in response to Executive Order 13563, the Department planned 83 retrospective analyses in 2012 and completed 33 analyses with final action by August 31, 2013.

By contrast, the Department issued 247 rules between the date Executive Order 13563 was issued and August 31, 2013.

As of July 2016, the Department had 40 planned retrospective analyses and by April 2017 had completed analyses with final action on 19 of them.

These findings are consistent with government assessments that the Department's efforts to comply with 5 U.S.C. 610 have at times been lacking.

Connor Raso,

Assessing regulatory retrospective review under the Obama administration,

Brookings Inst., (Jun. 15, 2017),

https://www.brookings.edu/research/assessing-regulatory-retrospective-review-under-the-obama-administration/.

Id.

See, e.g.,

Curtis W. Copeland, Cong. Rsch. Serv., RL32801, Reexamining Rules: Section 610 of the Regulatory Flexibility Act 7-8 (2008); U.S. Gov't Accountability Off., GAO/GGD-94-105, Regulatory Flexibility Act: Status of Agencies' Compliance 12 (1994) (quoting a 1983 Small Business Administration report that stated that the Department's section 610 review plan was “ `very general,' and, as a result, `it is difficult to measure progress and to make recommendations with respect to future review' ”);

see also

Testimony of The Hon. Thomas M. Sullivan, Chief Counsel for Advocacy, U.S. SBA, U.S. House of Representatives Comm. on Small Bus. Subcomm. on Reg.'s, Health Care and Trade (July 30, 2008),

https://www.sba.gov/sites/default/files/files/test08_0730.pdf

(“Historically, federal agency compliance with section 610 has been limited.”).

Commenters on the proposed rule listed the following as examples of regulations that they and/or Congress have requested the Department to review, but that the commenters claimed were not reviewed:

• Regulations mandated for review by the 21st Century Cures Act, Public Law 114-255, sec. 2034, 130 Stat. 1033 (2016). Section 2034 of that Act, according to the commenters, requires the Secretary to lead a review by research funding agencies of all regulations and policies related to the disclosure and reporting of financial conflicts of interest to reduce administrative burden on federally funded researchers. It also calls for the Secretary to harmonize the differences between the Basic HHS Policy for the Protection of Human Research Subjects (45 CFR part 46, subpart A) and the FDA regulations for the protection of human subjects (21 CFR parts 50 and 56). Commenters stated that these regulations are well overdue for assessment and review.

• Regulations covering access to skilled therapy services, which commenters say must be updated to reflect the national settlement in the

Jimmo

Sebelius

litigation to codify the fact that skilled services are covered for Medicare beneficiaries not just to improve function, but to maintain or prevent deterioration in function.

• The dockets established by FDA's Center for Food Safety and Applied Nutrition and Center for Veterinary Medicine on Sept. 8, 2017,

in which the Centers requested comments and

information to assist in identifying existing regulations and related paperwork requirements that could be modified, repealed or replaced, consistent with the law, to achieve meaningful burden reduction while allowing FDA to achieve its public health mission and fulfill statutory obligations. The commenters stated these were examples of incomplete regulatory review initiatives.

Commenters stated that despite submitting extensive comments that detailed numerous regulations that they believe could be modified, repealed or replaced, the agency did not take any further action.

E.g.,

Nonrulemaking Docket FDA-2017-N-5093: Review of Existing General Regulatory and Information Collection Requirements of the Food and Drug Administration,

https://beta.regulations.gov/docket/FDA-2017-N-5093.

See

Review of Existing General Regulatory and Information Collection Requirements of the Food and Drug Administration, 82 FR 42506 (Sept. 8, 2017); FDA-2017-N-5093,

https://beta.regulations.gov/docket/FDA-2017-N-5093.

A review conducted for the Department in 2019 (discussed in more detail in Section C) concluded that related good governance stewardship actions were deprioritized and relegated to “rainy day” activities that Department operating divisions would get around to when they could.

However, the rainy day in many cases has never arrived.

See infra

n.68 and accompanying text.

Scholars have also posited reasons why agencies may be reluctant to perform retrospective reviews. One administrative law expert now at Northwestern University has written:

[E]ven with sufficient resources, agencies may not be properly incentivized. They are less likely to be found at fault for not conducting rigorous periodic reviews. Many rules, even those with significant effects, are often not on the public's radar once adopted. Challenging agency regulation under the RFA is more difficult than under the Administrative Procedure Act (APA) because there is no comment process and standing is granted to more limited parties. The harm to the public resulting from a cursory analysis is also much less clear. If sufficient interests exist to modify the rule, strong interest groups will directly lobby the agency to modify the rule. But in this case, a brand new rulemaking effort emerges.

There are also political reasons and moral hazard concerns associated with performing retrospective analyses. In most cases, retrospective analyses of existing regulations are routine business matters left to be handled by staff members, rather than political appointees. Political appointees, such as agency heads, tend to come with specific regulatory agendas of their own. By contrast, staff members at regulatory agencies are best viewed as career members who have a vested interest in seeing their agencies continue to exist and thrive. All else equal, they are not inclined to acknowledge that the work of their agency is inefficient or unnecessary, and even less inclined to conduct analyses that may lead to a curtailing of the agency's authority. Whatever the reasons may be, serious ex post reviews are few and far between. A majority of rules, once adopted, will likely persist without significant ex post modification. As to how many agency rules currently implemented may be costing more resources than yielding benefits is anyone's guess.

Yoon-Ho Alex Lee,

An Options Approach to Agency Rulemaking,

65 Admin. L. Rev. 881, 895-96 (2013).

Thus, the Department concludes that it needs to impose a strong incentive on itself to perform retrospective review, given these countervailing incentives to not perform such reviews and the limited number of retrospective reviews that the Department has performed over the last 40 years. As discussed in more detail in the regulatory impact analysis

infra,

the Department has the resources to periodically review the impacts of its regulations.

C. Limitations in Government Projections Counsel in Favor of Widespread Retrospective Regulatory Review

The Congressional and Presidential directives to periodically review existing regulations are sound policy. When the Department first issues a regulation, it makes an educated guess about the regulation's impact. Several years after the regulation is promulgated, the Department has a somewhat greater basis for assessing its real-world impacts and can refine the regulation or agency enforcement practices, as appropriate. This would further democratic values such as accountability, administrative simplification, transparency, and performance measurement and evaluation.

Indeed, the literature indicates that government projections of regulatory impacts would benefit from refinement based on experience after the regulations are implemented. The literature suggests the need for refinement is widespread, so widespread review would yield greater benefits than review of a handful of regulations. In 2005, the Office of Management and Budget (OMB) provided an overview of a sample of retrospective analyses based on an examination of forty-seven case studies.

OMB considered a pre-regulation estimate to be accurate if the post-regulation estimate was within +/− 25 percent of the pre-regulation estimate.

This measure of accuracy reveals the difficulty and uncertainty inherent in prospective cost-benefit analysis. OMB found that agencies often inaccurately estimated the benefits of regulations in its sample of regulations, and agencies were more likely to overestimate benefits than to underestimate them, where benefits were estimated.

Agencies overestimated benefits in 19 of 39 sampled regulations, whereas they underestimated benefits in only two of the 39 regulations.

In two cases, agencies overestimated benefits by a factor of 10.

Second, agencies sometimes overestimated the benefit-cost ratio, and in that sense were a bit too optimistic about the consequences of their rules. Agency estimates were accurate in only 11 rules, while the ratio was overestimated in 22 rules and underestimated in 14 rules.

Third, agencies also overestimated and, less frequently, underestimated costs in the sampled regulations. Agency cost estimates were accurate for only 12 rules, overestimated for 16 rules, underestimated for 12 rules, and not estimated for seven rules.

Office of Mgmt. & Budget, Validating Regulatory Analysis: 2005 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities, at 46-47 (2005),

http://perma.cc/R8LX-BQMJ

(collecting studies comparing ex ante and ex post analyses of regulations' costs and benefits, including examples where cost and benefit estimates were off by more than a factor of ten).

Id.

at 42.

Id.

at 43-46.

Id.

at 47.

Id.

at 43.

Id.

at 47.

Id.

Academic studies have also identified inaccuracies in agency estimates, relative to an ex post re-estimation. For example, one study of sixty-one rules for which benefit-cost ratios could be compared before and after the fact (including some not included in the OMB review) found that the estimated ratios were essentially accurate in only sixteen of the sixty-one cases, though the study found no bias in estimates of benefit-cost ratios.

In this analysis, Dr. Harrington criticized certain aspects of the OMB analysis. But it is notable that, even though OMB and Dr. Harrington used somewhat differing methods and reviewed samples of regulations that did not completely overlap, they both found ex ante estimates to be in many cases lacking. Dr. Harrington concluded his analysis by noting that “the results

demonstrate the value of

ex post

analysis. It is frustrating that there is so little of it, especially when so many close observers, from all points of view, claim to be in favor of it.”

Winston Harrington,

Grading Estimates of the Benefits and Costs of Federal Regulation,

Res. for the Future, Discussion Paper 06-39, 2006, at 33,

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=937357.

Dr. Harrington used the same measure of accuracy as OMB. While both OMB and Dr. Harrington noted that using +/− 25% as the measure of accuracy could be arbitrary, it is nonetheless informative that in many cases the ex ante estimates in the sampled regulations differed from ex post estimates by more than +/−25%.

Id.

at 34.

A more recent study of a sample of federal regulations found that of the eight regulations for which the author was able to make ex ante and ex post cost comparisons, six regulations involved overestimates of costs, two involved underestimates of costs, and none were deemed accurate.

A regulation was deemed accurate if the regulation's regulatory impact analysis fell roughly within +2/−5% of the ex post observation.

Of the 18 regulatory requirements for which the author was able to compare benefits (also referred to as “effectiveness” in the study) estimates on an ex ante and ex post basis, he found that 10 involved overestimates, six were underestimates, and two were relatively accurate.

Richard Morgenstern,

Retrospective Analysis of U.S. Federal Environmental Regulation,

9 J. of Benefit Cost Anal., no. 2, 2018, at 294,

https://www.cambridge.org/core/services/aop-cambridge-core/content/view/891E36D3DBCEB79C969278488E5E1897/S2194588817000173a.pdf/retrospective_analysis_of_us_federal_environmental_regulation.pdf.

Id.

Id.; see also

Cynthia Morgan & Nathalie B. Simon,

National primary drinking water regulation for arsenic: A retrospective assessment of costs

, 5 J. Benefit Cost Anal. no. 2, 2014, at 259-84,

https://www.cambridge.org/core/services/aop-cambridge-core/content/view/A7B29CE98E650B424E92FF292A8FFC89/S2194588800000774a.pdf/national_primary_drinking_water_regulation_for_arsenic_a_retrospective_assessment_of_costs.pdf

(finding that the EPA methodology overestimated predicted capital costs from its arsenic rule in most studied cases, especially as the size of the system increases (as measured by the design flow rate)).

These studies all found that in most cases the sampled ex ante estimates were not within +/−25% of the ex post observations. The studies suggest many federal regulations are estimated after the fact to have real-world impacts that differ from the estimated impacts at the time the regulations were promulgated. Although these samples were not necessarily representative, it would not be unreasonable to think that the Department could make major improvements by conducting widespread review of its regulations, rather than merely reviewing the small number of regulations that interested parties ask the Department to consider revising.

This is not to suggest that prospective regulatory impact analyses are not helpful. To the contrary, they add tremendous value and greatly improve agency rule makings. But as explained elsewhere herein, even when an agency's cost-benefit analysis uses sound science and the best available information to estimate the costs, benefits or other impacts associated with a rule, technological innovation or subsequent changes in the law, among other things, can result in an ex post assessment of impacts differing from the agency's estimates at the time it promulgated the rule.

Reasons Regulatory Projections Differ From Regulations' Real-World Impacts

There are several reasons why regulations' ex ante cost-benefit estimates tend to be inaccurate. First, changes in the legal landscape can cause government projections to become obsolete. For example, in February 2010, officials in the Centers for Medicare and Medicaid Services' Office of the Actuary (OACT) issued health spending and coverage projections through 2019.

A month later, Congress enacted the Patient Protection and Affordable Care Act, Public Law 111-148, 124 Stat. 119 (“ACA”), and the Health Care and Education Reconciliation Act of 2010, Public Law 111-152, 124 Stat. 1029. Largely as a result of the ACA's passage, in October 2010 OACT issued revised projections forecasting that by 2019 the insured share of the population would be 92.7 percent—roughly ten percentage points higher than OACT projected nine months earlier.

See

Truffer CJ, et al.

Health Spending Projections Through 2019: The Recession's Impact Continues,

29 Health Aff. no. 3, 2010, at 522-29,

https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2009.1074.

See

Sisko, et al.,

National Health Spending Projections: The Estimated Impact Of Reforms Through 2019,

29 Health Aff. no. 10, at 1936,

https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2010.0788.

Second, changes in technology can also render projections inaccurate. One study has noted that even when an agency's benefit-cost analysis uses sound science and the best available information to estimate the costs associated with a rule, technological innovation can result in an ex post assessment of costs differing from the agency's cost estimates at the time it promulgated the rule.

As an example of technology's impact on regulations, in 2019 the Food and Drug Administration (FDA) issued a rule amending requirements for medical device premarket submissions to remove requirements for paper and multiple copies, and replace these requirements with requirements for a single submission in electronic format.

Changes in technology had rendered the requirement for multiple copies, whether in electronic format or paper form, no longer necessary.

Had the Department reviewed more of its regulations, it might have learned of additional instances where technological changes counsel in favor of amendment. In addition, some scholars have suggested that in some cases changes in technology can reduce the costs of complying with regulatory mandates.

If retrospective reviews conclude that technology has reduced compliance costs, that can inform the Department's decision about if or how to amend a regulation.

Cynthia Morgan & Nathalie B. Simon,

National primary drinking water regulation for arsenic: A retrospective assessment of costs

, 5 J. Benefit Cost Anal. no. 2, 2014, at 259-84,

One example referred to in this study is that technological innovation or regulatory or technical constraints could result in water systems using different treatment technologies for arsenic removal than assumed by the agency when it promulgated a regulation.

Medical Device Submissions: Amending Premarket Regulations That Require Multiple Copies and Specify Paper Copies To Be Required in Electronic Format, 84 FR 68334 (Dec. 16, 2019).

Id.

at 68334.

See, e.g.,

Cass R. Sunstein,

The Regulatory Lookback,

94 B.U. L. Rev. 579, 599 (2014).

Yet another reason for potential divergence between prospective and retrospective regulatory impact estimates is non-compliance with the regulation being assessed. One study found differing accuracy for prospective per-unit cost estimates and prospective aggregate cost estimates; where there is substantial non-compliance with the regulation being analyzed, cost estimates per unit can sometimes be reasonably accurate while aggregates are simultaneously overestimated.

(Non-compliance would, of course, also affect the accuracy of benefits estimates.

) As such, ex post analysis has the potential to inform not just decisions about codified regulatory requirements but also about agency enforcement practices.

Winston Harrington, Richard D. Morgenstern and Peter Nelson,

On the Accuracy of Regulatory Cost Estimates,

J. Policy Anal. & Management 2000, 19(2): 297-322.

See, e.g.,

Si Kyung Seong and John Mendeloff,

Assessing the Accuracy of OSHA's Projections of the Benefits of New Safety Standards,

Am. J. Industrial Medicine 2004, 45(4): 313-328.

Institutionalizing Retrospective Review To Refine Projections That Were Lacking

While the prospective cost-benefit analyses performed in connection with the promulgation of rules are quite useful, former OIRA Administrator Cass Sunstein has explained that “[w]hen agencies issue rules, they have to speculate about benefits and costs.”

Therefore,[a]fter rules are in place, [agencies] should test those speculations, and they should use what they learn when revisiting a regulation

or issuing a new one.”

Professor Sunstein described this as “one of the most important steps imaginable” for regulatory reform, “not least because it can reduce cumulative burdens and promote the goal of simplification.”

He has noted that agencies' failure “until very recently . . . to gather, let alone act on” retrospective reviews is “an astonishing fact.”

Cass R. Sunstein,

The Regulatory Lookback,

94 B.U. L. Rev. 579, 591 (2014).

Id.

at 588.

Michael Greenstone, who served as Chief Economist on the Council of Economic Advisors between 2009 and 2010, similarly concluded that the “single greatest problem with the current system is that most regulations are subject to a cost-benefit analysis only in advance of their implementation. This is the point when the least is known and any analysis must rest on many unverifiable and potentially controversial assumptions.”

According to Professor Greenstone, the lack of a regulatory lookback created a system “largely based on faith, rather than evidence,” where the agency “all too frequently takes shots in the dark and we all too infrequently fail to find out if we have hit anything—or even worse, we only find out when things have gone horribly wrong.”

As he explained, “it is nearly impossible to imagine” only prospective, and not retrospective, evaluations “being used in other contexts where people's lives are on the line. For example, I am confident that there would be a deafening uproar of protest if the FDA announced that it would approve drugs without testing them in advance. Yet, this is largely what we do with regulations that affect our health and well-being.”

Michael Greenstone,

Toward a Culture of Persistent Regulatory Experimentation and Evaluation,

in New Perspectives on Regulation 111, 113 (David Moss & John Cisternino eds., 2009). It should not be inferred, however, that retrospective analysis is free of assumptions (including potentially controversial assumptions) or is generally without challenges, especially with respect to establishing relevant counterfactuals. For discussion and recent examples related to just two of the many areas of Department regulatory activity,

see

Trinided Beleche

et al., Are Graphic Warning Labels Stopping Millions of Smokers? A Comment on Huang, Chaloupka, and Fong,

15 Econ Journal Watch 129 (2018) and Aaron Kearsley

et al., A Retrospective and Commentary on FDA's Bar Code Rule,

9 J. Benefit-Cost Analysis 496 (2018). Moreover, to the extent that retrospective analysis is used to inform policy choices going forward, it becomes, or is at least being used as, prospective analysis and thus relies on assumptions about the future, including as regards technology and the legal and regulatory landscape. But since retrospective analysis is conducted after some real-world experience living under the regulation, it can in many cases be an improvement over earlier prospective analysis.

Michael Greenstone,

Toward a Culture of Persistent Regulatory Experimentation and Evaluation,

in New Perspectives on Regulation 111, 111-12 (David Moss & John Cisternino eds., 2009);

see also

ABA Sec. of Admin. Law & Reg. Prac., Improving the Administrative Process: A Report to the President-Elect of the United States (2016), 69 Admin. L. Rev. 205 (2017).

ABA Sec. of Admin. Law & Reg. Prac.,

Improving the Administrative Process: A Report to the President-Elect of the United States (2016),

69 Admin. L. Rev. 205, 219 (2017) (emphasis in original).

The Need for a Greater Incentive To Institutionalize Retrospective Review

Despite these many calls for retrospective review, as noted in section II.B., the Department has had limited success in implementing retrospective review in practice.

In 2019, the Department piloted an approach to augment expert policy insights with artificial intelligence-driven data analysis of its regulations, which showed the need to more firmly institutionalize retrospective review. The artificial intelligence review found that 85% of Department regulations created before 1990 have not been edited; the Department has nearly 300 broken citation references in the CFR (

i.e.

CFR sections that reference other CFR sections that no longer exist); more than 50 instances of regulatory requirements to submit paper documents in triplicate or quadruplicate; and 114 parts in the CFR with no regulatory entity listed, 17 of which may be misplaced.

The Department concluded that some good governance stewardship recommendations “were deprioritized and relegated to rainy day activities that [Department operating divisions] would get around to when they could.”

Unfortunately, in many cases the Department has for years not gotten around to addressing these issues.

See also

Yoon-Ho Alex Lee,

An Options Approach to Agency Rulemaking,

65 Admin. L. Rev. 881, 894 (2013), (“one might think that agencies would faithfully take advantage of [] opportunities to conduct rigorous retrospective [cost-benefit analyses] of their existing regulations and test their effectiveness and efficiency. This would be the surest way of incorporating ex post learning in rule implementation. This is far from the truth in practice, however.”).

Regulatory Streamlining & Analysis (Mar. 2019).

Id.

at 18

As one observer recently explained:

Retrospective review of existing regulations . . . is a perennial favorite target for advice on how to improve OIRA's processes. Every administration since President Carter has developed some program to modify, streamline, or expand existing regulations, and there is no shortage of advice on how to make the process run more efficiently. Yet, despite a few notable one-off successes from past retrospective review efforts, no past retrospective review campaign has ever truly succeeded in creating a long-term culture of retrospective review or of prospectively embedding into new regulations a process for data collection and pre-set targets for future lookbacks. Any future efforts around retrospective review, therefore, should be clear-eyed about past failures.

Jason Schwartz,

Enhancing the Social Benefits of Regulatory Review,

Institute for Policy Integrity, at 30 (Oct. 2020),

https://policyintegrity.org/files/publications/Enhancing_the_Social_Benefits_of_Regulatory_Review.pdf.

Several weeks after publishing this article, the author submitted a comment opposing the proposed rule. For the reasons discussed in the responses to public comments, the Department did not find those arguments compelling, but believes the quoted passage is a fair description of the problem this final rule aims to solve. The Department is trying to be clear-eyed about past failures, and has concluded that a strong incentive, such as that included in this final rule, is commensurate with the problem to be solved and to more firmly institutionalize retrospective review.

For the reasons discussed in this final rule, the Department believes a stronger

incentive is needed to achieve the benefits of retrospective review.

This final rule creates a mechanism to more firmly institutionalize the retrospective reviews that Professors Sunstein and Greenstone, as well as ACUS and others, have called for.

Regulatory Streamlining & Analysis (Mar. 2019) (it “appears the current set of governance structures, incentives and processes to promulgate regulatory reform need strengthening to be more effective”).

D. The Experiences of States and Other Jurisdictions With Automatic Expiration or “Sunset” Provisions

This mechanism is based in part on the experiences of States and other jurisdictions. Several States incorporate retrospective regulatory review into their laws. New York, for example, requires retrospective review of regulations “no later than in the fifth calendar year after the year in which the rule is adopted,” and requires that rules be “re-reviewed at five-year intervals” thereafter. N.Y. A.P.A. Law sec. 207. Similarly, Texas requires State agencies to review rules four years after they go into effect and then subsequently at four-year intervals. Tex. Gov't Code sec. 2001.039. In addition to New York and Texas, State law requires some form of retrospective regulatory review in at least Alabama, Arizona, Illinois, Iowa, Michigan, Missouri, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, Tennessee, and Washington.

Ala. Code 41-22-5.2; Ariz. Rev. Stat. 41-1056; 5 Ill. Comp. Stat. Ann. 100/5-130; Iowa Code Ann. 17A.33; Mich. Comp. Laws 10.151; Missouri Rev. Stat., Title XXXVI § 536.175.5; N.J. Stat. Ann. 52:14B-5.1; N.M. Stat. 14-4A-6; N.C. Gen. Stat. 150B-21.3A; N.D. Cent. Code 28-32-18.1; Ohio Rev. Code Ann. 106.03; Okla. Stat. Ann. tit. 75, 307.1; 71 Pa. Stat. Ann. 745.2; R.I. Gen. Laws Ann. tit. 42, ch. 64.13; Tenn. Code Ann. 4-56-102; Wash Rev. Code Ann. 43.70.041, 43.22.052.

Some States with retrospective review requirements allow regulations to automatically expire or sunset after a period of time, unless reviewed or readopted. In New Jersey, regulations automatically expire “seven years following the effective date of the rule” unless extended by the agency. N.J. Stat. Ann. sec. 52:14B-5.1(b).

Indiana allows regulations to expire on January 1 following the seven-year anniversary of their effective dates. Ind. Code sec. 4-22-2.5-2. The Governor of Florida recently instructed Florida government agencies to “include a sunset provision in all proposed or amended rules,” which “may not exceed five years unless otherwise required by existing statute.”

Although the New Jersey law permits the Governor, within five days of the expiration of a rule, to restore it, the Department does not include a similar provision in this proposed rule. That is because the RFA contains no such similar provision and the Department is giving itself ten years, as opposed to seven years, to perform Assessments and (when required) Reviews of Regulations.

Letter from Gov. Ron DeSantis to Florida Agency Heads (Nov. 11, 2019),

https://www.floridahasarighttoknow.myflorida.com/content/download/147113/980326/FINAL_Directive_to_Agencies_11.19.pdf.

Experience in the States suggests that sunset provisions can be an important tool to ensure reviews take place. An analysis of regulation in all 50 States found that for a reduction in both regulatory creation and enforcement, “[t]he single most important policy in a state is the presence of a sunset provision.”

On the other hand, one report stated that, despite their initial popularity in the States,

sunset provisions fell out of favor, not because they did not produce more cost-effective, cost-justified regulation, but because sunset requirements did not provide sufficient legislative control over executive agencies.

But that observation is inapplicable to the Department, because this final rule concerns the Department's review of its own regulations. Noting the benefits of sunset provisions, the report added that sunset “provisions have been responsible for the analysis of thousands of state regulations and, on average, the repeal of twenty to thirty percent of existing regulations and the modification of another forty percent.”

Russell S. Sobel & John A. Dove,

State Regulatory Review: A 50 State Analysis of Effectiveness

36 (Mercatus Ctr., Working Paper No. 12-18, 2012),

https://www.mercatus.org/system/files/State-Regulatory-Review-50-State-Analysis-Effectiveness.pdf.

Jason A. Schwartz,

52 Experiments with Regulatory Review: The Political and Economic Inputs into State Rulemakings,

Inst. for Policy Integrity, Rep. No. 6, at 33 (Nov. 2010),

https://policyintegrity.org/files/publications/52_Experiments_with_Regulatory_Review.pdf.

See id.

(noting that “North Carolina was first to repeal its sunset law, and many other states quickly followed suit” after concluding that “sunset provisions quickly proved to be an expensive, cumbersome, and disappointing method for enhancing legislative control”).

Id.

at 23-24. The report added, without citing a great deal of empirical evidence, that “sunset requirements produce perfunctory reviews and waste resources.” This appears to be based on a law review article that noted, not that retrospective reviews were per se perfunctory, but that “unless adequate resources are provided, the reviews

may be

relatively perfunctory and meaningless, wasting whatever resources are expended.”

See

Neil R. Eisner & Judith S. Kaleta,

Federal Agency Reviews of Existing Regulations,

48 Admin. L. Rev. 139, 160 (1996) (emphasis added). But this law review article noted that adding “sunset” dates to regulations unless they are reviewed was “likely to ensure that a review is done.”

Id.

As explained herein, the Department intends to commit adequate resources to its reviews if this proposed rule were to be finalized. The law review article said that sunset provisions should be used only in narrowly focused situations where it is determined that it is necessary to apply some “pressure” and only where assessments are made of the available resources and the benefits to be derived from the review.

Id.

But the article was written in 1996. As discussed herein, subsequent experience with efforts short of a forcing mechanism suggest that forcing mechanisms are needed to ensure review of a wide array of Department regulations, and that the benefits from these retrospective reviews would be substantial.

Experience outside the United States also suggests the utility of sunset provisions. The Office for Economic Co-Operation and Development (OECD) analyzed regulatory practices in the European Union. In a 2010 report, the OECD recommended, for “[t]he management and rationalization of existing regulations,” that Germany “[k]eep up the `spring cleaning' of legislation at regular intervals” and “consider the inclusion of a review mechanism in individual draft regulations, or even [include] a sunset clause (beyond which the law automatically expires) where appropriate.”

With respect to the United Kingdom's regulatory program, the OECD noted “sunset clauses are also helpful” in order “to remove unnecessary burdens in legislation.”

Throughout the 2010 report, the OECD repeatedly noted the value of retrospective regulatory review.

OECD,

Better Regulation in Europe: Executive Summaries,

GOV/RPC (2010)13, at 113,

http://www.oecd.org/gov/regulatory-policy/45079126.pdf.

Id.

at 46.

See, e.g., id.

at 107 (“The

ex post

evaluation of regulations which is provided for in the impact assessment process provides a framework in principle for checking what really happens, and whether regulations have actually achieved the objectives originally set.”).

In 2019, the OECD published an additional survey regarding regulatory review practices in the European Union. The OECD again noted the utility of sunset provisions, describing them as a “useful `failsafe' mechanism to ensure the entire stock of subordinate regulation remains fit for purpose over time.”

The report noted as of its 2019 date that sunset provisions are in place for at least some regulations in nine different countries, including the United Kingdom, France, and Germany.

OECD,

Better Regulation Practices across the European Union,

at ch. 4, Box 4.1 (2019),

https://www.oecd-ilibrary.org/sites/9789264311732-en/1/2/4/index.html?itemId=/content/publication/9789264311732-en&_csp_=07701faff9659027b81a5b5ae2ff041c&itemIGO=oecd&itemContentType=book.

Id.

at ch. 4, Table 4.1.

In 2009, the Republic of Korea (ROK) enacted a law under which about 20% of the existing regulations are to be reviewed on a regular basis (about every 3 to 5 years) and become invalid if they

are found to lack feasibility.

Under the ROK's “review and sunset,” there is a duty to carry out a review of a regulation on a specified schedule. This sunset clause was established upon the idea that even a rational regulation needs to be examined periodically to determine its grounds for remaining in force, as its validity may be compromised under any change in circumstances or its characteristics.

An OECD report stated that “[g]iven such rationale, the sunset clause is considered as a critical component of efforts in regulatory quality improvement.”

OECD,

Latest Developments on Korea's Regulatory Policy,

at 2,

https://www.oecd.org/gov/regulatory-policy/45347364.pdf.

OECD Reviews of Regulatory Reform, Regulatory Policy in Korea, Toward Better Regulation, at 86 (2017),

https://publicadministration.un.org/unpsa/Portals/0/UNPSA_Submitted_Docs/2019/4cd3e219-c819-40f3-8246-7a024d9a82a9/2020%20UNPSA_the%20Regulatory%20Reform%20Sinmungo_Evaluation%20Report_27112019_032807_e4d166a9-f6ef-4a6c-9aaf-99748fa94284.pdf?ver=2019-11-27-032807-637.

Id.

These authorities indicate an emerging awareness that sunset provisions are useful in ensuring retrospective regulatory review. This is consistent with the Department's experience over the last 40 years, which suggests that, absent a sunset provision or automatic expiration date, Congressional and Presidential directives to perform periodic retrospective reviews of regulations have limited success.

Indeed, previous Administrations have recognized the benefits of sunset provisions. In a June 2015 report, the Department of Treasury's Office of Economic Policy, the Obama Administration's Council of Economic Advisors, and the Department of Labor discussed sunset provisions as applied to occupational licensing.

That report found evidence that sunset reviews that automatically terminate regulatory boards and agencies absent legislative action assist with “removing unnecessary licensing.”

The report explained that sunset review can be “useful because, even if licensing was justified when first introduced, technological and economic changes may have rendered it unnecessary or overly restrictive.”

The report found “[p]eriodic examination of existing rules is thus helpful in maintaining the quality of occupational regulation.”

Occupational Licensing: A Framework for Policymakers,

The White House, at 48-50 (July 2015),

https://obamawhitehouse.archives.gov/sites/default/files/docs/licensing_report_final_nonembargo.pdf.

Id.

at 48.

Id.

at 49.

Id.

The report also suggests that to strengthen sunset provisions in the States, sunset commissions responsible for conducting the cost-benefit analysis should be provided adequate resources; the cost-benefit review process should be insulated against political interference; a minimum number of votes should be required to overrule the sunrise agency's recommendation; and specialized committees within legislatures be appointed to work with the agency in charge of conducting the review.

See id.

at 42. As discussed herein, the Department believes it has adequate resources to conduct the required reviews. As discussed in footnote 92, it is not clear that a federal agency can legally completely insulate its reviews from supervision by the agency's leadership, but the Department believes that its retrospective reviews will generally be performed by career civil servants. Lastly, the Department cannot require Congress to appoint committees to work with the Department officials performing the retrospective reviews, but the Department would welcome the opportunity to discuss reviews with Congressional staff if Congress so chose. The report also suggested “sunrise” reviews can be more effective than sunset reviews. But for already-existing regulations, the Department cannot perform sunrise reviews, so the Department is has decided to take advantage of the benefits of sunset reviews. Moreover, the Department already engages in “sunrise review” to some extent when it develops regulatory flexibility analyses,

see

5 U.S.C. 603, 604, and regulatory impact analyses (notably, such reviews did not occur for regulations that preceded the RFA, many of which still remain in effect).

Professor Greenstone has similarly recommended the automatic repeal of regulations if their benefits and costs are not periodically assessed:

[Another] step in reforming our regulatory system is to require that all regulations contain rules specifying the date by which the regulatory review board has to assess their costs and benefits. If the regulatory review board fails to meet one of these deadlines, then the regulation should be repealed by default. The purpose of this sunset provision is to ensure that all regulations are evaluated carefully and do not stay on the books just because they have been on the books in the past.

Greenstone,

Toward a Culture of Persistent Regulatory Experimentation and Evaluation,

in New Perspectives on Regulation 111, 121 (David Moss & John Cisternino eds., 2009).

Professor Greenstone suggested that this review could cause the regulation to be expanded if supported by evidence.

According to Professor Greenstone, this would “ensure that ineffective regulations are removed and that society fully benefits from the effective ones.”

Id.

at 123. Professor Greenstone made a separate suggestion that a regulatory review board be created with the authority to assess the effectiveness of regulations and repeal regulations deemed ineffective. The Department considered this in the proposed rule. First, the Department is concerned that such a board raises legal concerns, since many Department regulations can only be repealed by the Secretary, not by an independent board. Second, Professor Greenstone proposed the independent review board on the grounds that (1) it would remove the board's functions as much as possible from political control, and (2) those most deeply involved in implementing a regulation are likely to see the benefits more clearly than the costs.

Id.

at 119-121. While these concerns are understandable, the Department believes it is capable of performing the Review. As an initial matter, those who conduct the Review would not necessarily be those in the Department who implement the Section being Reviewed. Moreover, as described herein, Reviews must be performed in such a manner that they can withstand judicial review under the arbitrary and capricious standard. This would require the Reviews to meet a minimum standard of rigor and require them to consider relevant factors. Moreover, many regulations legally cannot be amended or repealed without authorization by a political appointee.

This final rule seeks to advance democratic values and apply the lessons learned from States, foreign jurisdictions, and the academic community. This final rule would apply the benefits of automatic-expiration-absent-periodic-review to a broader array of regulations than is currently being reviewed by the Department.

E. The Need for Widespread Retrospective Review

The evidence suggests the Department should conduct retrospective review on a broad scale to improve impact estimates and enhance the Department's ability to fulfil the goals motivating its regulations. As explained in Section C, studies of federal regulations consistently find that, in most sampled regulations, the ex ante estimate of costs and benefits is not within +/−25% of the ex post observation. Although these samples were not necessarily representative, taken together they suggest that many federal regulations are estimated after the fact to have real-world impacts that differ from the estimated impacts at the time the regulations were promulgated. Therefore, HHS believes that review should be done on a broad scale, rather than reviewing a handful of regulations that happen to be brought to the Department's attention.

The artificial intelligence review described in this final rule also suggests that large numbers of Department regulations would benefit from retrospective review. The artificial intelligence review identified that 85% of Department regulations created before 1990 have not been edited; the Department has nearly 300 broken citation references

in the CFR; and there are more than 50 instances of HHS regulatory requirements to submit paper documents in triplicate or quadruplicate.

This suggests that humans performing a comprehensive review of Department regulations would find large numbers of requirements that

would benefit from review, and possibly amendment or rescission.

As discussed below, HHS has roughly 18,000 regulations total.

85 FR 70102.

The HHS response to the COVID-19 pandemic also indicates that the Department should perform widespread retrospective reviews. During the COVID-19 pandemic, the Department's response has largely consisted of waiving regulatory requirements or exercising enforcement discretion to not enforce certain regulatory requirements to enhance the Nation's response to the pandemic. Examples include waivers to increase hospital capacity, ease restrictions on services rendered by medical residents, and allowing patients to seek more services via telehealth.

On November 25, 2020, the Department published in the

Federal Register

a non-exhaustive list of 382 enforcement discretion announcements, waivers or changes to regulations, agency guidance materials, or compliance obligations made to respond to the COVID-19 pandemic and its impact on the healthcare industry.

See

Regulatory Relief to Support Economic Recovery; Request for Information (RFI), 85 FR 75720 (Nov. 25, 2020) at Attachment A. The Department should learn from the pandemic and conduct widespread reviews to determine whether these or other regulatory requirements could hinder the Nation's response to a future emergency, or otherwise should be amended or rescinded. Determining whether the Department's existing 18,000 regulations are having appropriate impacts is a worthwhile enterprise, even if it somewhat reduces the time spent issuing new regulations. Some commenters at the November 23, 2020 public hearing on the proposed rule suggested that the proposed rule was akin to using a missile to kill a mouse. But the literature and the Department's experience indicate the problem is not a mere mouse.

See, e.g.,

Coronavirus waivers and flexibilities,

CMS.gov, https://www.cms.gov/about-cms/emergency-preparedness-response-operations/current-emergencies/coronavirus-waivers

Thus, there is a need for widespread retrospective review, but it is nearly impossible to see how a satisfyingly comprehensive review could occur without a sunset mechanism. The Department recognizes that in many cases the Department had strong reasons for issuing its regulations. Examples of such motivations might include enhancing food safety,

increasing access to health insurance,

or increasing the incentive for Temporary Assistance for Needy Families recipients to work.

E.g.,

21 CFR part 112.

E.g.,

45 CFR part 147.

45 CFR part 261.

This final rule is not a reversal of a prior Department policy, but in fact an effort to enhance both (1) the fulfillment of the existing policies that led to the Department's regulations and (2) the Department's longstanding desire to comply with the RFA and periodically review its regulations. In any event, this final rule provides the reasoned explanation that would be required if it were a change in policy.

See FCC

Fox TV Stations, Inc.,

556 U.S. 502, 515-16 (2009) (“[A] reasoned explanation is needed for disregarding facts and circumstances that underlay or were engendered by the prior policy,” but the agency “need not demonstrate to a court's satisfaction that the reasons for the new policy are

better

than the reasons for the old one; it suffices that the new policy is permissible under the statute, that there are good reasons for it, and that the agency

believes

it to be better, which the conscious change of course adequately indicates”) (emphasis in original).

F. Operationalization of This Final Rule

In this section, the Department summarizes aspects of how it will operationalize this final rule.

The proposed rule proposed creating a website where the Department would announce when it has commenced Assessments or Reviews. The proposed rule further proposed that the public could comment on regulations and submit comments requesting that the Department Assess or Review a regulation.

100

See, e.g.,

85 FR 70120.

In light of public comments, the Department is making these procedures more robust. Under this final rule, when the Department commences the process of performing an Assessment or Review, it shall state on a Department-managed website the sections of the Code of Federal Regulations whose Assessment or Review it is commencing. The Department shall also announce once a month in the

Federal Register

those new Assessments or Reviews that it has commenced in the last month. Some comments on the proposed rule said that announcements should be made in the

Federal Register

, which the public already monitors, rather than a separate website. Therefore, in response to these comments, in this final rule the Department commits to announcing once a month in the

Federal Register

which new Assessments and Reviews it has commenced. The Department will also create a docket on

Regulations.gov

for each Assessment or Review that the Department is conducting. These docket numbers will be referenced in the

Federal Register

announcements. The public will be able to submit comments to the dockets of each rulemaking being Assessed or Reviewed. Each docket shall specify the date by which comments must be received. There shall also be a general docket on

Regulations.gov

where the public can submit comments requesting that the Department Assess or Review a regulation. This addresses the commenters' concern about commenting on a Department website, rather than via the regular

Federal Register

method. The Department anticipates that the process will be similar to that currently used by the EPA.

101

The Department also intends to publish the results of the Assessments and Reviews in the dockets for the applicable regulations.

101

See, e.g.,

Regulatory Flexibility Act Section 610 Review of the Testing and Labeling Regulations Pertaining to Product Certification of Children's Products, Including Reliance on Component Part Testing, 85 FR 52078 (Aug. 24, 2020).

To further aid the public and the Department, the Department is placing at

https://www.hhs.gov/regulations/federal-registry/index.html

a list of Department rule makings; the year they were initially promulgated; the last year the rule making was amended; and the

Federal Register

citation from the time the rule making was amended. This list was generated with artificial intelligence and the Department believes it is accurate, but it is conceivable that some Department regulations are not included. This list includes all Department regulations, including those that may be exempt from this final rule. The Department believes it would be informative to the public to provide a list of all Department regulations, as well as their

Federal Register

citations and promulgation dates. The Department intends to update this list annually with newly-issued regulations.

In addition, the Department intends to create on its website a dashboard that shows its progress on its Assessments and Reviews, including when it commenced those Assessments and Reviews; its progress; and when it expects them to be completed. If they so

choose, the public can view this dashboard to see the Department's progress on its Assessments and Reviews of particular regulations. The dashboard will also help to keep the Department on track to timely complete Assessments and Reviews.

102

The Department's information technology personnel are currently undertaking a large data migration that had been planned for a long time. Therefore, the dashboard will not be active as of the date this final rule is published. But the Department intends for this dashboard to be active well in advance of 2026, when the first Assessments and Reviews must be completed.

Finally, the Department will, within nine months of publication of this final rule, publish in the

Federal Register

its schedule for conducting Assessments and Reviews. The Department's goal is to provide the public with more information on which regulations it intends to Assess or Review in the next 24 months, so that the public can plan ahead for any desired engagement on those regulations. The Department will subsequently publish in the

Federal Register

its schedule for conducting Assessments and Reviews of regulations that the Department does not intend to review in the first 24 months. However, the Department expects that this schedule will be aspirational in nature to ensure Departmental flexibility to depart from the plan if needed to respond to changing circumstances. The Department will update the plan at appropriate intervals based on its progress.

III. Statutory Authority and Legal Basis for This Final Rule

The statutory authorities supporting this final rule are the statutory authorities for the Department's existing regulations.

103

85 FR 70103. The Department finalizes herein its proposal to amend its regulations to add expiration dates unless the Department periodically conducts the required Assessment or Review of the regulations, or an exception applies. Some of the Department's primary rulemaking authorities include:

103

Including certain ones inadvertently not listed in the proposed rule.

• Section 701(a) of the Federal Food Drug and Cosmetic Act (FD&C Act), 21 U.S.C. 371(a), which authorizes the Secretary to “promulgate regulations for the efficient enforcement of [the FD&C Act], except as otherwise provided in this section”;

• Section 1102 of the Social Security Act, 42 U.S.C. 1302, which provides that the Secretary “shall make and publish such rules and regulations, not inconsistent with this Act, as may be necessary to the efficient administration of the functions with which [he] is charged under this Act”;

• Section 1871 of the Social Security Act, 42 U.S.C. 1395hh, which provides that “the Secretary shall prescribe such regulations as may be necessary to carry out the administration of the insurance programs under this title”; and

• 5 U.S.C. 301, which provides that “[t]he head of an Executive department or military department may prescribe regulations for the government of his department, the conduct of its employees, the distribution and performance of its business, and the custody, use, and preservation of its records, papers, and property. This section does not authorize withholding information from the public or limiting the availability of records to the public.”

It complies with the Administrative Procedure Act (APA) to amend regulations to add dates by which the regulations expire unless a review of the regulation is timely performed. An agency can, through notice-and-comment rulemaking, amend its regulations to provide that they expire at a future date.

104

An agency can also provide that its regulations expire when an event occurs or ceases to occur.

105

That is what this final rule does.

104

See, e.g.,

Amendment to the Interim Final Regulation for Mental Health Parity, 70 FR 42276, 42277 (July 22, 2005) (amending interim final rule to provide that “the requirements of the MHPA interim final regulation apply to group health plans and health insurance issuers offering health insurance coverage in connection with a group health plan during the period commencing August 22, 2005 through December 31, 2005. Under the extended sunset date, MHPA requirements do not apply to benefits for services furnished after December 31, 2005.”);

see generally Clean Air Council

Pruitt,

862 F.3d 1, 9 (D.C. Cir. 2017) (an agency can amend or revoke a legislative rule through notice-and-comment rulemaking).

105

See, e.g.,

Control of Communicable Diseases; Foreign Quarantine, 85 FR 7874, 7874 (Feb. 12, 2020) (providing that, unless extended, interim final rule “will cease to be in effect on the earlier of (1) the date that is two incubation periods after the last known case of 2019-nCoV, or (2) when the Secretary determines there is no longer a need for this interim final rule”); Medicare and Medicaid Programs, Clinical Laboratory Improvement Amendments (CLIA), and Patient Protection and Affordable Care Act; Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency, 85 FR 54820, 54820 (Sept. 2, 2020) (providing that an interim final rule applies “for the duration of the [public health emergency] for COVID-19”); U.S. Dep't of Transp., Final Regulatory Impact Analysis: Amendment to Federal Motor Vehicle Safety Standard 208 Passenger Car Front Seat Occupant Protection, at XII-35 (July 11, 1984),

http://www-nrd.nhtsa.dot.gov/Pubs/806572.pdf

(explaining that “[i]f mandatory use laws are passed that will cover 67 percent of the population effective September 1, 1989, the rule will be rescinded”).

Moreover, Agencies can—and often do—issue one rule that applies to many other agency rules, rather than amending or rescinding each affected regulation individually. To take one example, in 2008 the Department revised the definition of “entity” at 42 CFR 411.351.

See

73 FR 48434, 48751 (Aug. 19, 2008). The revised definition had the effect of changing the meaning of “entity” each time it was used in 42 CFR part 411, subpart J. It would be burdensome to specify the meaning of “entity” each time it appears in Subpart J, so the Department issued one definition that broadly applied to all sections of Subpart J.

There are many other examples where an Agency issues a regulation that applies to, amends, rescinds, or supersedes many other regulations.

106

This avoids an unnecessarily cumbersome process. A court ruling that agencies must amend each individual regulation would call into question large numbers of agency regulations and impose substantial burdens on agencies (and the Office of the Federal Register, which would be required to print the same text over and over) when promulgating future regulations.

106

See, e.g.,

21 CFR 1.1(b) (“the definitions and interpretations of terms contained in sections 201 and 900 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321 and 387) shall be applicable also to such terms when used in regulations promulgated under that act”); 7 CFR 786.113 (“

Notwithstanding any

other regulation,

interest will be due from the date of the disbursement to the producer or other recipient of the funds”); 40 CFR 455.21

(“

Notwithstanding any

other regulation,

process wastewater flow for the purposes of this subpart does not include wastewaters from the production of intermediate chemicals”); 45 CFR 611.12 (“All regulations . . . heretofore issued by any officer of the Foundation which impose requirements designed to prohibit any discrimination against individuals on the ground of race, color, or national origin under any program to which this part applies, and which authorize the suspension or termination of or refusal to grant or to continue Federal financial assistance to any applicant for or recipient of such assistance for failure to comply with such requirements,

are hereby superseded

to the extent that such discrimination is prohibited by this part,” with certain exceptions); 7 CFR 3430.1 (“In cases where regulations of this part conflict with existing regulations of NIFA in Title 7 (

i.e.,

7 CFR parts 3400 through 3499) of the Code of Federal Regulations,

regulations of this part shall supersede”

); 24 CFR 943.118 (“The participating PHAs must adopt the same fiscal year so that the applicable periods for submission and review of the joint PHA Plan are the same.

Notwithstanding any other regulation,

PHAs proposing to form consortia may request and HUD may approve changes in PHA fiscal years to make this possible”) (emphasis added).

Moreover, in this rule making the Department considered each individual Department regulation, and, as discussed further, decided to exempt certain regulations. The Department concluded that this final rule should apply to and amend its remaining regulations, because this final rule will enhance both (1) the fulfillment of the existing policies that led to those

regulations and (2) the Department's longstanding desire to comply with the RFA and periodically review its regulations. There is a need for widespread retrospective review, but it is nearly impossible to see how a satisfyingly comprehensive review could occur without a sunset mechanism. The Department recognizes that in many cases the Department had strong reasons for issuing its regulations. Examples of such motivations might include enhancing food safety,

107

increasing access to health insurance,

108

or increasing the incentive for Temporary Assistance for Needy Families recipients to work.

109

These are all important policy goals that the Department wishes to achieve. This final rule is intended to further these goals, as well as the other goals motivating the Department's regulations. The literature and the Department's experience suggest that large numbers of regulations are having impacts that, over time, differ from what was estimated at the time the regulations were promulgated. Therefore, the Department needs to conduct periodic reviews of its regulations to determine whether the policy goals behind the regulations are in fact being effected (and if amending those regulations could more effectively further those goals). The Department concluded that the benefits of retrospective review, and need to more strongly incentivize it, justified this course of action. Forty years of experience since the RFA's enactment; the decades since relevant Executive Orders were enacted; and other Federal government efforts to spur the Department to conduct more retrospective reviews indicate that, absent this final rule's pushing mechanism, the Department will not conduct as many retrospective reviews as desired. In addition, the Department will consider each individual Section when conducting Assessments and (if needed) Reviews.

107

E.g.,

21 CFR part 112.

108

E.g.,

45 CFR part 147.

109

45 CFR part 261.

The Department also notes the text of 5 U.S.C. 610 indicates Congress believed agencies had the authority to periodically review at least those regulations that have a significant economic impact upon a substantial number of small entities (and that the agency had the authority to assess which of its regulations have such an impact).

The Department received comments on the statutory authority for the proposed rule. Below the Department summarizes these comments and responds to them.

IV. Provisions of Proposed Rule and Response to Public Comments

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The Department proposed to add substantively identical provisions to Titles 21, 42, and 45. For concision, in this section the Department describes these provisions once, rather than repeating the same substantive provisions several times. The Department uses the phrase “[XX]” to refer to the fact that substantively identical provisions will be added to chapters in Titles 21, 42, and 45.

On November 4, 2020, HHS published in the

Federal Register

the proposed rule.

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Part of the proposed rule had a 30-day public comment period, and part of it had a 60-day comment period to comply with 42 U.S.C. 1395hh(b). In response to the publication of that proposed rule, HHS received 486 comments from industry trade organizations, healthcare providers, businesses, legal/policy think tanks, non-profit public interest groups, and members of the U.S. Congress during the initial 30-day public comment period, and 532 comments total throughout the 60-day comment period. Commenters generally opposed the proposed rule, although some commenters supported it. Roughly a quarter of commenters requested that the Department withdraw the proposed rule. Some commenters requested that the Department extend the public comment period.

111

See

85 FR 70096.

The Department also held a public hearing on the proposed rule on November 23, 2020. Twenty-one members of the public, all representing either unions, public-interest groups, or industry trade organizations, spoke. The speakers at the public hearing all either expressed concerns about the proposed rule, opposed it, or requested that the Department withdraw it. Both a transcript and recording of the public hearing are available at

https://beta.regulations.gov/docket/HHS-OS-2020-0012/document.

In the following sections, HHS includes a summary of the provisions of the proposed rule, the public comments received, HHS's responses to the comments, and any changes made to the regulatory text as a result.

General Purpose of the Proposal and General Comments

5 U.S.C. 610 and Executive Orders 12866 and 13563 direct agencies to devise plans to periodically review certain of their regulations using certain criteria. By requiring the Department to periodically perform such reviews, this final rule implements Congress's and the President's desires for retrospective review of regulations. This final rule will lead to the amendment or rescission, where appropriate, of Department regulations that have a significant economic impact upon a substantial number of small entities. This final rule also furthers democratic values such as accountability, administrative simplification, transparency, and performance measurement and evaluation.

General Comments and Responses

Comment:

A few commenters stated that the retrospective review of regulations proposed by the rule is an important and necessary tool for improving agency regulation and minimizing unnecessary regulatory burdens. Commenters listed the many benefits of this approach, including the refining of regulations using real-world data and experience, improving government accountability, avoiding the natural tendency of agency officials charged with achieving public benefits to focus on pursuing those benefits and not on reducing the burdens of their regulation to the public, and preventing the continued enforcement of obsolete, outdated, and even unintentionally harmful regulations. Some commenters stated that it is axiomatic that periodic retrospective review is essential to the proper functioning of the executive branch.

Response:

The Department agrees, and believes this final rule will achieve these benefits.

Comment:

A few commenters stated that beyond simply cutting regulatory burdens, the scheduled assessments and, when necessary, reviews of existing HHS regulations afford HHS the opportunity to keep regulations up to date with modern trends. Commenters noted that not only will this rule establish an opportunity for the Department to terminate obsolete regulations that are no longer fit for purpose or that are judged to be ineffective, but it will also give HHS and the public a reliable framework and a set of tools to continually keep regulations up to date with evolving circumstances.

Response:

The Department agrees and emphasizes that the benefits of retrospective review—some of which are cited by these commenters—are substantial. As the proposed rule noted, Professor Cass Sunstein, who served as OIRA Administrator from 2009 to 2012, has observed that “the requirement of retrospective analysis,” if “firmly institutionalized,” “would count as the most important structural change in regulatory policy since the original

requirement of prospective analysis during the Reagan Administration.”

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Cass R. Sunstein,

The Regulatory Lookback,

94 B.U. L. Rev. 579, 584 (2014).

Comment:

A large number of commenters stated that the proposed rule will cause an additional burden to the Department and a diversion of the Department's personnel resources. Some of these commenters suggested that the regulatory review process could adversely affect the Department's ability to focus on the administration of current programs, to issue new regulations, and to appropriately review current regulations needing modification. Commenters also raised specific concern about the initial review of regulations that are over ten years old within two years after the calendar year in which this rule is finalized. Those commenters expressed concern that HHS would be unable to Assess or Review all 12,400 regulations that the Department estimates will fall under this category because of the high volume of regulations. A number of commenters stated that two years is an arbitrary and inadequate timeline for all 12,400 regulations to be Assessed or Reviewed, and some regulations could expire simply because the Department did not have enough time to conduct an Assessment or Review. Several commenters also stated that they believe the Department's estimate that 12,400 of its regulations are over ten years old is lower than the actual number, although no commenter provided an independent count of HHS regulations to support this assertion. A few commenters pointed out that after an Assessment or Review occurs, there may be additional need for rulemaking or revision of regulations, which is an additional cost the Department does not contemplate in its estimate. A few commenters stated that it was unclear where HHS plans to obtain the funding and personnel resources needed to implement this regulatory review process.

Response:

The Department has considered the public comments, and decided that, for regulations that are more than ten years old on the effective date of this final rule, the Department shall have five years, rather two as proposed in the proposed rule, to complete the Assessments and (if needed) Reviews. This will spread out the initial burden and provide the opportunity for more robust Assessments and Reviews. The regulatory impact analysis in this final rule explains how HHS has the resources and personnel to perform the Assessments and Reviews called for by this final rule. Moreover, the Regulatory Flexibility Act already calls for the Department to assess which of its regulations have a significant economic impact upon a substantial number of small entities, and to review those regulations every ten years. Therefore, assuming full compliance with the RFA, this rule does not impose any additional burden on the Department beyond what was already called for in the RFA.

To the extent there are additional burdens resulting from this regulation, HHS believes widespread retrospective review is a worthwhile enterprise. The literature and the Department's experience suggest that large numbers of regulations are having impacts that, over time, differ from what was estimated at the time of promulgation. The Department should conduct periodic reviews to determine whether the policy goals behind the regulations are in fact being effected (and if amending those regulations could more effectively further those goals). Thus, it is sensible to periodically review existing regulations, even if it takes some time away from issuing new regulations (many of which, the literature suggests, would have impacts that differ from their estimated impacts at the time of promulgation).

HHS also notes that courts “have no basis for reordering agency priorities. The agency is in a unique—and authoritative—position to view its projects as a whole, estimate the prospects for each, and allocate its resources in the optimal way.”

In re Barr Labs., Inc.,

930 F.2d 72, 76 (D.C. Cir. 1991). For the reasons discussed herein, the Department has done this, and determined that Reviews and Assessments should be a priority.

Lastly, we note that the COVID-19 pandemic imposed a tremendous, unforeseen burden on the Department, yet there has been no material drop in the Department's ability to promulgate new regulations or enforce existing regulations. This suggests that after the pandemic, the Department will be resourceful enough to perform Assessments and Reviews, as well as promulgate new regulations that need to be promulgated and appropriately enforce existing regulations.

Comment:

A few commenters stated that the benefits of this final rule are difficult to fully anticipate, and there are a number of reasons to believe that the benefits of this rulemaking will vastly outweigh the costs. For example, if HHS were to find cost savings worth 0.0025 percent of departmental spending or 0.0007 percent of national spending, the regulation would pay for itself and pass a cost-benefit test at the higher end of cost estimates.

Response:

The regulatory impact analysis for this final rule describes what the Department expects to be the primary impacts resulting from this final rule.

Comment:

A large number of commenters stated that, as proposed, this rule would divert resources from the Department's COVID-19 pandemic response efforts. Many of these commenters stated that it is irresponsible for the Department to create a retrospective regulatory review process at a time when it should be devoting all of its resources to combatting COVID-19.

Response:

HHS respectfully disagrees with this comment. Due to the changes made from the proposed rule, under this final rule the first Assessments and Reviews need not be completed until the end of 2026. The Department believes the pandemic will be over by then.

In fact, the COVID-19 pandemic has reinforced the need for this final rule. The Department's response to the pandemic has largely consisted of waiving regulatory requirements or exercising enforcement discretion to not enforce certain regulatory requirements during the pandemic.

See, e.g., Coronavirus waivers and flexibilities, CMS.gov

https://www.cms.gov/about-cms/emergency-preparedness-response-operations/current-emergencies/coronavirus-waivers;

Regulatory Relief to Support Economic Recovery; Request for Information (RFI), 85 FR 75720 (Nov. 25, 2020) at Attachment A (non-exhaustive list of enforcement discretion announcements or changes to regulations, agency guidance materials, or compliance obligations made to respond to the COVID-19 pandemic and its impact on the healthcare industry). The Department should learn from the pandemic and consider whether to retain regulatory requirements that were waived or where flexibility was provided during the Nation's response to COVID-19, as well as consider the impact its regulations could have on the response to a future pandemic or other emergency.

Comment:

A large number of commenters viewed the 30-day comment period (which began on November 4, 2020, the day that the

Federal Register

published the proposed rule and the day after the rule went on public display) as too short. A large number of these commenters stated that the proposed rule should be withdrawn for various reasons, or in the alternative, requested a longer comment period if the proposed rule was not withdrawn. Commenters' reasons for asking for an extension included lack of

advanced notice of the proposed rule, the perceived magnitude of the rule, fewer resources available to commenters due to the COVID-19 pandemic and the Thanksgiving holiday, and the number of topics on which the Department requested comment.

A large number of commenters stated that the 30-day comment period violates the Administrative Procedure Act (“APA”) because it denies meaningful “opportunity to participate in the rule making” required by 5 U.S.C. 553(c).

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A few commenters specifically mentioned that while there is no established minimum comment period prescribed by the APA, Executive Order 12866 states that the public's opportunity to comment, “in most cases should include a comment period of not less than 60 days,” although shorter comment periods have been upheld in the face of exigent circumstances.

114

Other commenters said the Department should not finalize the rule until the next Administration enters office.

113

See N.C. Growers' Ass'n, Inc.

United Farm Workers,

702 F.3d 755, 770 (4th Cir. 2012) (APA requires “meaningful” opportunity to comment);

Petry

Block,

737 F.2d 1193, 1201 (D.C. Cir. 1984) (relying on Administrative Conference of the United States' view that 30-day comment period is inadequate and 60-day comment period is the reasonable minimum time for comment).

114

Exec. Order No. 12866 of Sept. 30, 1993, 58 FR 190 (Oct. 4, 1993).

Response:

While HHS understands the commenters' desire for more time, the comment period was adequate. Neither the APA, nor any other statute requires a longer comment period for the proposed rule. Instead, the APA merely requires that “[a]fter notice required by this section, the agency shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation.” 5 U.S.C. 553(c). This occurred here. The comment period provided ample time for the submission of 486 comments by a variety of interested parties, including extensive comments by a number of entities just by the end of the 30-day period. Those comments offer a broad array of perspectives on the proposed rule. The number and comprehensiveness of the comments received disprove commenters' claim that the 30-day comment period was insufficient time for commenters to provide meaningful comment. Accordingly, after reviewing the public comments and the requests for additional time, the Department does not believe that extending the comment period is or was necessary for the public to receive sufficient notice of, and opportunity to meaningfully comment on, the proposed rule. Nor is there anything that would have required additional outreach outside of the public notice and comment process and the comment period.

Moreover, under this final rule, the public will have a robust opportunity to comment on each regulation during the Assessment or Review process.

HHS respectfully disagrees that Executive Order 12866 requires a 60-day comment period for this rule. Executive Order 12866 repeats the baseline requirement that “each agency should afford the public a meaningful opportunity to comment on any proposed regulation,” which “in most cases should include a comment period of not less than 60 days.”

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Neither Executive Order mandates a 60-day comment period. That is why many HHS, and other agency, regulations are issued with shorter comment periods. No commenter pointed to a court decision vacating a rule based on a failure to comply with an Executive Order's supposed 60-day comment period requirement. As explained above, the volume of comments received demonstrates that the public has been afforded a meaningful opportunity to comment.

116

115

see also

Testimony of The Hon. Thomas M. Sullivan, Chief Counsel for Advocacy, U.S. SBA, U.S. House of Representatives Comm. on Small Bus. Subcomm. on Reg.'s, Health Care and Trade (July 30, 2008),

122

See, e.g.,

Connor Raso,

Assessing regulatory retrospective review under the Obama administration,

Brookings Inst., (Jun. 15, 2017),

https://www.brookings.edu/research/assessing-regulatory-retrospective-review-under-the-obama-administration/.

Comment:

A large number of commenters stated that the proposed rule would be unnecessary and duplicative of the Department's existing efforts to review its regulations. These commenters stated that the Department already updates some of its rules annually, and has updated other non-annual rules in the past. Other commenters believe that HHS is already doing a fulsome review as required by the RFA. Several commenters stated that in 2011, the Department posted its final plan for retrospective review of existing regulations, and from 2012-2016 it provided semi-annual updates on its website listing the rules undergoing or scheduled for review. Some commenters suggested that previous executive orders that called for periodic review of existing regulations are a sufficient means of ensuring the Department is conducting these periodic reviews. Commenters suggested that the Department continue to conduct retrospective reviews using its already established process and provide regular updates to the public on its progress. Other commenters stated that the Department does not address why it failed to perform the required regulatory reviews in the past, nor how the process proposed in the proposed rule will make a difference.

A few commenters noted that even though previous executive orders have prioritized regulatory reviews, most observers to date note that these kinds of reviews have failed to be institutionalized by agencies, including HHS. These commenters cited evidence suggesting that despite efforts to review regulations over the years and to reduce regulatory burdens, the total number of regulatory restrictions that have been issued by HHS continues to grow year after year, except for two brief periods around 1980 and during the mid-1990s (perhaps as part of deregulatory efforts).

Response:

The Department respectfully disagrees that this final rule is unnecessary and duplicative. While commenters are correct that HHS annually updates the annual Medicare payment rules, those rules and certain other rules that are updated annually are exempt from this final rule. This final rule also exempts the rules at 42 CFR part 73, since those are periodically reviewed. Regarding the 2011-2016 retrospective review plan and reviews, that effort was helpful but sporadic, not sustained. As explained in the proposed rule, these efforts only resulted in review of a small fraction of rules.

See

85 FR at 70099. The failure to institutionalize retrospective review further underscores the need for this final rule and the review process it is implementing. A few instances of the Department taking the initiative to review its regulations cannot reasonably be considered a sufficient regulatory review when thousands of regulations that have been promulgated over the decades have not been touched.

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See, e.g.,

85 FR at 70111 (explaining that as of 2019, 85% of Department regulations created before 1990 had not been edited, and the Department had nearly 300 broken citation references in the CFR).

Comment:

Many commenters questioned the Department's plan for personnel resources to conduct the Reviews prescribed by this final rule. These commenters believe that the Department underestimated the number of people who would be needed to conduct the Reviews, and stated that the personnel resources would be better utilized on other projects. For example, some commenters stated that the Department is already too slow in promulgating certain regulations, and should task its employees with carrying out the Department's existing duties.

Response:

The regulatory impact analysis for this final rule describes the personnel resources that the Department envisions being used to conduct Assessments and Reviews. The

sensitivity analysis therein addresses the possibility that costs could be lower than estimated in the proposed rule. Periodically reviewing regulations with a significant economic impact upon a substantial number of small entities is an existing Department duty. Moreover, as discussed elsewhere herein, retrospective review can yield tremendous benefits. The literature and the Department's experience suggest that large numbers of regulations are having impacts that, over time, differ from what was estimated at the time the regulations were promulgated. Therefore, the Department should prioritize conducting periodic reviews of its regulations to determine whether the policy goals behind the regulations are in fact being effected (and if amending those regulations could more effectively further those goals).

Comment:

A few commenters questioned whether the Department should have employees Assess or Review regulations if those employees are not responsible for implementing them. These commenters stated that if reviewers have not worked on matters connected with the regulations they are Reviewing, those reviewers may not have an adequate understanding of the regulations, which could lead to the expiration of regulations that are essential to the successful operation of the Department's programs.

One commenter also disagreed with the premise of the Department's use of career civil servants to conduct regulatory reviews. This commenter stated that the proposed rule was logically inconsistent because it “maligned” career public servants at the Department for not reviewing the Department's regulations, but also proposes to task these same individuals with carrying out the proposed review process.

Response:

Which Department officials Assess or Review particular regulations will be decided on a case-by-case basis, but those conducting Assessments and Reviews will generally be employees who are familiar with those regulations, as well as technical experts, including economists. The Department strongly disagrees with the comment that the proposed rule “maligned” career civil servants. The proposed rule quoted a law professor who was suggesting several reasons why retrospective reviews do not occur as often as desired. The Department believes career civil servants can capably Assess and Review regulations, just as they capably conduct regulatory impact analyses and regulatory flexibility analyses.

Comment:

Several commenters stated that the two-year timeline for review of all regulations over ten years old was insufficient. A number of commenters suggested that the timeline be extended to five years.

Response:

The Department has considered these comments and has decided to revise the rule in light of them. Under this final rule, regulations issued more than ten years prior to the final rule's effective date will not expire if Assessed and (if necessary) Reviewed within five calendar years of the effective date of this final rule. Moreover, under this final rule, if the Secretary makes a written determination that the public interest requires continuation of the Section (as defined in the text of the final rule) in force beyond the date on which the Section otherwise would expire, the Secretary may continue the Section in force one time for a period stated in the determination, which period shall not to exceed one year.

Comment:

Several commenters stated that the proposed rule would cause significant regulatory uncertainty in the healthcare industry, which would not know which regulations may or may not expire. Some commenters stated that the proposed rule would cause uncertainty for states, which implement Federal programs and rely on Federal regulations and funding. Potential regulatory changes could create additional compliance and regulatory costs for healthcare providers which may be forced to adapt to a changing regulatory framework. Changes may also trigger regulated entities to forgo future investments because they lack regulatory clarity. For example, some commenters stated that the uncertainty created around the expiration of regulations, including those that guide eligibility for Medicaid, Medicare provider reimbursements, or certification of hospitals and clinics, could disrupt the efficient operation of critical safety-net programs, create regulatory gaps and inconsistent application of the law, and make accessing safety-net services for our most vulnerable populations even more complicated and difficult than it is today. Some commenters said the poor, people of color, and/or the LGBTQ community, would be particularly affected. Additionally, some commenters stated that the proposed rule would make it difficult for them to advise clients on how to comply with the Department's regulations. These commenters stated that if HHS determined that a regulation required modification, it should clearly publicize its intention to exercise enforcement discretion in not enforcing the then-current iteration of the regulation while the particular regulation is being modified.

Other commenters stated that the regulatory review process set forth in this rule would ensure that HHS reviews regulations as required by the RFA, which means that if HHS were currently complying with the RFA in a satisfactory manner, there would be little additional uncertainty stemming from the proposed rule.

Response:

The Department notes that there is always a possibility that regulations could be amended or rescinded, even absent this rule. The Department does not believe uncertainty among the regulated community will add significantly to the costs of this rulemaking for the following reasons. The Department's sporadic use of periodic retrospective review—notwithstanding the RFA and Executive Orders—itself leads to “uncertainty” about how robustly the Department implements directives that make for good policy.

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To the extent that the Department can maintain compliance with its obligations, this should build trust in the Department and reduce uncertainty (offsetting some or all of the uncertainty discussed by the commenters, if such uncertainty exists). Further, as noted above, the Department plans to release information about the 18,000 regulations under its authority and when they were adopted, such that any uncertainty surrounding the expiration dates of the Department's various rulemakings will be reduced substantially, if not entirely. Additional measures to mitigate private costs are discussed in the “Operationalization of This Final Rule” section of this final rule. Second, the Department notes that many states and foreign jurisdictions have sunset provisions that are a routine part of their regulatory processes. If the sunset reviews in these other jurisdictions do not create tremendous uncertainty, it stands to reason that neither will this final rule. The regulatory impact analysis for this final rule describes in more detail the sunset provisions from these other jurisdictions.

124

To the extent this uncertainty has been lessened because the public has seen how the Department has implemented these directives over the course of many years, the same can be said for this final rule once it has been implemented for several years.

Under this final rule, the regulated community has five years to adjust to the changes made by this final rule, so any reliance interests are significantly reduced as compared to the proposed rule. Where appropriate, the Department would announce the regulations for

which it is exercising enforcement discretion.

Comment:

A few commenters stated that the Department should allow reasonable reliance on a regulation while that regulation is under review, and for a reasonable time after a decision to amend, rescind or allow a regulation to expire. These commenters also stated that the final rule should allow the Department to extend a regulation for any period of time reasonably necessary for regulated entities relying the regulation to adjust their business practices.

Response:

HHS appreciates the commenters' concern regarding the reliance interests of regulated entities; however, HHS respectfully disagrees with the premises of these comments. First, HHS does not intend to allow a regulation to simply expire. And as explained in the proposed rule, the public will have the opportunity to provide comments identifying regulations that the public believes need to be Assessed and Reviewed, which mitigates the risk of inadvertent expiration.

Second, with respect to Sections that, after Review, the Department determines should be amended or rescinded, such Sections will be amended or rescinded through a separate notice-and-comment rulemaking process. Considerations about the effective dates of such amendments or rescissions, including the need to allow adequate time for transition, will be taken into account in that separate rulemaking process. Finally, Review under this final rule expressly considers “the continued need for the Section,” so regulated entities' reliance interests will be taken into account during Reviews.

Comment:

Several commenters stated that the use of artificial intelligence and machine learning technology in regulatory review is a novel and innovative approach, and members of the public should have been afforded notice of the Deloitte research project and the opportunity to comment on the use of this technology. In particular, these commenters wanted to understand if and how the technology would be used by HHS to identify the regulations that will be reviewed. Some commenters asked HHS to provide additional information regarding the methodology used, and the underlying algorithm. A few commenters stated that all code should be posted on a publicly-accessible website, consistent with best practices among academic researchers in data science.

Response:

The Department agrees that the use of artificial intelligence machine learning technology in regulatory review is a novel and innovative approach. The technology discussed in the proposed rule was initially used to perform an internal assessment of Department regulations, which is why the Department did not previously notify the public about this research project. Artificial intelligence will not be used to perform Assessments and Reviews pursuant to this final rule. While artificial intelligence can determine if a regulation has been amended in the last thirty years, it cannot at this time easily determine if a regulation satisfies the criteria listed in 5 U.S.C. 610. The artificial intelligence review was useful, because it suggested that large numbers of Department regulations would benefit from retrospective review. The technology identified that 85% of Department regulations created before 1990 have not been edited; the Department has nearly 300 broken citation references in the CFR; and there are more than 50 instances of HHS regulatory requirements to submit paper documents in triplicate or quadruplicate. This suggests humans performing a comprehensive review of Department regulations would find large numbers of requirements that would benefit from review, and possibly amendment or rescission.

Regarding the technology used to perform the 2019 analysis, the analysis was performed using a tool called RegExplorer. RegExplorer is an “augmented intelligence” tool, meaning it is designed to use artificial intelligence in conjunction with subject matter experts. While RegExplorer is proprietary technology, some of the models deployed within RegExplorer include keyword technology (a structured and iterative approach to process, analyze, and return keyword search results); a clustering algorithm (a cluster is a machine-generated group of regulatory documents that have been algorithmically gathered together based on a set of similar characteristics, such as the relevant sub-agency, placement of text within the regulatory dataset, similarity of text content, and text format and structure); citation extraction and mapping; and similar section analysis.

Comment:

A few commenters asked why HHS chose to redact some of the “Regulatory Streamlining & Analysis” published by Deloitte in March 2019 that the Department cites in support of the proposed rule. These commenters pointed out that two of three bullet points in the “executive summary” slide, and all but 25 of the document's 170 pages are redacted. These commenters asked why this information was not made available to the public, and why HHS did not have a public meeting to discuss the Deloitte findings and solicit feedback on its regulatory reform ideas back in 2019.

Response:

The Department was transparent by including the Deloitte analysis in the docket for this rulemaking. The redacted information is information protected by applicable privileges, is confidential information, trade secret information, or not relevant to this rulemaking. As can be seen from the Table of Contents for the analysis, the redacted information does not relate to the machine learning analysis that was conducted to enhance regulatory reform that was discussed in the proposed rule. In November 2020, the Department held a public hearing on the proposed rule, which referred to the Deloitte presentation. The public was able to opine on the analysis at that public hearing. The Department did not have a public meeting to discuss the Deloitte findings and solicit feedback in 2019, because the Department was at the time still undergoing its internal deliberative process.

Comment:

A few commenters stated that ideally the systematic evaluation of regulations should be a regular part of the rulemaking process, with the evaluation criteria and timeline embedded within each new rule so that the regulated community has an opportunity to opine on how and when each regulation will be reviewed. Commenters suggested that HHS identify up front what data it will use to track the progress of the regulation, and commit to continually collecting the same kinds of data over time. Such a process would make future evaluation of regulations and programs easier. It would also improve public accountability because the public would have a clearer sense of what the regulation is designed to achieve, and can monitor HHS's progress.

Response:

HHS agrees with the commenters' focus on the need to systematically evaluate the effectiveness of agency regulations—indeed, the Department has proposed the instant rule in order to make such evaluations more frequent and comprehensive. The timeline for Review of a given Section is set forth in section [XX](c)(1), and the criteria for Review are set forth in [XX](d). As is current practice, the Department intends to explain in the preambles to future rules what goals the rules are intended to achieve. This will enable the public to know what goals each regulation is designed to achieve. However, the data necessary to evaluate a particular rule will differ from rule to rule, and the Department cannot

generally commit to such collection in advance and in the abstract, although it may be useful to do so in particular cases.

Comment:

One commenter suggested that HHS consider performing a cost-savings analysis for regulations receiving a Review under the proposed rule, or for that subset of Assessed regulations that are deemed significant or economically significant. Such analysis could include estimates of the costs, cost savings, and the net cost savings of the regulation.

Response:

For purposes of this final rule, the Department has decided to limit the Review criteria to the criteria listed in 5 U.S.C. 610, plus whether the regulation complies with applicable law. These are the criteria that Congress directed the Department to use in its periodic reviews, plus a review for compliance with the law. Determining the regulation's costs, as well as cost savings from amendment or rescission, will often be subsumed in the five criteria listed in 5 U.S.C. 610.

Comment:

A large number of commenters stated that the proposed rule would negatively impact programs if review efforts are underfunded, or that the proposed rule was costly and unfunded.

Response:

The Department disagrees that regulatory review efforts would be underfunded. As explained in the regulatory impact analysis, this final rule will impose relatively low costs on the Department.

Comment:

Several commenters, including Tribal governments and representatives, affiliated groups of Indian Tribes, and the IHS Tribal Self-Governance Advisory Committee, stated that the Department should have consulted with Tribal governments on the rule and failed to notify Tribal leaders and representatives of the proposed rule in violation of HHS's duty as a federal agency to consult with Tribal nations under Exec. Order No. 13175 of Nov. 6, 2000, 65 FR 67249 (Nov. 9, 2000) (E.O. 13175) and the Department's own Tribal consultation policy.

Response:

The Department and Indian Tribes share the goal to establish clear policies to further the government-to-government relationship between the Federal Government and Indian Tribes. True and effective consultation shall result in information exchange, mutual understanding, and informed decision-making on behalf of the Tribal governments involved and the Federal Government. The importance of consultation with Indian Tribes was affirmed through Presidential Memoranda in 1994, 2004 and 2009,

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and E.O. 13175. HHS believes that neither the proposed nor the final rule violate the Department's Tribal consultation policy or E.O. 13175. Subject to certain exceptions, the policy and E.O. 13175 require consultation before any action that will significantly affect Indian Tribes, or before promulgating any regulation that has Tribal implications. HHS believes that this final rule does not significantly affect Indian Tribes or have Tribal implications, as those terms are used in the policy and E.O. 13175. This final rule amends existing regulations to provide that the regulations will expire if not Assessed and (if necessary) Reviewed by certain dates. HHS intends that all rules will be Assessed and (if necessary) Reviewed timely. Therefore, this final rule would have no direct impact on Indian Tribes, beyond their costs of participation in the monitoring, Assessment, and Review processes. As explained in this final rule's regulatory impact analysis, the estimated total monitoring costs to the public over ten years is estimated to range from $52.2 million to $156.7 million using a 7% discount rate, or $58.8 million to $176.3 million over ten years using a 3% discount rate (all figures using $2020). The U.S. Census estimates that in 2019, 1.7% of the U.S. population was all or partially American Indian or Alaska Native.

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1.7% of the estimated monitoring costs would be roughly $887,400 to $2.66 million over ten years using a 7% discount rate, or $999,600 to roughly $3 million over ten years using a 3% discount rate (and the cost to Tribes could be less since not every American Indian or Alaska Native is affiliated with a Tribe). Tribes will be able to comment on regulations during the Assessment and Review processes.

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Presidential Memoranda on Government-to-Government Relations With Native American Tribal Governments, 85 FR 22951 (May 4, 1994), Presidential Memorandum, Government-to-Government Relationship with Tribal Governments, September 23, 2004,

https://www.govinfo.gov/content/pkg/WCPD-2004-09-27/pdf/WCPD-2004-09-27-Pg2106.pdf,

Presidential Memorandum on Tribal Consultation, 74 FR 57879 (Nov. 9, 2009).

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ACS Demographic and Housing Estimates,

U.S. Census Bureau,

https://data.census.gov/cedsci/table?q=United%20States&g=0100000US&tid=ACSDP1Y2019.DP05&hidePreview=true.

Comment:

A commenter stated that the rule would allow for the sunset of regulations that merely implement statutory requirements, such as Indian preference. The commenter cited as examples 42 CFR 136.41-43, 42 CFR 121, 42 CFR 136a.41-43, all of which, the commenter stated, are mandated by 25 U.S.C. 5117.

Response:

The Department respectfully disagrees. This final rule exempts from the Assessment and Review requirement “Sections whose expiration pursuant to this section would violate any other Federal law.”

See

Section [XX](g). In any event, the Department is not convinced the statutory provision cited by the commenter mandates the cited regulations. There is no obligation imposed on HHS in 25 U.S.C. 5117 to prescribe any particular regulations on Indian preference. Rather, section 5117 provides that “any employee entitled to Indian preference who is within a retention category established under regulations prescribed under such subsection to provide due effect to military preference shall be entitled to be retained in preference to other employees not entitled to Indian preference who are within such retention category.” Neither 25 U.S.C. 5117 nor 25 U.S.C. 5116 (which is referenced in 25 U.S.C. 5117) are cited as statutory authorities for the regulations cited by the commenter.

Comment:

A few commenters stated that agencies (including HHS) have long ignored the retrospective review mandate of the RFA and have failed to perform such reviews. One reason for this, according to the commenters, is that the RFA does not create incentives for federal agencies to review their regulations. These commenters stated that this final rule would solve that problem by providing a clear incentive for agencies within HHS to review their regulations to prevent their automatic expiration. Commenters stated that without such a consequence, agencies will continue to fail to conduct retrospective reviews of their regulations.

Response:

The Department cannot speak for other federal agencies and would not state that the Department has completely ignored retrospective review. But the Department would agree that it has not performed reviews as often as Congress intended. The Department agrees that this final rule will address this problem by providing an incentive to perform retrospective reviews.

Comment:

A few commenters stated that the Department failed to analyze the potential costs of rescinding regulations, and only focuses on the costs of conducting voluntary Assessments and Reviews. A few commenters stated that HHS did not assess the potential forgone benefits of expired regulations.

Response:

This is addressed in the regulatory impact analysis for this final rule.

Comment:

A few commenters stated that the Department should consider doing a regulatory impact analysis when reviewing rulemakings that predate the Regulatory Flexibility Act and have a significant economic impact upon a substantial number of small entities (“SEISNOSE”). These commenters also noted that conducting additional regulatory impact analyses would impose an additional cost to the Department, which it should account for if it chooses to do additional analysis on Pre-RFA rulemakings.

Response:

As explained in the proposed rule, more resources will be required to review regulations that predate the RFA.

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The regulatory impact analysis for this final rule accounts for the additional resources required to conduct Reviews of rule makings that predate the RFA. But the criteria listed in 5 U.S.C. 610 are the criteria that Congress directed the Department to use when reviewing regulations that predate the RFA. Therefore, for rule makings that predate the RFA and have a SEISNOSE, this final rule requires that the Review consider the factors listed in 5 U.S.C. 610, as well as whether the component Sections within those rulemakings comply with applicable law.

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See

85 FR 70115 (“Of the 273 rulemakings subject to Reviews in the first two years, the Department estimates roughly 16%, or 44, of those rulemakings were promulgated prior to the requirement for prospective regulatory flexibility analyses. As described further below, those 44 Reviews will require more Department resources than the estimated 229 Reviews of rulemakings promulgated after the prospective analysis requirement went into effect”).

Comment:

A few commenters asked for clarification on whether a regulation that is identified for amendment through the regulatory review process set forth in this final rule would be prioritized over new regulations the Department is promulgating.

Response:

In the scenario described by commenters, the Department would aim to amend the referenced regulation and also promulgate new regulations that the Department believes should be promulgated. Experience shows the Department is able to amend existing regulations and promulgate new ones at the same time.

Comment:

A few commenters asked if regulations that are sunset because they were not Assessed or Reviewed by the deadline would have to go through notice-and-comment rule making to be reissued if they were otherwise unchanged. These commenters also asked how these regulations would be prioritized by the Department.

Response:

As explained throughout the proposed rule (and this final rule), the Department is committed to dedicating adequate resources to timely Assess and Review its regulations. If a regulation did automatically expire, though, the Department would be required to undertake notice-and-comment rule making to reissue the regulation, unless one of the exceptions to notice-and-comment rule making in 5 U.S.C. 553 applies.

Furthermore, allowing for automatic reissuance of an expired regulation threatens to undermine the efficacy of this final rule. If there were no costs or obstacles to simply resurrecting an expired regulation in its original, pre-expiration form, then there would be no compelling incentive to timely Assess and Review Department regulations.

It is impossible to say at this point how the Department might “prioritize” re-issuance of expired regulations, without knowing which regulation is at issue and what other competing priorities the Department might have at the time. That said, the Department anticipates it will prioritize re-issuance of expired regulations in line with the public need for such regulation, balancing the same considerations it always does in allocating its policy-making resources. As noted above, the risk that important, “priority” regulations—those that meaningfully impact regulated entities—will expire is mitigated by the fact that interested members of the public can alert the Department to a needed Assessment or Review. Commenters have also flagged regulations to review during the public comment process on this rule.

Comment:

A few commenters stated that the Department should clarify how it will reconcile or update applicable guidance documents associated with rescinded regulations. If guidance documents remain in existence or are not updated to account for the regulatory changes resulting from the process established in this final rule, it could lead to confusion for regulated entities. A few commenters asked for clarification on whether the Department is considered to have Reviewed a regulation if the Department issues a guidance document on that particular regulation.

Response:

The Department may not issue any guidance document that establishes a legal obligation that is not reflected in a duly enacted statute or in a regulation lawfully promulgated under a statute. The Department may not use any guidance document for purposes of requiring a person or entity outside the Department to take any action, or refrain from taking any action, beyond what is required by the terms of an applicable statute or regulation.

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Therefore, any guidance document based on an expired regulation has no effect. If a guidance document addresses expired regulations as well as regulations still in effect, the Department would seek to expeditiously revise the guidance document.

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Department of Health and Human Services Good Guidance Practices, 85 FR 78785 (Dec. 7, 2020).

The Department is not considered to have Reviewed a Section simply because the Department issues a guidance document concerning that particular Section. The Department is only considered to have Reviewed a Section if, with respect to the Section, the Department has followed the procedures specified in section [XX](f) of this final rule. The Department must publish the results of the Review, including the full underlying analyses and data used to support the results (subject to any applicable privilege, protections for confidential business information, or explicit legal prohibition on disclosure), in the

Federal Register

Comment:

A few commenters asked how other enforcement agencies, such as the Office of the Inspector General or the Department of Justice, and federal healthcare program contractors, would be affected by the proposed rule. Commenters stated that a lack of coordination between agencies and other entities with equities in an expired regulation could lead to different and possibly contrary conclusions about how to proceed. These commenters also stated that this could lead to conflicting requirements, resulting in different rules in different jurisdictions. Commenters asked the Department to clarify how corporate compliance programs should advise their organizations if a regulation expires.

Response:

This final rule applies to the HHS Office of Inspector General (OIG), which is a component of HHS, although certain regulations for which OIG has enforcement responsibility are exempt, such as 42 CFR 1001.952. For regulations that were issued in coordination with another Agency, that function in concert with another Agency's regulations, or that have a specific, direct impact on regulations issued by another Federal agency, the Department shall consult with that other Agency when undertaking the Assessment or Review, and consider the other Agency's views when considering the factors described in section [XX](d). In addition, when Assessing or Reviewing regulations that require review and approval by the Attorney General under Exec. Order No. 12250 of

Nov. 2, 1980, 45 FR 72995 (Nov. 4, 1980), the Department will consult with the Department of Justice (DOJ) and provide a draft of the findings to DOJ well in advance of the Assessment or Review deadline so DOJ can review and approve prior to the publication of the findings. If an HHS regulation is amended, rescinded, or expires, no other governmental body may take a different view of the regulation's legal effect.

Regarding how corporate compliance programs should advise their organizations if a regulation expires, an HHS regulation that expires no longer has legal effect and cannot be enforced by any governmental body against a regulated entity.

Comment:

One commenter stated that HHS observes that the proposed rule's review requirements “do not impose new burdens . . . if incomplete compliance [with the Regulatory Flexibility Act] is not accounted for in the regulatory baseline.”

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But HHS's entire rationale for the proposed pule, according to the commenter, is that incomplete compliance with existing review requirements is and will continue to be a problem under the regulatory baseline (

i.e.,

absent the proposed rule).

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85 FR 70112.

Response:

HHS maintains that the proposed rule, as well as this final rule, does not impose new burdens if incomplete compliance with the RFA is not accounted for in the regulatory baseline. HHS recognizes that, after implementation of this final rule, the Department's Assessments and Reviews will likely result in an additional resource expenditure beyond what would occur absent promulgation of this final rule. This was analyzed in the Regulatory Impact Analysis of the proposed rule and in more detail (largely due to comments received) in the Regulatory Impact Analysis of this final rule. It is worth noting, though, that the burdens resulting from this final rule are burdens that Congress already intended for the Department to bear.

Comment:

A few commenters stated that the Department does not cite any reason why a regulatory review should be triggered by the age of a regulation or why ten years should be the trigger. Some commenters stated that a regulatory review could also be based on the subject matter of the regulation, its economic impact, or the number of people it affects. Other commenters pointed out that the Department also could have used a different time period other than ten years to conduct its reviews. Commenters point to the Department's citation to a number of foreign and sub-national entities that mandate the reviews of regulations after five or seven years. These commenters stated that since there are other options for the frequency of regulatory review, the proposal to have such rules automatically expire after ten years is arbitrary and capricious.

Response:

HHS respectfully disagrees. The proposed rule explained why the Department chose ten years:

The Department proposes to perform the Assessment and (if required) the Review on each Regulation every ten years. Some states provide that, unless readopted or re-reviewed, their regulations expire in seven years,

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while at least one state uses a ten-year time period.

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The Department proposes to perform the Assessment and (if required) the Review every ten years, because ten years is the period listed in 5 U.S.C. 610. The Department has many Regulations, some of which are complex, so having to perform the Assessment and Review more than once every ten years could unduly burden the Department and increase the likelihood that a Regulation inadvertently expires because it is not Assessed or Reviewed.

132

130

See, e.g.,

N.J. Admin. Code § 1:30-6.4 (2020) (regulations expire every seven years unless readopted, subject to certain exceptions); Ind. Code 4-22-2.5-2 (imposing seven-year expiration date on regulations unless readopted).

131

N.C. Gen. Stat. 150B-21.3A.

132

85 FR at 70106.

This rationale still holds. In this final rule, the Department decides to Review rules that have a SEISNOSE, because those are the rules that the RFA directed HHS to review.

Comment:

A few commenters stated that the proposed rule interferes with the RFA's procedure for regulatory review. 5 U.S.C. 610-611. These commenters note that those sections require agencies to publish plans for regulatory review, provide a schedule for revision that varies by agency, give agency heads the right to delay review for one-year periods, up to a maximum of five years, identify multiple factors that must be considered in reviewing each rule, prescribe the terms of public notice via the

Federal Register

, and specify judicial appeal procedures and criteria, including standing rights and remedies. These commenters also stated that the Department's proposed rule would scrap that process and replace it with a default of across-the-board regulatory repeal in case of inaction, without recourse, using a completely different system of judicial review premised on the underlying APA, rather than the RFA. Commenters stated that this would be a usurpation of Congress's role, and would raise constitutional questions involving balance of power between the branches. According to commenters, the Department must address this issue or else promulgating this final rule would be arbitrary and capricious.

Response:

HHS respectfully disagrees. This final rule is consistent with the RFA's requirement to publish a plan for periodic review—it

such a plan, and the RFA does not prohibit the Department from including expiration dates in its regulations. The Review process considers the five factors enumerated in the RFA.

See

5 U.S.C. 610(b). This final rule requires publication in the

Federal Register

of the results of Assessments and Reviews under section [XX](f). This final rule does not supplant or purport to foreclose any available judicial review under 5 U.S.C. 611. And with respect to section 610 compliance, the RFA's judicial-review provisions expressly cross-reference the broader APA judicial-review provisions.

See

in accordance with chapter 7.”

) (emphasis added). Because this rule is consistent with the RFA, it does not usurp Congress's role or raise constitutional separation-of-power concerns. To the contrary, it implements Congressional intent for periodic review of regulations. Section II.F of this final rule further addresses the commenters' concerns in discussing how the Department will operationalize this final rule.

Comment:

Several commenters stated that the proposed rule violates the RFA's intent as expressed by Congress. In passing the RFA, Congress expressly made the following finding: “the practice of treating all regulated businesses, organizations, and governmental jurisdictions as equivalent may lead to inefficient use of regulatory agency resources, enforcement problems and, in some cases, to actions inconsistent with the legislative intent of health, safety, environmental and economic welfare legislation.”

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These commenters stated that the proposed rule departs from the Congressional intent in passing the RFA becau

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