# Securing Updated and Necessary Statutory Evaluations Timely; Proposal To Withdraw or Repeal > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2021-23472 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** October 29, 2021 - **Citation:** 86 FR 59906 ## Text 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 1300 [Docket No. HHS-OS-2020-0012] RIN 0991-AC24 Securing Updated and Necessary Statutory Evaluations Timely; Proposal To Withdraw or Repeal AGENCY: Department of Health and Human Services (HHS). ACTION: Proposed rule. SUMMARY: The Department of Health and Human Services (HHS or Department) is proposing to withdraw or repeal a final rule entitled “Securing Updated and Necessary Statutory Evaluations Timely” (SUNSET final rule) and published in the Federal Register of January 19, 2021. The SUNSET final rule was originally scheduled to take effect on March 22, 2021. However, after a lawsuit was filed on March 9, 2021, seeking to overturn the SUNSET final rule, HHS issued an administrative delay of effective date that extended the effective date of the SUNSET final rule until March 22, 2022. HHS is now proposing to withdraw or repeal the SUNSET final rule. DATES: Submit either electronic or written comments on the proposed rule by 11:59 p.m. on December 28, 2021. ADDRESSES: You may submit comments through the Federal eRulemaking Portal: https://www.regulations.gov. Follow the “Submit a comment” instructions. Warning: Do not include any personally identifiable information (such as name, address, or other contact information) or confidential business information that you do not want publicly disclosed. All comments may be posted on the internet and can be retrieved by most internet search engines. No deletions, modifications, or redactions will be made to comments received. Inspection of Public Comments: All comments received before the close of the comment period will be available for viewing by the public, including personally identifiable or confidential business information that is included in a comment. You may wish to consider limiting the amount of personal information that you provide in any voluntary public comment submission you make. HHS may withhold information provided in comments from public viewing that it determines may impact the privacy of an individual or is offensive. For additional information, please read the Privacy Act notice that is available via the link in the footer of https://www.regulations.gov. Follow the search instructions on that website to view the public comments. FOR FURTHER INFORMATION CONTACT: Daniel J. Barry, Acting General Counsel, 200 Independence Avenue SW, Washington, DC 20201; or by email at reviewnprm@hhs.gov; or by telephone at 1-877-696-6775. SUPPLEMENTARY INFORMATION: Table of Contents I. Executive Summary A. Purpose and Coverage of the Proposed Rule B. Summary of Major Provisions C. Legal Authority D. Costs and Benefits II. Table of Abbreviations/Commonly Used Acronyms in This Document III. Background A. History of the SUNSET Rulemaking B. The Department's Review IV. Legal Authority V. Explanation of Proposed Rule To Withdraw or Repeal the SUNSET Final Rule A. Implementation Burdens on the Department and Stakeholders B. Potential Harms From the Possible and Actual Expiration of Regulations C. RFA Considerations D. APA Considerations E. Vague and Confusing Provisions VI. Preliminary Economic Analysis of Impacts A. Introduction, Summary, and Background B. Market Failure or Social Purpose of Regulatory Federal Action C. Purpose of Proposed Withdrawal or Repeal Rule D. Baseline Conditions E. Benefits of Proposed Withdrawal or Repeal Rule F. Costs of Proposed Withdrawal or Repeal Rule G. Analysis of Regulatory Alternatives to the Proposed Withdrawal or Repeal Rule VII. Federalism VIII. Consultation and Coordination With Indian Tribal Governments IX. Analysis of Environmental Impact X. Paperwork Reduction Act XI. References I. Executive Summary A. Purpose of the Proposed Rule HHS issued the SUNSET final rule on January 19, 2021. 86 FR 5694. The SUNSET final rule provides, among other things, that all regulations, subject to certain exceptions, issued by the Secretary of the Department of Health and Human Services (Secretary) or his delegates or sub-delegates shall expire at the end of (1) five calendar years after the year that the SUNSET final rule first becomes effective, (2) ten calendar years after the year of the regulation's promulgation, or (3) ten calendar years after the last year in which the Department “Assessed” and, if required, “Reviewed” the regulation, whichever is latest. 1 The SUNSET final rule was scheduled to take effect on March 22, 2021. However, after a lawsuit seeking to overturn the SUNSET final rule was filed on March 9, 2021, HHS issued an administrative delay of effective date, effective as of March 19, 2021, which postponed the effective date of the SUNSET final rule, pending judicial review, until March 22, 2022. 86 FR 15404 (Mar. 23, 2021). 1 The terms “Section,” “Assess,” and “Review” were capitalized in the preamble to the final rule where those terms have the definitions ascribed to them in the text of the final rule. For ease of readability, these terms are not capitalized in the following discussion of this proposed rule unless directly quoting or paraphrasing the final rule. After reconsideration of the comments submitted on the SUNSET proposed rule (85 FR 70096 (Nov. 4, 2020)), HHS is now issuing this notice of proposed rulemaking to withdraw or repeal the SUNSET final rule. B. Summary of Major Provisions We are proposing to withdraw or repeal the SUNSET final rule in its entirety. C. Legal Authority The primary statutory authorities supporting this proposed rule are the general rulemaking authorities for the various substantive areas under the Department's umbrella, as well as a general authorization for agencies to issue regulations regarding the administrative processes to be followed by that agency. These provisions include: 21 U.S.C. 371(a); 42 U.S.C. 216; 42 U.S.C. 1302; 42 U.S.C. 1395hh; 42 U.S.C. 2003; and 5 U.S.C. 301. D. Costs and Benefits This proposed regulatory action would reduce the time spent by the Department performing retrospective assessments and reviews of its regulations as required by the SUNSET final rule, and time spent by regulated entities and other stakeholders, including the general public, small and large businesses, non-governmental organizations, Tribes and state and local governments, on comments related to these assessments and reviews. We monetize the likely reductions in time spent by the Department and the general public as cost savings. Our primary estimate of these cost savings in 2020 dollars, annualized over 10 years, using a 3% discount rate, totals $69.9 million. Using a 7% discount rate, we estimate $75.5 million in annualized cost savings. Table 1 reports these primary estimates alongside a range of estimates that capture uncertainty in the amount of time it will take the Department to perform each regulatory assessment and review, and uncertainty in the amount of time the public will spend on comments. The impact of the proposed withdrawal provisions is analyzed in the Preliminary Economic Analysis of Impacts for this proposed rule. We seek comment on these preliminary estimates and analysis. II. Table of Abbreviations/Commonly Used Acronyms in This Document As used in this preamble, the following terms and abbreviations have the meanings noted below. Term Meaning ACA Affordable Care Act. ACF Administration for Children and Families. ACUS Administrative Conference of the United States. APA Administrative Procedure Act. CFR Code of Federal Regulations. CHIP Children's Health Insurance Program. CMS Centers for Medicare & Medicaid Services. COVID-19 Coronavirus Disease 2019. EO Executive Order. FD&C Act Federal Food, Drug, and Cosmetic Act. FDA Food and Drug Administration. FSMA FDA Food Safety Modernization Act. HHS or Department U.S. Department of Health and Human Services. IHS Indian Health Service. OCR Office for Civil Rights. OIRA Office of Information and Regulatory Affairs. PDV Present Daily Value. PHS Act Public Health Service Act. RFA Regulatory Flexibility Act. SAMSHA Substance Abuse and Mental Health Services Administration. SBA Small Business Administration. SEISNOSE Significant Economic Impact Upon a Substantial Number of Small Entities. SECG Small Entity Compliance Guide. SUNSET Securing Updated and Necessary Statutory Evaluations Timely. UA Unified Agenda. III. Background The SUNSET final rule, if implemented, would significantly alter the operations of HHS with considerable repercussions for a diverse array of stakeholders. We note that the process to promulgate the rule was extremely unusual, if not unprecedented. The rule is expansive in scope and impact, faced considerable opposition from stakeholders (and very little support), and lacked a public health or welfare rationale for expediting rulemaking. In contrast to the Department's historical approach to rulemaking in these circumstances, HHS completed the rulemaking—from the publication of the proposal to publication of the final rule—in less than three months. Upon a thorough review of the rule, we find that, given the lack of a public health or welfare reason to expedite the rulemaking and other procedural shortcomings, the Department should now reconsider the commenters' significant objections to the proposal. Moreover, based on a reanalysis of the regulatory impact of the rule, we now believe that the rule rested on a flawed understanding of the resources required for this undertaking, which implicates the likelihood that HHS regulations would expire if the final rule were to go into effect. That in turn will require the Department to make resource allocation decisions which could impede the Department's routine operations and hamper its ability to carry out other key priorities and goals, particularly during an ongoing public health emergency. Now that we have reconsidered the public comments and the regulatory impact analysis, including a consideration of the impacts that are not quantified or monetized, we believe that the rule prioritized regulatory review over other Department operations to a degree that may negatively impact many stakeholders and the general public in a variety of ways. We disagree with that approach as a matter of policy and therefore are proposing to withdraw the rule in its entirety. A. History of the SUNSET Rulemaking 1. Proposed Rule, Comment Period, and Final Rule On November 4, 2020, HHS published a notice of proposed rulemaking entitled “Securing Updated and Necessary Statutory Evaluations Timely” (SUNSET proposed rule). 85 FR 70096. Under the proposed rule, subject to certain exceptions, Department regulations would expire at the end of (1) two calendar years after the year that the SUNSET rule first became effective, (2) ten calendar years after the year of the regulation's promulgation, or (3) ten calendar years after the last year in which the Department “Assessed” and, if required, “Reviewed” the regulation, whichever was latest. Thus, under the SUNSET proposed rule, unless HHS assessed and, if required, reviewed most of its regulations within a certain timeframe specified in the rule (for most existing regulations, within two years) and every ten years thereafter, the regulations would automatically expire. The SUNSET proposed rule also provided that if a review led to a finding that a regulation should be amended or rescinded, the Department must amend or rescind the regulation within a specified timeframe (generally two years). In addition, the SUNSET proposed rule contained certain publication requirements, including that (1) the Department publish the results of all “Assessments” and “Reviews,” including the full underlying analyses and data used to support the results, in the Federal Register , and (2) the Department announce the commencement of an “Assessment” or “Review” of a particular regulation on the agency website, with an opportunity for public comment. The SUNSET proposed rule provided that comments to the proposed rule had to be submitted by December 4, 2020, except for comments on the portion of the rule amending 42 CFR parts 400-429 and parts 475-499 (Medicare program regulations), which were to be submitted by January 4, 2021. On November 16, 2020, HHS announced a public hearing, scheduled for November 23, 2020, to receive information and views on the proposed rule (Public Hearing). 85 FR 73007. Despite the short notice, over twenty interested parties provided oral comments at the Public Hearing. See Transcript, Public Hearing on the Securing Updated and Necessary Statutory Evaluations Timely Notice of Proposed Rulemaking (Nov. 23, 2020) (available at https://www.regulations.gov/document/HHS-OS-2020-0012-0501 ) (Public Hearing Transcript). All of the commenters, which included industry/trade organizations, medical organizations, and public interest organizations, 2 criticized the proposed rule in its substance, the rulemaking process, or both. 2 Commenters at the Public Hearing included: National Health Law Program, Center for Science in the Public Interest, Consumer Federation of America, Food & Water Watch and Food & Water Action, American Frozen Food Institute, American College of Obstetricians and Gynecologists, Lambda Legal, Center on Budget and Policy Priorities, American Lung Association, United Fresh Produce Association, Consumer Brands Association, Campaign for Tobacco-Free Kids, The National Confectioners Association, National Immigration Law Center, Prevent Blindness, American Feed Industry Association, Disability Rights New Mexico, Pet Food Institute, Public Citizen, American Medical Association, and Service Employees International Union. In addition to the oral comments, a wide range of stakeholders submitted over 500 comments on the proposed rule. Almost all of the comments opposed the proposal. Comments opposing the rule were submitted by, for example, health care and medical organizations; Federally Qualified Health Centers and advocates for beneficiaries of Federal health care programs; State Attorneys General and other state government representatives; Tribal governments and Tribal organizations; large industry associations and trade associations; consumer and public interest groups; and interested individuals. Only a handful of commenters supported the rule, and two of those comments were submitted by an individual who, under an agreement with HHS, also provided a draft regulatory impact analysis for the SUNSET final rule. See 86 FR 5737 n.210. Other commenters supporting the rule included independent business advocacy organizations and a nonprofit legal organization. On December 18, 2020, the Office of Information and Regulatory Affairs (OIRA) in the White House Office of Management and Budget received the SUNSET final rule for review and clearance and posted on the OIRA dashboard for E.O. 12866 Regulatory review (Ref. 1). This preceded the January 4, 2021, conclusion of the comment period for the parts of the proposed rule relating to 42 CFR parts 400-429 and parts 475-499. HHS issued the SUNSET final rule on January 19, 2021. 86 FR 5694. The final rule provides that all regulations issued by the Secretary or their delegates or sub-delegates in titles 21, 42, and 45 of the Code of Federal Regulations (CFR), subject to certain exceptions, shall expire at the end of (1) five calendar years after the year that the SUNSET final rule first becomes effective, (2) ten calendar years after the year of the regulation's promulgation, or (3) ten calendar years after the last year in which the Department “Assessed” and, if required, “Reviewed” the regulation, whichever is latest. Thus, the final rule contains the same basic expiration framework as the proposed rule, but extends the timeframe for assessment and any applicable review of most existing regulations from two calendar years to five calendar years. The final rule also provides for a one-time “continuation” of a regulation that is subject to expiration if the Secretary makes a written determination that the public interest requires continuation. The continuation period, stated in the determination, is not to exceed one year. In addition, the final rule contains exemptions for a small set of HHS regulations applicable to the Food and Drug Administration (FDA), the Centers for Disease Control and Prevention (CDC), and the Centers for Medicare & Medicaid Services (CMS). The final rule maintains the timeframe for amendment or rescission of regulations, and includes a new Federal Register publication requirement in addition to the publication requirements proposed in the SUNSET proposed rule. 3 3 The final rule also moved the location of some of the regulatory text from having a general provision covering an entire title to having a separate, duplicate provisions in different chapters of HHS regulations. 2. Litigation and Delay of Effective Date On March 9, 2021, the County of Santa Clara and several other plaintiffs sued the Department seeking to overturn the SUNSET final rule under the Administrative Procedure Act (APA). Complaint, County of Santa Clara v. HHS , Case No. 5:21-cv-01655-BLF (N.D. Cal. Mar. 9, 2021) ( Santa Clara ) (Ref. 2). On March 18, 2021, the Acting Secretary of HHS signed, pursuant to 5 U.S.C. 705 of the APA, an administrative delay of effective date (Administrative Delay Order), effective as of March 19, 2021, which extended the effective date of the SUNSET final rule until March 22, 2022. 86 FR 15404. B. The Department's Review The Department has reexamined the SUNSET final rule in light of the allegations in the Santa Clara complaint, the many comments submitted to the docket and raised at the Public Hearing, and changed policy views in the current Administration. This review has considered the processes followed in issuing the rule, its policy goals and objectives, the projected effects and analysis of impacts in its implementation, and the legal evaluation of and support for its provisions, including whether the rule is consistent with HHS statutory obligations and its mission to promote and protect the public health. It should be noted at the outset that HHS already conducts retrospective reviews, and the Department is open to feedback regarding how to improve these existing processes. The purpose of this review, however, has been to reconsider whether the new requirements imposed in the SUNSET final rule would achieve the goals of retrospective review in a manner that best serves the Department's public health and welfare mission. As described further below, based on our review, we now believe that the SUNSET final rule should be withdrawn in its entirety. However, we request comment on whether, consistent with the goals of retrospective review as well as other current policy priorities and considerations discussed in this proposed rule, the Department should consider modifying, rather than withdrawing or repealing, the SUNSET final rule. Our current view is that, to be consistent with the Department's usual practices when engaging in rulemaking, the Department should have engaged in a more robust consideration of the comments, should have more thoroughly examined the factual and legal basis of the rule, and should have given greater weight to the potential harms to stakeholders and the public health. Our thinking is informed by a reevaluation of the factual premises and conclusions in the SUNSET final rule that are central to the Department's analysis of the rule's implications and effects. In particular, based on a reanalysis of the regulatory impact of the rule, we now believe that the rule likely rested on a flawed understanding of the resources required for this undertaking, which implicates the likelihood that HHS regulations would expire, and which in turn will require the Department to make resource allocation decisions which could impede the Department's ability to carry out other key priorities. That diversion of resources will likely impede efforts to adopt new rules to address national priorities and advance equity for all, including historically underserved and marginalized communities. It is therefore potentially inconsistent with the current Administration's policies that aim to empower agencies to use appropriate tools to achieve those ends. In this section, we summarize the key considerations, addressed in greater detail throughout the preamble, that have led us to change our view of the overall merit of the SUNSET final rule and to propose to withdraw the rule in its entirety. As an initial matter, based on our review, we have found that there were several procedural shortcuts taken in the rulemaking process which may have impeded full consideration of the commenters' significant objections to the proposal. The SUNSET final rule was issued on an unusually expedited timeline of less than three months for a rule of this significance, with potential impacts not just on small businesses but also the general public, larger businesses, Tribes, States, non-governmental organizations, and other regulated entities and stakeholders across a wide range of industrial sectors. The SUNSET rule was also unusually expansive in scope, requiring review and possibly regulatory or deregulatory activity across a variety of distinct substantive statutes 4 within the jurisdiction of a several operating divisions ( e.g., CMS, FDA, CDC, Substance Abuse and Mental Health Services Administration (SAMSHA), the Office for Civil Rights (OCR), and the Administration for Children and Families (ACF)). Furthermore, it appears that the comments were not adequately considered (as evidenced by the summary mention in the preamble to the SUNSET final rule, as discussed further elsewhere in this preamble), and, contrary to policy, the Department did not consult with tribal governments. 4 See section IV below. As for the substance, we note initially that the resources required to comply with the assessment and review requirements would be substantial. For each regulation covered by the SUNSET final rule, HHS agencies would need to: Collect data to conduct the relevant evaluation (which may require time for public notice and comment, and Office of Management and Budget (OMB) review and approval, under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., in addition to the time needed for data collection and analysis); engage subject matter experts and others to complete an assessment (and possibly a review); consult with state and local jurisdictions and Tribes; open and publicize public dockets for each assessment or review that the Department conducts; consider any comments to the public docket related to the evaluation; participate in interagency review; and publish the results of this process in the Federal Register , “including the full underlying analyses and data used to support the results.” 86 FR 5712. If warranted by the results of this process, HHS agencies would then need to complete a rulemaking to amend or rescind the regulation, which would require an additional investment of agencies' resources and public input. If the Department cannot complete this extensive process within the final rule's timeframes, the regulations would then automatically expire. In addition, after that lengthy process, the Department would likely then need to revise guidance documents associated with both expiring regulations and regulations still in effect. It appears that the SUNSET final rule made at least two errors in its justification for establishing this mandatory review process. First, based on the preliminary regulatory impact analysis for this proposed rule, it appears to have miscalculated the extent of the resources needed for this undertaking. In particular, we now believe that HHS underestimated the costs of complying with the rule at least by a factor of four. Second, and relatedly, it assumed that regulations would not simply expire. See, e.g., 86 FR 5710 (“HHS does not intend to allow a regulation to simply expire”); id. at 5712 (“the Department is committed to dedicating adequate resources to timely Assess and Review its regulations”); id. at 5714 (“the Department intends to timely complete the necessary Assessments and Reviews and has built in safeguards to mitigate the risk of inadvertent expiration”). Preventing the automatic expiration of regulations, however, would require prioritizing retrospective review above many other Department programs and missions. Based on our reconsideration and expert judgment, we no longer consider that resource prioritization to be in the best interests of the public health and well-being and therefore believe that this assumption—that no regulations would expire—was not well founded. Because we now believe that the SUNSET final rule underestimated the burden on the Department and its agencies imposed by the regulatory review required by the rule and dismissed the likelihood that rules would expire, it similarly did not adequately acknowledge the difficult resource allocations decisions that the Department would confront in implementing the rule. With its finite set of resources, the Department would be faced with a quandary of how best to triage the needs of its existing programs (as well as new public health priorities) and the new regulatory review process under the SUNSET final rule. On the one hand, given the large scale of resources that would be required to conduct the required reviews, compliance with these new review requirements would lead to the diversion of resources from existing and new priority programs to the detriment of the other programs. This diversion of resources would degrade HHS' capabilities to carry out mission-critical objectives such as protecting the health of Americans, strengthening their economic and social well-being, and fostering sound, sustained advances in the sciences. On the other hand, the automatic expiration of regulations could also undermine mission-critical objectives. The Department's ability to redirect resources may be further complicated by statutory directives regarding programs and their funding as well as difficulties in finding, hiring, training, and transferring personnel to ensure adequate familiarity and technical expertise to conduct the analyses. Our reanalysis of the rule's regulatory impact, and particularly the estimated hours per assessment and review, indicates that such staffing measures likely would be needed in order to comply with the rule. It is not feasible at this time to determine with any specificity how the Department would make these difficult choices on when to divert resources from existing programs, to the extent permitted by statute and logistics, and when to let regulations expire without review. However, as described elsewhere in this proposed rule, we now predict, contrary to the statements in the SUNSET final rule, that it is very likely that some regulations will automatically expire without substantive review. This quandary has several implications. Both the potential for automatic expiration of rules, as well as the diversion of resources from existing regulatory programs, would create regulatory uncertainty, and that uncertainty could have several negative repercussions for stakeholders, including interference with planning, contracting, and product development. Further, the actual expiration of regulations could lead to confusion among stakeholders, undermine predictability and confidence in many sectors regulated by the Department, and could harm the public health in numerous ways, discussed in greater detail below. Commenters suggested that the legal analysis in the SUNSET final rule wrongly concluded that the final rule was consistent with the APA's requirements. As discussed further below (in section V.D), under the APA, HHS must consider the relevant factors and provide an adequate basis and explanation in the rulemaking record for its decision. Commenters asserted that the Department did not adequately consider the potential harms of each affected regulation automatically expiring, such as the facts and circumstances that would no longer be addressed upon automatic expiration of that regulation. In light of that absence, among other things, there may be a plausible argument that HHS's justification was inadequate under the APA. The SUNSET final rule is also based on policies that are contrary to several policy goals of the current Administration. The SUNSET final rule cited for support an Executive Order entitled “Reducing Regulation and Controlling Regulatory Costs” (E.O. 13771), which placed limits on agencies' ability to issue new regulations. 86 FR 5696 (citing 82 FR 9339 (Jan. 30, 2017)). President Biden, on his first day in office, issued an Executive order entitled “Revocation of Certain Executive Orders Concerning Federal Regulation,” which revoked E.O. 13771. 5 86 FR 7049 (Jan. 25, 2021) (E.O. 13992). As stated in E.O. 13992, the current Administration's policy is to equip executive departments and agencies with flexibility to use available tools such as robust regulatory action to confront the urgent challenges facing the Nation, including the coronavirus disease 2019 (COVID-19) pandemic, economic recovery, racial justice, and climate change. Accordingly, E.O. 13992 revoked “harmful policies and directives that threaten to frustrate the Federal Government's ability to confront these problems and empowers agencies to use appropriate regulatory tools to achieve these goals.” Id. 5 The SUNSET final rule also cited “Regulatory Relief To Support Economic Recovery,” (May 19, 2020) (E.O. 13924), which was revoked in Executive Order 14018. 86 FR 11855 (Feb. 24, 2021). Upon review, we now believe that the burdens imposed by the SUNSET final rule could undermine the Department's ability to fulfill its public health and human services missions, promote national priorities, and confront the challenges facing the nation—contrary to the policies expressed in E.O. 13992. Although the Department is committed to exploring ways to improve its processes for conducting retrospective reviews under the Regulatory Flexibility Act (RFA) and identify and retire obsolete rules, the approach in the SUNSET final rule appears to go beyond what is needed to meet those objectives, as noted by several commenters at the Public Hearing. See, e.g., Public Hearing Transcript, Comments by the Consumer Federation of America, American Frozen Food Institute, and Disability Rights New Mexico. In essence, the SUNSET final rule would likely have led to a sharply diminished role for the Department in providing Federal leadership in public health and human services, a position with which the current Administration fundamentally disagrees. Based on the many comments opposing the rule, the SUNSET final rule also appears to undercut the policy expressed on the first day of the current Administration in E.O. 13985 entitled “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,” which lays out the current Administration's policy for the Federal Government to “pursue a comprehensive approach to advancing equity for all, including people of color and others who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality.” 86 FR 7009 (Jan. 25, 2021). In addition, on January 26, 2021, the current Administration issued a “Memorandum on Tribal Consultation and Strengthening Nation-to-Nation Relationships,” directing the heads of executive departments and agencies to make respect for Tribal sovereignty and self-governance, commitment to fulfilling Federal trust and treaty responsibilities to Tribal Nations, and regular, meaningful, and robust consultation with Tribal Nations cornerstones of Federal policy pertaining to American Indians and Alaska Natives. 86 FR 7491. The current administration also issued an E.O. titled “Strengthening Medicaid and the Affordable Care Act,” 86 FR 7793 (Feb. 2, 2021) (E.O. 14009), states that it is the policy of the Biden-Harris Administration for the Federal Government to protect and strengthen Medicaid and the ACA and to make high-quality healthcare accessible and affordable for every American. The E.O. directs HHS, among others, to examine its regulations, policies, and the like to ensure that they are consistent with the policy of providing high quality and accessible health care for all, and do not undermine protections for people with pre-existing conditions under the ACA, reduce coverage under or otherwise undermine Medicaid or the ACA, or undermine the Health Insurance Marketplace or the individual, small group, or large group markets for health insurance in the United States. If implemented, we now believe that the SUNSET final rule could negatively impact diverse groups of stakeholders, including historically underserved, marginalized, and adversely affected communities, and undermine the Department's public health mission. For example, as discussed in more detail below, numerous commenters expressed concern about the anticipated impacts on various populations including children, the elderly, the disabled, those living in poverty, and communities marginalized by racism and prejudice, who could lose eligibility for programs and services if the regulations underpinning the eligibility requirements were to expire. Public commenters, including Tribes and tribal representatives, assert that the SUNSET final rule would threaten the regulatory underpinnings of the Indian health system, completely disrupt the ability of that system's mission to provide care to tribal communities, undermine the delivery of HHS public health and social service programs for tribal members, and generate a level of uncertainty that is the antithesis of the goals of the HHS Tribal Consultation Policy. 6 Furthermore, HHS now acknowledges that the SUNSET final rule does not provide for advance notice of regulations that might automatically expire, which we believe conflicts with the Department's policy to engage in meaningful consultation with Tribal Nations. 6 U.S. Department of Health and Human Services, HHS Tribal Consultation Policy (December 12, 2010) (available at https://www.hhs.gov/about/agencies/iea/tribal-affairs/consultation/index.html). IV. Legal Authority The primary statutory authorities supporting this proposed rule are the general rulemaking authorities for the various substantive areas under the Department's umbrella, as well as a general provision authorizing agencies to issue regulations regarding the administrative processes to be followed by that agency. These include: • 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 215 of the Public Health Service Act (PHS Act), 42 U.S.C. 216, which provides that “The Surgeon General, with the approval of the Secretary, unless specifically otherwise provided, shall promulgate all other regulations necessary to the administration of the Service[ ];” • 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 [they are] 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;” • 42 U.S.C. 2003, which provides that “the Secretary of Health and Human Services is also authorized to make such other regulations as [they] deem desirable to carry out the provisions of this subchapter [transferring to the Indian Health Service (IHS) the authority to provide health care services to American Indians and Alaska Natives];” 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.” Congress' grant of broad, discretionary rulemaking authority necessarily includes the authority not to promulgate—and therefore also to withdraw or repeal—a proposed or final rule. See Natural Res. Def. Council, Inc. v. SEC, 606 F.2d 1031, 1045 (D.C. Cir. 1979); see also 5 U.S.C. 551(5) (defining “rule making” to include formulating, amending, and repealing a rule). V. Explanation of Proposed Rule To Withdraw or Repeal the SUNSET Final Rule The Department proposes to withdraw or repeal the SUNSET final rule based on the following concerns: (A) Implementation of the rule could create burdens on the Department and on stakeholders that would divert resources from pressing public health matters and thus harm the public; (B) both the possibility of automatic expiration of HHS regulations, and the actual expiration of HHS regulations, could harm the public; (C) the final rule may be harmful to small entities, inconsistent with Congress' intent in enacting the RFA, and unnecessary to achieve the RFA's objectives or to incentivize the Department to conduct reviews of regulations; and (D) ambiguity in the definitions and exceptions in the final rule may increase the burden of the regulation and the risk of regulations automatically expiring. In addition, questions were raised as to whether the final rule is consistent with the APA, which merit further consideration. A. Implementation Burdens on the Department and Stakeholders 1. Burden on the Department The framework set forth in the SUNSET final rule would create a tremendous economic and workload burden on the Department, and would pursue the objective of regulatory review at great expense to the public and to the small business community it purports to benefit. As explained in more detail below, these harms are likely to be greater than any benefits of the retrospective review framework in the SUNSET rule. Although the SUNSET final rule acknowledged the submission of a large number of comments stating that the rule would burden the Department, divert its personnel resources, and adversely affect the Department's ability to administer programs, and issue and modify regulations, the final rule essentially concluded that these concerns were outweighed by its finding that “widespread retrospective review is a worthwhile enterprise.” 86 FR 5705. As previously discussed, that finding was predicated on what we now believe to be a flawed understanding of the regulatory impact of the rule. Our reanalysis of the burden of the SUNSET rule fundamentally alters any evaluation of the merits of the rule and gives new force to the comments concerning the burden. Also, as discussed, this Administration has different policy goals than the previous Administration, and these differences impact how these various issues, concerns, and goals are weighed. We now believe that the SUNSET final rule did not give sufficient consideration and weight to the large number of comments, discussed immediately below, raising concerns regarding the burdens on the Department's ability to effectively carry out its missions. Numerous commenters opposed the proposed rule out of concern that the burden and the diversion of resources to assessments and reviews would negatively impact public health activities. Several commenters referred to the burden imposed on the Department as “undue,” “unreasonable,” “unnecessary,” “onerous,” and “misguided.” In response to these comments on the proposed rule, the SUNSET final rule attempted to minimize these concerns by extending the period for the automatic expiration of regulations from two to five years, and ultimately concluded that its retrospective review scheme is sensible “even if it takes some time away from issuing new regulations.” 86 FR 5705. We now believe that assertion rested on a flawed understanding of the resources required to implement the SUNSET final rule. The rule did not explain how HHS could devote numerous employees to full-time retrospective review without compromising the Department's and its sub-agencies' many other crucial tasks, such as protecting the country from future pandemics or other public health emergencies. We now believe that the SUNSET final rule underestimated the rule's regulatory impact and failed to appreciate the scope of its effects on the Department, including that the rule could compromise some of the Department's most important initiatives. Commenters also emphasized particular apprehension about the impact of the rule on the Department's ability to address public health emergencies such as COVID-19 and the opioid crisis. The SUNSET final rule ultimately concluded that the new retrospective review requirements would not hamper the response to the pandemic because by that time the COVID-19 Public Health Emergency “is likely to have subsided.” 86 FR 5748. However, as explained further below, many commenters expected that implementation of the rule—by diverting staff and resources—would create immediate disruption to programs essential to the COVID-19 response for patients, beneficiaries of HHS health programs, and the larger health system. Commenters also expected that these demands would continue to evolve during the remainder and aftermath of the current pandemic, and noted that the same problems could occur with other public health emergencies in the future. Bolstering the commenters predictions, the trajectory of the COVID-19 pandemic seems far less certain than when the SUNSET final rule was published. HHS has reconsidered these comments and now believes that the Department must continue to remain flexible and focused on the management and utilization of HHS resources to address COVID-19 and its impacts as well as future public health emergencies. The challenges of the continued current public health emergency suggest a risk of future harm because the SUNSET rule provides no good cause exception to avert the expiration of a regulation in the event of a pandemic, a public health emergency, or another declared national emergency. Although the final rule added a provision to permit the Secretary to extend the period for assessments and reviews, the extension can only be applied one time, for up to one year, per each section of regulation, and the extension can only be exercised through a determination published in the Federal Register . 86 FR 5725. Given the brief extension available for the assessment and review and the potential duration of an emergency (as evidenced by the current 18-month plus duration of the COVID-19 pandemic), the final rule was likely incorrect to conclude that this option would be sufficient to avoid the diversion of resources and the automatic expiration of regulations in the event of a pandemic, emergency, or other development that prevents the Department from timely assessing or reviewing certain sections. Id. at 5726. As noted in public comments, the SUNSET final rule imposes multiple types of burdens on the Department. First, the rule's assessment and review processes have substantial resource implications. Such processes require Department evaluations of regulations based on certain criteria, which would involve information collection and analysis (potentially including public notice and comment, and OMB review and approval, under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. ), engagement with subject matter experts, and consultation with state and local jurisdictions and Tribes. In addition, the Department would need to solicit and consider public comment related to those evaluations, participate in interagency review, and publish results in the Federal Register , including the full underlying analyses and data used to support the results. 7 Completing these steps for the thousands of regulations currently issued by the Department, and for future regulations, would be a colossal undertaking on any timeframe. But the SUNSET rule requires these processes on a compressed timeframe, meaning many assessments and reviews would need to occur simultaneously, thereby compounding the impact. Data collection may be infeasible under the timeframes required under the rule, which could compromise the quality and completeness of the work. As noted in the final rule, approximately 12,400 8 of the Department's estimated 18,000 sections in the CFR are over ten years old, and each of these are regulations that could automatically expire five years after the SUNSET final rule's effective date unless assessment and, as applicable, reviews are completed. 9 For example, under the timeline and definitions provided in the final rule, over 7,000 sections of the CFR that were promulgated by the FDA are more than ten years old, or would become more than ten years old during the first five years the rule would be in effect, representing over 95 percent of this agency's current regulations. Although there are limited categorical exceptions and some specific regulations excepted from the rule, the enumerated exceptions are very limited and likely would not make a meaningful difference in the burden on the agency, including because HHS has yet to assess the applicability of these exceptions. 10 7 These analyses and data would need to be reviewed in light of any applicable privilege, protections for confidential business information, or explicit legal prohibition on disclosure, thereby adding to the burden. 8 85 FR 5705. 9 The SUNSET final rule defines “Section” as “a section of the Code of Federal Regulations” and provides the following example, 42 CFR 2.13 is a Section, and 42 CFR 2.14 is another Section ( see 1 CFR 21.11). 86 FR 5751. 10 In addition, based on a count from an HHS website that provides a listing of the rulemakings promulgated by HHS and includes the date that each regulation was first issued in title 21, title 42, and title 45 of the CFR, U.S. Department of Health and Human Services, List of HHS Rulemakings by Date of Promulgation (available at https://www.hhs.gov/regulations/federal-registry/index.html ), over 3,000 sections of the CFR were promulgated by HHS before the enactment of the RFA in 1980, which required the rulemaking process to include an analysis of whether regulations have a significant economic impact upon a substantial number of small entities (SEISNOSE). Although the final rule acknowledges that additional resources would be needed to review regulations that predate the RFA, the rule does not reflect the additional work to assess these regulations to determine if a review is necessary. For older regulations enacted before the RFA that are not otherwise exempt from the rule, the assessment phase would not necessarily have analysis or information from the original rulemaking record to inform an assessment. Furthermore, this burden is recurring. As soon as the Department reviewed all the current rules, it would start having to review them again within a 10-year timeframe. And the expertise needed to conduct assessments and reviews and achieve the pace and scope set forth in the rule would require a reallocation of staff including subject matter experts, regulatory counsels, economists, and attorneys. This reallocation effort alone would entail a significant burden and would draw resources away from other public health and welfare activities. Second, if a review concludes that a regulation should be amended or rescinded, the rule requires the Department to amend or rescind the regulation within two years of the date that the review results are published. The development of regulations is a deliberative and resource-intensive process that requires consideration of a wide range of factors, including current relevant facts, statutory obligations, and public-health and -welfare goals. Requiring the Department not only to assess and review its regulations, but also to amend or rescind them (in applicable circumstances) on a specific timeframe, amplifies the burden on the Department. Third, as discussed further below, the SUNSET final rule contains ambiguities that would need to be clarified in order to operationalize the rule. This creates another hurdle to implementing the SUNSET final rule that is separate from the assessment, review, and rulemaking requirements. For example, under the rule, it is not clear when certain regulations would need to be assessed and whether the regulation falls within a categorical exception. The Department would need to develop processes and standard operating procedures to try to bring consistency and transparency to this process. While the Department expressed an intent to create a dashboard for monitoring assessments and reviews, the development, monitoring, and updating of this dashboard would add to the burden on HHS. Collectively, these activities would likely delay the initiation of assessments and further strain the Department's ability to prevent regulations from automatically expiring. Fourth, the SUNSET rule imposes on HHS the task of determining where to redirect resources to support assessments and reviews and thereby preserve regulations. Multiple, complex considerations would likely be relevant to this effort, including public health and legal considerations. Furthermore, to the extent that any regulations would expire under the SUNSET final rule—which the Department now predicts would be likely—HHS would need to consider how to prioritize its assessment and review processes to manage that risk. Overall, the economic and workforce burdens imposed on the Department by the SUNSET final rule are significant. As noted above, commenters opposed to the rule expressed concern that the diversion of resources would disrupt public health activities and social service programs administered by specific HHS operating divisions. For example, commenters expressed concern that, in order to review or assess regulations within the rule's timeframe, FDA staff could be diverted from the review of medical product applications, food additive petitions, efforts to promote medical product innovation, competition, and access to medicine, and the regulation of the food and medicine supply for humans and animals. Commenters also described impacts on the administration of HHS social services programs, expressing concern that there will not be enough time and staff to efficiently review regulations and to serve citizens at the same time, including those who depend on safety net programs under the auspices of the ACF such as Head Start and the Low Income Home Energy Assistance Program. Multiple commenters who advocate for mental health issues also opposed the diversion of staff resources away from programmatic work that addresses inequities in access to health and mental health care. Commenters nationwide who represent state and county health departments, as well as legal and social service organizations who advocate for beneficiaries, individual beneficiaries themselves, and concerned citizens, expressed concern that the CMS would be hampered in the day-to-day administration of public health programs for millions enrolled in the Children's Health Insurance Program (CHIP), Medicaid, and Medicare. Some noted the burden of retrospective reviews could put a strain on the administration of the Affordable Care Act (ACA) and the development of new regulations and guidance to: Support health care coverage, innovation, and competition; enhance patient safety; and combat waste, fraud, and abuse. Commenters representing Federally Qualified Health Centers (FQHCs) expressed opposition to the rule because it would result in the diversion of resources from programs that support particular populations served by FQHCs such as Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Health Centers for Residents of Public Housing. Commenters representing or affiliated with American Indians and Alaska Natives described the potential impact of resource diversion from the administrative and operational activities of the IHS, which could diminish access to critical safety net programs for American Indians and Alaska Natives and decrease programmatic staff available to administer programs that provide critical protections for tribal youth. Some commenters also noted that the focus on the activities required by the SUNSET rule would impair the Department's ability to issue new regulations that would modernize the healthcare system, improve service delivery, and promote equity for all, including people of color and others who have been historically underserved, marginalized, and adversely affected by persistent poverty. Therefore, based on review of these comments and the Department's new cost estimates for the SUNSET rule, HHS now believes that the SUNSET final rule may have significantly underestimated the burden on the Department resources to comply with the rule and incorrectly evaluated the Department's ability to expend the necessary resources to prevent the automatic expiration of regulations. The Department also thinks it likely that these burdens would result in the diversion of significant resources from other HHS initiatives and priorities. The Department now believes that the harm and the costs resulting from this diversion are likely greater than any benefits of the retrospective review framework in the SUNSET rule. Department initiatives are each intended to further the health and well-being of Americans. Often, these respond to the most pressing issues of the day, which are diverse and range from foodborne illness to the opioid crisis to the COVID-19 global pandemic to dealing with humanitarian crises, such as the care and custody of unaccompanied children at the border. Redirecting resources away from these types of initiatives in order to fully implement the SUNSET rule could mean neglecting the areas of greatest public health need, contrary to the Department's mission. As discussed above, many commenters identified examples of important programs threatened by the diversion of resources of SUNSET final rule, and the Department agrees with those examples. Ultimately, the Department no longer believes that the analysis of existing regulations, which may have little practical effect in many cases, should be elevated over HHS's other important regulatory initiatives. 2. Potential Burden on Stakeholders HHS has also reexamined the burden the SUNSET final rule places on stakeholders to prevent the automatic expiration of regulations and the final rule's estimation that “the cost of monitoring Assessments will be relatively trivial.” 86 FR 5744. The final rule describes “safeguards to mitigate the risk of inadvertent expiration,” such as enabling the public to submit comments requesting that the Department commence an assessment or review, and making a dashboard that would be available on an HHS website that would enable stakeholders to monitor the status of assessment and reviews of regulatory sections that may expire. Id. at 5714. Various public commenters, however, opined that it is inappropriate and unfair to place such a heavy burden on the public. More than one commenter posited that the automatic expiration of regulations resulting from the Department's failure to complete assessments and reviews would constitute a penalty to the regulated, and not the regulators. Many commenters opposed to the rule expressed concern that the monitoring burden would be overwhelming, particularly for health care providers, public health advocates, caregivers, and beneficiaries, among other stakeholders, who would have to divert time and effort from providing direct health care. In addition, commenters representing a wide range of industry stakeholders anticipated a higher burden on small entities that would not have the personnel and resources to both monitor the status of thousands of regulations being assessed contemporaneously, and simultaneously provide comments about data and information that should be considered in an assessment or review. Similarly, commenters expressed concern that members of the general public would not have the ability or awareness to participate in the process envisioned, so that the construct would favor well-funded special interests who would have the resources to hire lawyers and lobbyists to advocate for their favored outcomes. Several commenters associated with trade associations and advocacy organizations described the immense effort that would be needed to engage organization membership and to research, draft, review, and submit consensus-driven comments with members and partner organizations. Some commenters noted that they expected the monitoring process to be chaotic as stakeholders seek the Department's prioritization of the assessment or review of regulations they are concerned might expire. The Department believes that any retrospective review process should not impose an undue burden on the public. Based on these comments and the Department's new cost estimates for the SUNSET rule, the Department now believes that the SUNSET final rule likely underestimated the burden on stakeholders to monitor and comment on potentially expiring regulations. B. Potential Harm From the Possible and Actual Expiration of Regulations 1. Potential Harm From Uncertainty HHS has given further consideration to the harms to the public health from the regulatory uncertainty created by the SUNSET final rule. Because of the above-described substantial burdens imposed on the Department by the breadth and scope of the regulatory review process required by the SUNSET final rule, the Department now acknowledges that, despite statements in the final rule that HHS did not intend to allow any regulations to simply expire, see, e.g., 86 FR 5710, it is unrealistic to assume that no regulations would automatically expire as a result of the final rule. In fact, given the complicated resource allocation decisions discussed above, HHS is unable to forecast the number or identity of specific regulations that may expire without a completed review and assessment. It may therefore be difficult for stakeholders to know which regulations will remain in place because that will depend on whether the Department will actually be able, and will choose, to complete each regulation's assessment and/or review by the assessment or the review deadline. The potential automatic expiration of large swathes of rules, or even one complex rule, without a reasoned justification such as a change in the governing law or a change in circumstances, could create uncertainty and unpredictability regarding regulatory programs going forward. Several commenters supported the Department's efforts to explore ways to improve its processes for conducting retrospective reviews to reassess, update, and amend regulations. As discussed further in section V.3.C., HHS already exercises its authority to conduct retrospective reviews, and comments suggested improvements to achieve the goals of retrospective review productively and efficiently. However, as the comments explained, there is a stark difference, particularly from a planning standpoint, between thoughtful reconsideration of individual rules, with stakeholder participation and a reasoned justification, and automatic expiration of rules from lack of sufficient resources (by either or both stakeholders and the Department). Rather than the current baseline assumption that regulations will remain the same, absent a specific notice providing a basis for possible change, the new baseline would be uncertainty regarding the future validity of numerous regulations. Commenters explained that the uncertainty created by the potential automatic expiration of countless rules could have numerous repercussions for stakeholders and for the public health. Public commenters explained the importance of a relatively steady regulatory environment. For example, several commenters explained that rules that implement HHS policies and programs, such as Medicaid and CHIP, establish the national standards for Federal/State partnership programs, so that States in turn can design processes and run programs on a day-to-day basis based upon these standards. Predictable and reliable communication and guidelines facilitate effective implementation of these programs, so that providers can understand what their obligations are, and beneficiaries can understand what they are entitled to receive. Further, many participants in the health care ecosystem have structured their financial arrangements and business operations to satisfy the myriad conditions set forth in the current regulations. The uncertainty regarding the future of those regulations could upset the assurance of regulatory continuity underlying those arrangements and therefore disrupt planning and entering into longer-term commitments. And, for programs that rely on Federal funding, commenters asserted that potentially expired regulations could impact the ability to apply for, or receive, funding sources governed by those rules, which in turn would disrupt longer-term planning. Commenters also contended that the increased unpredictability of the future of regulations under the SUNSET final rule would impede product development and innovation. Commenters asserted that uncertainty in regulation would be particularly harmful for drug development: Because new therapeutic products may require decades to develop and review, and because this process is expensive, drug sponsors rely on a predictable regulatory environment to plan their development programs. For instance, FDA has extensive regulations that address standards for clinical trials and premarket submissions, requests for orphan designation, patent term restoration, and exclusivity determinations. Although statutory provisions govern these programs, the statute does not specify in detail the substance or processes for these premarket submissions. As a result, the potential for expiration of the regulations, which clarify the application pathway and requirements, could curtail drug development, including progress on cancer therapies and therapies for those with unmet medical needs. Similarly, one commenter noted that the development of digital health care platforms typically takes 5 to 10 years, and the developers will need to understand the regulatory environment in which they will be developing their business. Another commenter asserted that investments are made in industrial biotechnology innovations based on the assumption that regulations will be in place for at least 10 years; consequently, some emerging industrial biotechnology companies will have difficulty finding investors in the face of regulatory uncertainty. Thus, as one commenter opined, “[i]nstead of innovation, this rule could easily lead to stasis.” We question whether the SUNSET final rule adequately considered the potential costs of regulatory uncertainty created by the rule. The final rule states that it “does not believe uncertainty among the regulated community will add significantly to the costs of this rulemaking” because “there is always a possibility that regulations could be amended or rescinded, even absent this rule.” 86 FR 5709. HHS now believes the final rule's automatic expiration of regulations could instead be more haphazard and unpredictable, and therefore more disruptive, than the existing possibility of targeted changes to regulations based on a reasoned justification such as a change in the governing law, technology, or other circumstances. The Department also notes that E.O. 13563, “Improving Regulation and Regulatory Review,” which the SUNSET final rule cited for support, includes among general principles of regulation that our regulatory system “must promote predictability and reduce uncertainty.” 11 Upon reconsideration of the comments received, we now believe that, by introducing significant uncertainty about whether regulations will expire, the final rule may undermine these objectives. 11 76 FR 3821 (January 21, 2011). 2. Potential Harm From the Actual Expiration of Regulations After further consideration, HHS believes that, because the SUNSET rule failed to appropriately consider the likelihood that any regulations would expire, it likewise did not take into account the harm to stakeholders and the public health that could result from regulations expiring. The resources needed to prevent the automatic expiration of regulations are now estimated to be significantly higher than identified in the SUNSET final rule. Given statutory spending directives and other statutory obligations, it could be difficult, and in some cases prohibited, for the Department to redirect sufficient resources to prevent expiration of certain HHS regulations. Further, any attempt to divert the amount of resources necessary to prevent the expiration of regulations would degrade HHS' capabilities to carry out mission-critical objectives such as protecting the health of Americans, strengthening their economic and social well-being, and fostering sound, sustained advances in the sciences. As a result, these constraints make it likely that regulations could expire without review. This expiration is unlike the standard processes that agencies undertake to change rules. In general, it is more common for rules to be amended to account for a change in statutory authority or change in relevant circumstances; they are not simply rescinded in their entirety without a rule-specific justification or an opportunity for the public to comment on that justification, including identifying harms associated with the repeal. Because the final rule did not acknowledge the substantial risk of expiration of regulations, it did not examine the wide array of harmful effects that could arise in this situation including: Causing serious harm to millions of stakeholders who rely upon HHS programs, including underserved populations; upending established understandings across the public health spectrum as to how to comply with statutory requirements; and disrupting established industry standards that protect public health, create a level playing field for businesses, and boost consumer confidence. The breadth and complexity of some regulatory programs with interdependent regulatory provisions, and their integration into programs run by State and local authorities, could magnify the repercussions of many automatically expiring regulations. For example, as one commenter explained, Medicare is the largest payor in the U.S. health care system and the largest piece of a system comprised of thousands of interlocking moving parts; thus, the entire health care system is impacted by the Medicare program and therefore relies on Medicare regulations to function. The Medicare regulations were not contemporaneously enacted and therefore are subject to different potential expiration dates under the SUNSET final rule. If some individual Medicare regulations not subject to exceptions in the SUNSET final rule begin to expire, it could be difficult for regulated entities to disentangle the downstream effects to ascertain the remaining regulatory requirements. The expiration of these regulations also increases the potential for bad actors to try to exploit the lack of regulations, potentially resulting in increased fraud and abuse. Commenters explained that the confusion about what, if any, standards would govern in the event of a lapse in Federal regulations is likely to result in significantly increased regulatory complexity and implementation. Another commenter predicted that, if States will be directed to abandon expiring rules, and/or to suddenly implement new interpretations of statutory requirements in the event regulations automatically expire, they will be faced with enormous administrative costs such as computer system upgrades, staff training, amended services contracts, and public education on new requirements. Commenters provided numerous examples of harms to stakeholders and the public health that could arise from the actual expiration of regulations. States Attorneys General commented that States depend on HHS to administer trillions of dollars in Federal funding to support their healthcare systems and the health and safety of their residents, which would be disrupted by the expiration of regulations. Many commenters expressed particular concern about the anticipated impacts on various communities including children, the elderly, the disabled, those living in poverty, the LGBTQ community, patients living with HIV/AIDS, tribal members, communities of color who are often more reliant upon HHS programming as a result of systemic racism, and people who live in rural areas who rely more heavily on federally funded HHS programs. According to the commenters, these individuals will suffer worse outcomes in terms of health and well-being if they were to lose eligibility for programs and services upon expiration of regulations. This loss in program coverage could in turn increase the economic costs to public assistance organizations, which would need to devote more time, energy, and resources to finding ways to assist individuals absent these protections from the Federal Government. For example, commenters asserted that implementation of Medicaid and the ACA depends heavily on regulations to clarify coverage requirements, program implementation, and the obligations of state programs serving people with low incomes. As discussed above, Federal regulations play an important role in HHS' partnership with States in implementing Medicaid, which, as one commenter described, has helped communities respond to economic downturns, natural disasters, epidemics, and public health emergencies since the program was enacted in 1965. Another commenter described the importance of detailed Federal regulations in implementing the accountable care organization program, which increases the quality of care for Medicare beneficiaries while reducing unnecessary costs, and that expiration of the governing regulations would interfere with those program goals. Another example included regulations that protect Medicare beneficiaries from misleading and high-pressure marketing tactics; expiration of those regulations could end compliance and enforcement actions against these bad actors. If the governing regulations were to expire, HHS programs and other programs reliant on HHS regulations might be free to operate without standards, consistency, or accountability, which could lead to real harm to, for example, the millions of children who rely on those programs. Similarly, advocates for HIV services commented that the SUNSET rule's potential to cause confusion over the validity and enforceability of Medicaid regulations could lead to service and coverage delays, which, for people with HIV, can be detrimental, causing irreversible disease progression and prescription drug resistance. Commenters expressed concern regarding the expiration of other programs that support particular populations, which expiration could be devastating for the populations they serve. 12 12 Specific HHS programs identified to be at risk included: The Health Care Program; Low Income Energy Assistance Program; Temporary Assistance to Needy Families; Early and Periodic Screening, Diagnostic and Treatment; Indian Child Welfare Act; Child Care and Development Fund; the Administration for Community Living; Child Care and Development Grant; Head Start; Early Head Start; Maternal Infant and Early Childhood Home Visiting Program; National School Lunch Program; School Breakfast Program; Supplemental Nutrition Program for Women, Infants, and Children; Child and Adult Care Food Program; Summer Food Service Program; Community Mental Health Services Block Grant; Supplemental Nutrition Assistance Program; the Refugee Resettlement Program; and Medicaid Waiver programs including: The Children's Autism Home and Community‐Based Services Waiver Program; Adult Residential Waiver; Community Living Waiver; Adult Supports Waiver; Home and Community-Based Services Waiver for Persons with Traumatic Brain Injury; and the Frail Elder Home and Community-Based Services Waiver. More generally, commenters identified regulations protecting particular populations including those concerning Medicaid conditions of participation for nursing homes, substance use and addiction treatment and prevention programs, mental health services, access to childcare, foster care, adoption, and family violence services. Numerous tribes and tribal organizations commented that the Indian health system relies on a number of regulations that tribes have worked for decades on with the Department to promulgate on a government-to-government basis. These include the regulations governing the IHS, Tribal Self-Governance, and Indian specific provisions in the Medicaid, Medicare, CHIP, and ACA Health Insurance Marketplace regulations. Commenters asserted that the SUNSET final rule would threaten the regulatory underpinnings of the Indian health system and completely disrupt the ability of that system's mission to provide care to tribal communities. Other commenters asserted that HHS regulations are essential to maintaining consumer confidence in the Nation's supply of consumer products, as well as a level playing field among industries. Some commenters noted that there are many rules setting industry standards that have remained untouched for years—not through neglect—but because they work as intended. For example, as described in several comments, the food industry relies on FDA regulations to provide clarity on statutory requirements, to maintain relationships of trust between all members of the supply chain, to protect public health by providing safe and nutritious food, and to support both domestic consumer and worldwide confidence in the safety of the U.S. food products. Under the FDA Food Safety Modernization Act (FSMA), FDA over the last decade has promulgated, with considerable stakeholder input, an extensive set of detailed regulations governing prevention of foodborne illness throughout the production and delivery in the global food supply. Industry members have devoted significant resources to develop food safety plans consistent with the new regulations and in many instances have made significant capital investments in equipment, personnel, and facilities. Expiration of the FSMA regulations (while FSMA's statutory obligations remain in effect) could create confusion and uncertainty with regard to what standards apply, particularly because the statute required rulemaking for implementation and interpretation of the food protection provisions. It also could create inefficiencies given the time and resources that have been invested by the industry in recent years to ensure the highest levels of compliance. In addition to food safety regulations, commenters identified other longstanding food regulations—involving nutrition and food labeling and food ingredients—that set essential standards for the food industry. A food manufacturing association asserted that, if food regulations are rescinded, consumers may become distrustful of the U.S. food supply and, as a result, individual States might feel the need to pass their own laws and regulations, meaning manufacturers would have to comply with a patchwork of potentially conflicting new rules. Compliance with a patchwork of State rules nationally can be costly to industry, and those costs may be passed to consumers or may put food companies out of business, reducing competition and consumer options. Additionally, another commenter asserted that any loss in confidence in the safety of U.S. pet food could result in lost sales and new requirements by foreign regulators seeking assurances that the pet foods they import from the U.S. are safe. Many other effective regulations, some of which are decades old, bring similar efficiencies to the industry by clarifying applicable statutory obligations. As a commenter explained, heavily regulated manufacturers benefit from regulatory certainty that provides clarity for manufacturers and fosters consumer confidence that the products are properly regulated. By contrast, if the regulations expire, disreputable companies will be tempted to cut corners to gain economic advantage over responsible companies, with the risk that consumers will be harmed and will lose confidence in the products. For example, as another commenter explained, color additive regulations, many of which are decades old, are fundamental to the industry's operation in the U.S., and provide confidence that color additives are safe in food, drugs, cosmetics, and medical devices. The expiration of those regulations could lead to significant confusion. Commenters also explained that FDA issues many regulations relating to food, drugs, devices, cosmetics, and tobacco products that are essential to protecting the public health. To list just a few additional examples, these regulations provide: Safety standards for the blood supply, access to investigational treatments, protection of clinical trial participants, protection from harmful tobacco products, and good manufacturing practices that are the linchpin of many product supply chains. The expiration of these regulations could mean that regulated entities would be unsure how to comply with long-standing statutory requirements and may no longer be compelled to comply with long-standing safety standards. Commenters also raised concerns that the SUNSET final rule could impede responses to public health emergencies. For example, the regulations established in 2006 to implement the Pandemic and All Hazards Preparedness Act took years to develop and have been essential to addressing the COVID-19 pandemic. The expiration of those rules could leave the Department unprepared to respond to future emergencies and result in unnecessary human suffering and loss of life. HHS now believes that commenters have raised credible concerns that the SUNSET final rule would likely result in actual expiration of regulations and that these expirations would adversely impact them. Although these comments were raised regarding the SUNSET proposed rule, the SUNSET final rule discounted their seriousness, and did not give them sufficient consideration and weight. See 86 FR 5709. As discussed in greater detail elsewhere in this preamble, we now believe that the rejection of these comments was in error because, given the resources demands that would be required by the SUNSET final rule, the likelihood that regulations would automatically expire is high. Moreover, the potential automatic expiration of regulations would be contrary to the Department's role as the U.S. Government's principal agency for protecting the health of all Americans and providing essential human services, especially for those who are least able to help themselves. C. RFA Considerations 1. Rule Requirements Beyond RFA Requirements The SUNSET final rule imposes requirements beyond the requirements of the RFA. These additional requirements may not be consistent with Congressional intent. The SUNSET final rule asserts that it “implements Congressional intent for periodic review of regulations” and “closely tracks the RFA's goal of minimizing undue burden on small entities” 86 FR 5713-5714. Additionally, it asserts that, “assuming full compliance with the RFA, th[e] rule does not impose any additional burden on the Department beyond what was already called for in the RFA” because the RFA “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.” Id. at 5705. Many commenters disagreed with these assertions, and explained that the final rule would impose requirements beyond those set forth in the RFA. HHS remains committed to full compliance with the RFA, but, upon further consideration, HHS believes that the RFA does not require this final rule and finds the commenters' perspectives for repealing the rule worthy of further consideration. First, commenters assert that the final rule exceeds the RFA's express requirements by mandating that the Department conduct assessments of thousands of HHS regulations within certain timeframes. Section 610 of the RFA is focused on the retrospective review of rules identified with a Significant Economic Impact Upon a Substantial Number of Small Entities (SEISNOSE). Section 610 contemplates periodic review of a subset of “rules issued by the agency which have or will have a [SEISNOSE]” and imposes certain public notice and comment procedures for such reviews. 13 Nothing in the express language of the statute requires the Department to conduct assessments of all HHS regulations in order to determine which regulations at time of reassessment have or will have a SEISNOSE. As one commenter noted, Congress “does not[ ] . . . hide elephants in mouse holes.” See Whitman v. Am. Trucking Ass'ns, 531 U.S. 457, 468 (2001). This principle suggests that it is unlikely that Congress intended to require widespread assessments of thousands of regulations via a requirement that the SUNSET final rule asserted was “implicit” in section 610. See 86 FR 5714. As explained below, commenters and the Small Business Administration (SBA) have identified numerous more targeted, efficient, and effective alternatives for identifying regulations that have or will have a SEISNOSE. 14 13 See 5 U.S.C. 610(c) (requiring agencies to “publish in the Federal Register a list of the rules which have a [SEISNOSE], which are to be reviewed pursuant to this section during the succeeding twelve months” and “invite public comment upon the rule”). 14 We also note that the RFA expressly includes a goal of avoidance of duplicative or unnecessary analyses. See 5 U.S.C. 605. Second, principles of statutory construction do not support a broader reading of section 610 to require agencies to simultaneously consider all regulations and to do so on a recurring basis to determine whether they have or will have a SEISNOSE. Had Congress intended to mandate this broader reading, it would have done so when it enacted the RFA or during any one of the numerous times it has amended the RFA since enactment. 15 This principle holds particularly true for section 610(a) of the RFA, given that the provision explicitly directed a one-time simultaneous review of all SEISNOSE regulations that existed on the date of enactment. See, e.g., Salinas v. U.S. R.R. Retirement Bd., 141 S. Ct. 691, 698 (2021) (quoting Russello v. United States, 464 U.S. 16, 23 (1983) (“Where Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.”). 15 See Office of Advocacy, U.S. Small Bus. Admin., A Guide for Government Agencies: How to Comply with the Regulatory Flexibility Act 2-3 (Aug. 2017) (available at https://advocacy.sba.gov/2017/08/31/a-guide-for-government-agencies-how-to-comply-with-the-regulatory-flexibility-act/ ) (summarizing amendments enacted in 1996, 2007, and 2010). Third, the SUNSET final rule's requirements for public notice and comment procedures—such as notifying the public on a Department-managed website when it commences the process of performing an assessment, publishing a notice in the Federal Register within a month of commencement, and issuing a notice in the Federal Register to publish the results of all assessments—appear to extend beyond the RFA's notice and comment and other requirements for retrospective reviews. HHS agrees with commenters that section 610 requires notice and comment procedures for retrospective review, but it does not require notice and comment procedures to determine which regulations have or will have a SEISNOSE. 16 Similarly, the RFA provides no basis for an expedited timeline as specified in the SUNSET final rule for the completion of reviews, which was noted by commenters. Section 610(a) of the RFA provides only that the reviews required under that section be conducted “within ten years” of specific dates. 16 See 5 U.S.C. 610 (specifying factors agencies must consider in conducting reviews of rules that have or will have a SEISNOSE and requiring agencies to publish in the Federal Register plans for periodic reviews and a list of rules to be reviewed during the succeeding twelve months as well as invite public comment on rules to be reviewed); see also, e.g., id. 603(a) (requiring an initial regulatory flexibility analysis for proposed rules for which a notice of proposed rulemaking is required or published as well as public notice and comment and publication of the analysis); id. 604(a)(2), (b) (requiring a final regulatory flexibility analysis for final rules for which a notice of proposed rulemaking was required or published and requiring the analysis to include the agency's consideration of public comments received and to be published in full or summary form in the Federal Register ); id. 605(b) (permitting an agency head to exempt a rule from the requirements of sections 603 and 604 by certifying that a rule will not have a SEISNOSE and requiring the agency to publish the certification in the Federal Register “along with a statement providing the factual basis for such certification”); id. 608 (requiring findings supporting a waiver or delay of completion of the requirements of sections 603 and 604 to be published in the Federal Register ); id. 609(a) (with respect to rules that will have a SEISNOSE, requiring agency heads to “assure that small entities have been given an opportunity to participate in the rulemaking for the rule through the reasonable use of techniques such as” publication in certain sources and direct notification of interested small entities). Fourth, the automatic expiration of any rule issued by the Department simply because it was not timely assessed or, as applicable, reviewed, appears to be contrary to Congressional intent. Section 610 neither provides for automatic expiration of rules with a SEISNOSE nor presumptively applies automatic expiration dates to regulations. Rather, section 610 contemplates informed rescission or revision of rules only if they have or will have a SEISNOSE and if the Department has determined, based on a multi-factor review, that such rules should be rescinded or revised to minimize any SEISNOSE. Additionally, we note that section 611(a) provides a remedy for agency noncompliance with the requirements of section 610: Judicial review of such noncompliance and relief deemed appropriate by the reviewing court. Fifth, the framework for regulations to automatically expire without any consideration of the statutory objectives the rule implements appears to be inconsistent with the RFA's intent to balance the objectives of the RFA with the objectives of statutes critical to public health. The RFA's legislative history explicitly states that Congress did not intend for the RFA's requirements to “undermine . . . important [regulatory] achievements,” specifically those in the area of public health. 126 Cong. Rec. 21,448, 21,451 (August 6, 1980). The legislative history further states that Congress intended “agencies to continue to enforce [substantive] laws in a fully effective fashion,” id. at 21,451, and that “environmental, health or safety catastrophes must never be made more likely because of flexible regulations.” Id. at 21,455. Indeed, Congress expressed this intent in section 610 itself by providing that rescission of regulations should only occur if “consistent with the stated objectives of applicable statutes.” 5 U.S.C. 610(a). 17 17 The automatic expiration of rules without notice and comment appears to also be inconsistent with Congressional intent that the RFA's requirements “not alter procedural requirements contained in other statutes applicable to the agency” (126 Cong. Rec. 21,456). As described above, commenters argued that the monumental task of assessments would require diverting agency expertise and resources away from the Department's significant public health activities and would likely impair the Department's ability to respond to public health emergencies and administer critical public health programs. Commenters further argued that such results would undermine important public health statutory objectives and increase the likelihood of negative consequences for the public health. The RFA's legislative history explicitly addresses such concerns that the RFA “might require agencies to significantly compromise the objectives of underlying statutes authorizing rulemaking,” 126 Cong. Rec. 21,455, and, as noted above, emphasized that “[i]t is not the intent of regulatory flexibility legislation to undermine . . . important [regulatory] achievements,” id. at 21,451. Commenters also stated that the burden imposed on the Department by the final rule would impair the Department's ability to prevent the automatic expiration of regulations that would be imposed by the final rule, and, as discussed above, the actual expiration of regulations without any analysis would also undermine the objectives of those regulations' authorizing statutes contrary to Congressional intent. HHS notes that the economic and workforce burdens impairing the Department's ability to achieve important statutory objectives related to its mission would also be inconsistent with the RFA's intent to enhance administrative efficiency in the achievement of such objectives. The RFA's legislative history emphasizes that “regulatory flexibility should be considered a means of improving administrative effectiveness in enforcing the regulatory statutes which the Congress has enacted rather than an additional bureaucratic burden.” 126 Cong. Rec. 21,456. One commenter noted that requiring the Department to conduct analyses of thousands of rules within a compressed time period, in addition to the already complex existing tasks of the Department, is not efficient. Although the final rule asserts that it “will contribute to `the efficient administration of' the Department's functions . . . because the Reviews called for by this final rule will take into account both the continued need for particular regulations, as well as whether the burden of those regulations on small entities can be minimized,” 86 FR at 5719, HHS now believes that the final rule could introduce greater inefficiencies if rules expire without any assessment or review of the need for the regulation or the impact of the regulation on small entities. In summary, this rule is not mandated by the RFA and may not be consistent with Congressional intent. As a matter of policy, we are therefore reconsidering the benefits of an additional rule that exceeds the requirements of the RFA. 2. Potential Harm to Small Entities Inconsistent With the RFA Commenters argued that the final rule will impose undue and disproportionate burdens on small entities that undermine the RFA's purpose of alleviating the regulatory burden on such entities. The RFA seeks to address the “unnecessary and disproportionately burdensome demands . . . [of uniform regulatory requirements] upon small [entities] . . . with limited resources.” 126 Cong. Rec. 21,449. After reconsidering the burden of the SUNSET final rule, the legislative history for the RFA, and the comments, it is now our view that implementation of the SUNSET final rule could harm small entities, contrary to Congressional intent in enacting the RFA. Below, we summarize the comments that discuss these issues in detail. Commenters expressed concerns that the sudden expiration of regulations and the threat of sudden expiration of regulations would disproportionately burden small entities by creating regulatory uncertainty and a confusing regulatory landscape that would be difficult for these entities to navigate. Commenters also noted that the sudden expiration of rules could result in reputational harm with customers whose confidence relies on compliance with regulatory standards, and other outcomes that would be particularly damaging to small entities. For example, as discussed above, the expiration of certain regulations could create instances where regulations expire but statutory requirements continue to be applicable, leaving it unclear to small businesses how the Department intends to implement the statutory requirements. As another example, if, as suggested in the preamble to the final rule (86 FR 5712), guidance documents based on expired regulations would cease to have effect, the expiration of regulations could leave stakeholders without needed information in relevant guidance, including Small Entity Compliance Guides (SECG). Although several commenters representing small business industry associations expressed support for the final rule based on the assumption that the assessments and reviews would lead to deregulatory actions that could benefit small businesses, the vast majority of commenters disagreed with that assumption and opposed the rule. These commenters expressed the concern that small entities who rely on regulations to level the playing field would suddenly lose the clarity provided by such regulations and associated guidance for industry, which would create confusion, costs, and vulnerability for small entities. Commenters noted that most small businesses would generally lack resources to monitor, understand, anticipate, and adapt to changes in the regulatory landscape caused by the automatic expiration framework. Congress's findings in the RFA's legislative history substantiate this concern, as Congress explicitly found that small entities often have limited access to regulatory expertise and capital as compared to larger businesses. See 126 Cong. Rec. 21,453. Moreover, commenters also expressed concerns that the final rule's requirements and timelines would undermine small entities' ability to participate in assessments and reviews, which HHS notes is inconsistent with the RFA's intent to “give small businesses a greater opportunity to participate in shaping rules which would affect them.” 126 Cong. Rec. 21,451. Commenters explained that the frenetic pace and scope of simultaneous assessment of rules would impair small entities' ability to effectively engage in the final rule's assessment and review process and for HHS to identify and meaningfully address data and information related to impacts on these entities. Although the final rule suggests that regulatory uncertainty created by the final rule would be offset by increases in trust in the Department's RFA compliance, and greater transparency about when regulations were adopted, HHS has reason to doubt that assertion. First, this assertion may not have taken into account the high burden on the public, including small businesses, to calculate and track the expiration of regulations, or to participate in the assessment and review processes. Second, HHS no longer finds it appropriate to rely on conclusions regarding “sunset reviews” in other jurisdictions, including foreign governments and U.S. State legislatures, given the final rule's acknowledgement that “[t]hese jurisdictions' sunset provisions do not all work identically to this final rule.” 86 FR 5747. Commenters pointed out that the experience of foreign governments with sunset provisions would not be applicable to HHS, because these governments are not bound by the requirements of the APA. Other entities also may not have the same resource constraints as HHS, for example, with respect to earmarked funds. Finally, as explained at length throughout this preamble, HHS is no longer confident that, by giving industry five years until any regulations expire, the SUNSET final rule would mitigate the negative effects of expiration. We welcome comments regarding the experience of state and foreign governments with these laws. Overall, the Department's current assessment that implementation of the SUNSET final rule has the potential to harm small entities, contrary to Congressional intent in enacting the RFA, suggests that there are no clear beneficiaries of this rule. These conclusions call into question the fundamental basis and justification for the SUNSET rule. 3. The Final Rule Is Unnecessary Consistent with our assessment, discussed above, that the SUNSET final rule's impact exceeds the requirements of the RFA and could impose additional burdens on small entities, HHS now seriously questions the conclusion in the SUNSET final rule that simultaneous Department-wide assessments of thousands of regulations is an efficient way to achieve the RFA's objectives. Instead, HHS now believes more targeted alternatives suggested by commenters merit further consideration. As commenters noted, there are more efficient and effective ways to identify rules that have or will have a SEISNOSE and require review. For example, the Department may request information or use other processes to seek input from small entities and the public to identify such rules in a more targeted way, and the public may use already-existing petition processes to ask HHS to issue, amend, or repeal a rule. Conducting the assessments required by the rule could amount to searching for a needle in a haystack, and would not provide an effective means for stakeholders to provide input or for HHS to consider and evaluate such input and other relevant information. As commenters who expressed support for retrospective review also noted, the quality of reviews is more important than quantity, and the final rule's framework would strain the Department without improving the quality of reviews. Alternatives that employ a more targeted approach to identifying rules for review under section 610 of the RFA, which are less burdensome on the Department and stakeholders and incorporate meaningful participation by stakeholders, are consistent with guidance issued by the SBA's Office of Advocacy. That guidance explicitly recognizes that “[b]ecause of the breadth and volume of federal regulations, a review of all existing rules on a particular industry group can be an onerous task for a federal agency.” 18 Additionally, the guidance states that “[i]nsights about an existing regulation received from regulated entities and other interested parties should be a key component of a retrospective rule review,” and that “[b]y making the review process transparent and accessible, agencies are more likely to identify improvements that will benefit all parties at the conclusion of the review.” 19 18 Office of Advocacy, U.S. Small Business Administration A Guide for Government Agencies: How to Comply with the Regulatory Flexibility Act. (Aug. 2017), p. 40. 19 Id. at 83. A commenter noted that such alternatives are also consistent with the recommendations for best practices for retrospective review published by the Administrative Conference of the United States (ACUS), which is cited in the final rule, 20 whereas the automatic expiration framework is not. HHS now agrees that the targeted alternatives proposed by commenters are generally consistent with ACUS's recommendations, including the recommendation to prioritize retrospective reviews “[i]n light of resource constraints and competing priorities.” 21 Although the final rule asserts that certain of its provisions are consistent with ACUS recommendations, see, e.g., 86 FR 5726, the commenter further asserted that the automatic expiration framework is inconsistent with those recommendations, which do not endorse or reference sunset periods 22 and do recommend that retrospective review processes require consideration of and be tailored to the specific rule being reviewed. 23 ACUS issued new recommendations for periodic retrospective review in June 2021. 24 In the preamble to the recommendations, ACUS discusses the tradeoffs of periodic retrospective review, including the costs and time associated with collecting and analyzing data and the uncertainty created by the review process, and advises agencies to “tailor their periodic retrospective review plans carefully to account for these drawbacks.” 25 The consultant research report to ACUS on this topic specifically addresses the SUNSET final rule and notes: 20 See Admin. Conf. of the U.S., Recommendation 2014-5, Retrospective Review of Agency Rules (2014) (available at https://www.acus.gov/sites/default/files/documents/Recommendation%25202014-5%2520%2528Retrospective%2520Review%2529_1.pdf ). 21 Id. 22 See generally id. The commenter noted that the concept of sunset periods is mentioned only in passing in a report prepared in connection with the recommendations. See Joseph E. Aldy, Learning from Experience: An Assessment of the Retrospective Reviews of Agency Rules and the Evidence for Improving the Design and Implementation of Regulatory Policy 62, 65 (2014), (available at https://www.acus.gov/sites/default/files/documents/Aldy%2520Retro%2520Review%2520Draft%252011-17-2014.pdf ). 23 See ACUS Recommendations, supra n. 18, at 7. 24 See Admin. Conf of the U.S., Recommendation 2021-2, Periodic Retrospective Review (2021), available at https://www.acus.gov/sites/default/files/documents/Redline%20-%20Periodic%20Retrospective%20Review%20-%20Final.pdf. 25 Id. at 3. While recognizing the objective to promote retrospective reviews that may be needed, a strict sunset date is an especially strong, perhaps overly strong, incentive for periodic review. It raises questions under US administrative law regarding whether and how an agency can set an expiration date for thousands of its rules through a single new rule, without going through notice and comment rulemaking to rescind each rule or cluster of rules separately. Sunsetting rules may pose high social instability costs, as discussed above, if numerous rules on which stakeholders rely suddenly expire, potentially outweighing the benefits of the agency undertaking periodic reviews of some of these rules. Moreover, there does not seem to be a strong analytic basis presented for the periodicity (5 or 10 years) required in the HHS sunset review rule. 26 26 Lori S. Bennear and Jonathan B. Wiener, Periodic Review of Agency Regulation (June 7, 2021) at 37-38 (report to the Admin. Conf. of the U.S.), available at https://www.acus.gov/report/periodic-retrospective-review-report-final (footnotes omitted). HHS agrees that the more targeted alternatives suggested by commenters are likely to achieve the goals of retrospective review more efficiently. We are now reconsidering the SUNSET final rule's apparent position that a burdensome and widespread assessment is necessary to identify regulations that have or will have a SEISNOSE. For example, the final rule primarily emphasizes what it perceives as the general benefits of “widespread review” with little explanation of the specific benefits of widespread assessment. See, e.g., 86 FR 5698 (concluding that “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”). 27 Additionally, the final rule concludes that “stakeholder input cannot be the only source of information to spur reviews” because such input would not reflect the “dispersed costs” that “consumers, small businesses, and the public” experience, given that those groups “often find it costly to organize and lobby on behalf of their own interests” and “[c]oncentrated interests” that “find it relatively easier” to do so would not take such costs into account. Id. at 5740. However, HHS now doubts this conclusion because, as explained above, HHS received numerous comments to the SUNSET proposed rule from a diverse array of consumers, small businesses, and the public asserting the undue burdens and costs that rule would impose. 27 Commenters noted that any benefits derived from assessing thousands of regulations to determine their potential impact on small entities cannot reasonably be deemed to outweigh the benefit of more targeted alternatives that preserve HHS' ability to accomplish activities that protect and promote the public health. As stated earlier, while the Department can explore ways to improve its processes, HHS does have a meaningful track record of retrospective regulatory review. As required by section 610 of the RFA, the Department conducts periodic reviews of regulations with impacts on small entities and provides notification of these reviews in the annual Unified Agenda of Regulatory and Deregulatory Actions. Among HHS's other recent retrospective review efforts are the Department's 2011 Plan for Retrospective Review of Existing Rules, an initiative developed in accordance with E.O. 13563 and E.O. 13610, Identifying and Reducing Regulatory Burdens. The Department used this plan from Fiscal Year 2012 through Fiscal Year 2016 as a framework for its retrospective review of existing significant regulations to identify those rules that can be potentially eliminated as obsolete, unnecessary, burdensome, or counterproductive or that can be modified to be more effective, efficient, flexible, and streamlined. A number of commenters also specifically referenced a 2015 CMS initiative to modernize Medicaid Managed Care regulations for Medicaid and CHIP beneficiaries. We also note that the CMS Office of Burden Reduction and Health Informatics works, among other things, to eliminate overly burdensome and unnecessary regulations. More recently, in response to E.O. 13771, Enforcing the Regulatory Reform Agenda, HHS established a Regulatory Reform Task Force that oversaw an effort to evaluate existing regulations and make recommendations to the Secretary regarding their repeal, replacement, or modification, consistent with applicable law. HHS published summary reports of these reviews for Fiscal Years 2018-2020 on the HHS website (available at https://www.hhs.gov/about/budget/fy2021/performance/regulatory-reform/index.html ). These efforts demonstrate the Department's ongoing commitment to retrospective review, which could be upended rather than strengthened by the SUNSET final rule. The SUNSET final rule asserts that the threat of regulations expiring is necessary because “it is nearly impossible to see how a satisfying comprehensive review could occur without a sunset provision,” 86 FR 5702, and concludes that the Department “needs to impose a strong incentive on itself to perform retrospective review.” Id. at 5697. HHS now believes that there are numerous regulatory efforts that take place within agencies that routinely involve the review of regulations. Agencies are often requested to provide technical assistance to Congress on proposed legislation which quite often requires, among other considerations, an assessment of the proposal's impact on current regulations. FDA also reviews regulations in the course of responding to certain citizen petitions submitted under 21 CFR 10.30, requesting changes in FDA regulations. It is also common for new HHS regulations to amend, revise or modify sections of regulations in order to update, replace, or rescind requirements, or to add new definitions or clarifications, which inherently entail review of these sections. For example, the regulations FDA issued to implement FSMA 28 included both the addition of new sections of regulation and revisions and modifications to existing sections. Additionally, regulation provisions are reviewed to determine if guidance documents are needed to provide recommendations for complying with the regulation. This is particularly important when the regulation is necessarily general or broad to accommodate scientific and other innovation changes, and guidance is helpful to consider applicability of the regulatory provisions. 28 See FSMA Rules & Guidance for Industry (available at https://www.fda.gov/food/food-safety-modernization-act-fsma/fsma-rules-guidance-industry#Rules (accessed May 11, 2021)). Upon reconsideration, as a matter of policy, HHS now seriously questions whether automatic expiration is an effective or necessary means to incentivize regulatory review. Commenters expressed concern that the automatic expiration of regulations would in fact create a strong incentive, under certain circumstances, to not conduct reviews and thus, allow the Department to effectively rescind such regulations without any justification, explanation, or the notice and comment procedures generally required for rescinding a rule. The Department is concerned that the SUNSET final rule could degrade confidence in our regulatory stewardship. Among the evidence cited to explain the need for the SUNSET final rule was an artificial intelligence review of all HHS regulations that identified that 85% of regulations before 1990 had not been edited. 86 FR 5699. 29 However, the final rule incorrectly inferred that just because no edit has been made to a regulation, it has never been reviewed. There are numerous regulatory efforts that take place within agencies that involve the review of regulations without resulting in a change to the regulation. As noted above, some commenters explained that many rules setting industry standards have remained untouched for years—not through neglect, but because they work as intended. There have also been instances where an agency has included certain regulations on past Unified Agendas (UA) and yet never completed these proposals and thus these were eventually withdrawn from the UA. But this ultimate result does not mean that review did not occur. Often review of an existing regulation may result in an agency developing a draft of a new or amended regulation that, upon further deliberation or because of intervening events, the agency decides not to finalize. 29 The final rule stated that the findings of this artificial intelligence review indicated 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.” 86 FR 5701-02. However, commenters expressed concern that the methodology of this search was never made public, and the final rule acknowledged that the “Department did not previously notify the public about this research project” as well as certain limitations on the capabilities of this tool. 86 FR 5710. The SUNSET final rule also credited this artificial intelligence review with the identification of broken links in regulations and regulations that require multiple paper copies and provided these as examples that show the need to “more firmly institutionalize retrospective review.” 86 FR 5699. HHS notes that the broken links and other typographical errors identified through this process were successfully addressed as part of the HHS “Regulatory Clean-Up Initiative,” a final rule published on November 16, 2020 (85 FR 72899) that made miscellaneous corrections, including correcting references to other regulations, misspellings and other typographical errors in regulations issued by FDA, CMS, the Office of the Inspector General, and the ACF. In addition, FDA issued a final rule to amend regulations on medical device premarket submissions to remove requirements for paper and multiple copies and replace them with requirements for a single submission in electronic format. 30 However, neither the assessment-and-review process required by the SUNSET rule, nor the threat of expiring regulations, were necessary to incentivize these actions. Rather, HHS now believes the Department's ability to efficiently undertake such regulatory housekeeping in the future could be undermined if staff were overwhelmed by the implementation of the SUNSET final rule. 30 “Medical Device Submissions: Amending Premarket Regulations That Require Multiple Copies and Specify that Paper Copies To Be Required in Electronic Format.” Final Rule. 84 FR 68334. Dec. 16, 2019. D. APA Considerations Commenters questioned the legality of the SUNSET final rule under the APA, which may be an additional ground for reconsideration and repeal. Under the APA, agency action is unlawful and can be set aside by a court when it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” or “without observance of procedure required by law.” 5 U.S.C. 706(2)(A), (D). Commenter asserted that the SUNSET final rule may be vulnerable under these standards in light of its stated justification for the rule and the process it followed in promulgating the rule. 1. Consideration of the Relevant Factors The APA requires an agency, in issuing a final rule, to “examine the relevant data and articulate a satisfactory explanation for its action including a `rational connection between the facts found and the choice made.' ” Motor Vehicle Mfrs. Ass'n v. State Farm, 463 U.S. 29, 43 (1983) (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)). That explanation must show that “the decision was based on a consideration of the relevant factors.” Id. After a regulation is promulgated, the same process applies for amending or rescinding that regulation. 5 U.S.C. 551(5) (“rule making” encompasses the formulation, amendment, or repeal of a rule); Perez v. Mortg. Bankers Ass'n, 575 U.S. 92, 101 (2015) (“agencies use the same procedures when they amend or repeal a rule as they used to issue the rule in the first instance”). Thus, an agency must “present an adequate basis and explanation” for the amendment or repeal; if the agency has “entirely failed to consider an important aspect of the problem,” the rule is “normally . . . arbitrary and capricious.” State Farm, 463 U.S. at 41, 43. In particular, when an agency changes course, including by amending a regulation, “a reasoned explanation is needed for disregarding facts and circumstances that underlay or were engendered by the prior policy.” FCC v. Fox TV Stations, Inc., 556 U.S. 502, 515-16 (2009). As discussed above, the SUNSET final rule establishes a retrospective review scheme and amends most of HHS's regulations “to apply expiration dates unless certain conditions are satisfied”— i.e., the completion of retrospective review. 86 FR 5716. To support this approach, the Department provided the rationale that “the benefits of retrospective review, and the need to strongly incentivize it, are so great that the risk of a regulation inadvertently expiring is justified by the benefit of institutionalizing retrospective review in this manner.” 86 FR 5723. Several commenters questioned the validity of HHS's approach. Commenters asserted that HHS cannot amend or revoke a legislative rule in a rulemaking that does not address the particulars of that legislative rule because it did not contain any particularized consideration of the regulations subject to expiration, such as the facts, circumstances, and policies originally motivating the promulgation of these regulations. In the preamble to the SUNSET final rule, the Department acknowledged the submission of a large number of comments stating that the rule would violate the APA on this ground. 86 FR 5715. The Department rejected these arguments and asserted that the rulemaking was permissible by comparing the global amendment to an amendment to a specific rule to add an expiration date, or to amending a definition of a term that is more widely applicable to a set of regulations. See 86 FR 5703-04. We now question the relevance of that comparison: Because of the differences in scope, scale, and effect, it is far more likely that HHS could consider the relevant factors and produce the record needed to support the rulemaking for these more targeted amendments, in contrast to the global amendment proposed in the SUNSET final rule. The Department also addressed these comments by asserting that it had “considered the relevant factors” and “considered each individual Department regulation” in connection with deciding whether to exempt the regulation from the scope of the SUNSET final rule. 86 FR 5703, 5718. However, these statements were conclusory; the final rule did not contain particularized consideration of the rules that were amended. Because of this absence, the Department arguably did not adequately consider the factors relevant to the amendments as required under the APA. These questions are particularly pronounced in the circumstance that the SUNSET final rule leads to the automatic repeal of a regulation. As reflected elsewhere in this preamble, the Department believes that at least some amended regulations are likely to expire. In the event of such expiration, the Department would be changing course on a policy embodied in a regulation. As noted above, such a change needs to be supported by a reasoned explanation. In addition, the Department is concerned that the exemptions in the SUNSET final rule may not have been adequately justified. The Department exempted certain FDA regulations, for example, on the basis that they create product identities and are being reviewed under other processes. 86 FR 5731. It is not clear that the stated reasoning supports the exemption decisions or their scope. For example, it is not clear why other FDA regulations that are similar, such as those codifying the standards for human blood and blood products, were excluded. 2. Length of the Comment Period When HHS promulgated the SUNSET final rule, as discussed above, it provided a 30-day comment period for most comments. Many commenters asserted that the amount of time was inadequate under the APA, in light of the scale and complexity of the SUNSET proposed rule and in the absence of any public health or welfare emergency basis for the expedited timeline. The SUNSET final rule acknowledged the many comments received objecting to the length of the comment period, but concluded that the comment period was sufficient based primarily on the numerous comments received from a diverse array of stakeholders. 86 FR 5705-06. The APA does not specify a duration for comment periods in the context of notice-and-comment rulemaking, but agencies must provide “adequate time for comments.” Fla. Power & Light Co. v. United States, 846 F.2d 765, 771 (D.C. Cir. 1988). The timing considerations will vary depending on the nature of the proposal and its impact on the public. Generally, the comment period for issuing new Department regulations is at least sixty days and can be longer depending on the issue and complexity. The SUNSET final rule was determined by OIRA to be an economically significant regulatory action. 86 FR 5737. Furthermore, the SUNSET final rule was vast in scope and impact, affecting thousands of regulations. In light of that, the Department believes commenters raised credible concerns that they could not adequately consid [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2021-23472. Public record. Not legal advice.