AFL-CIO Issues Public Comment on HHS Proposed Rule

WASHINGTON, Dec. 20 -- Lee Goldberg, health policy specialist at the AFL-CIO, has issued a public comment on the Department of Health and Human Services proposed rule entitled "Securing Updated and Necessary Statutory Evaluations Timely". The comment was written on Dec. 4, 2020, and posted on Dec. 8, 2020:

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These comments on the proposed rule, "Securing Updated and Necessary Statutory Evaluations Timely", issued by the Department of Health & Human Services (HHS), are submitted by the American Federation of Labor and Congress of Industrial Organizations ("AFL-CIO") and its 55 affiliated unions. The AFL-CIO represents more than 12 million workers across the country in all sectors of our economy, including those working in manufacturing, construction, transportation, grocery and retail stores, food processing and meatpacking, health care, education, hospitality, entertainment, and state and local governments. Our affiliated unions negotiate health care benefits for millions of workers, retirees, and their family members, and these benefits are provided through single employer and multiemployer, both insured and self-funded.

The proposed rule would amend current law so that regulations issued by the Department shall expire at the end of (1) two calendar years after the year that this proposed 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./1

The AFL-CIO strongly opposes this rule, which would:

1. Violate the requirements for amending and revoking regulations established by the Administrative Procedures Act (APA);

1. Disrupt Medicare, Medicaid, and other essential programs that millions of Americans depend on for their health and well-being; and

2. Limit the Department's ability to target staff to address the multiple policies and regulatory challenges facing the country during a public health emergency.

Moreover, this attempt to eliminate regulations utilizes a standard of review that is arbitrary and capricious and cannot be justified by the statutory authority cited.

Violating the APA

The APA governs the procedures for federal agencies to develop and revise regulations./2

The most common method is notice-and-comment rulemaking, in which a federal agency publishes a proposed rule in the Federal Register to provide opportunities for the public to comment./3

Once an agency finalizes a rule, any effort to amend or eliminate it requires the same degree of compliance with the APA's notice-and-comment procedures as the development of a new regulation./4

As the D.C. Circuit recently noted, "[i]t is, of course, black-letter administrative law that ordinarily an agency that promulgates a rule under [APA] Sec. 553's auspices must use the same procedure to revoke that rule."/5

In promulgating the SUNSET rule, HHS proposes an end-run around the requirements of the APA whereby the agency's mere failure to act by a self-imposed deadline would rescind regulations without any public input.

In the NPRM's preamble, HHS seems to assert that the notice-and-comment process it is following for the SUNSET rule will satisfy the requirements of the APA for all future revocations that result from the rule's deadlines passing without agency Assessment and Review./6

And although the SUNSET rule provides for the public to submit comments to "remind the Department to perform the Assessment or Review if the deadline is nearing,"/7 HHS apparently is not obliged to take any action based on such a public reminder. The SUNSET NPRM and the thirty day comment period it provides do not provide sufficient notice or opportunity for the public to weigh in on the bevy of regulations that will be affected.

The steps in notice-and-comment rulemaking are no mere formality. The process is critical for the public legitimacy of regulations. As one scholar has noted, the notice-and-comment period is a substitute for the "relative transparency and accountability of the legislative process." The opportunity for public feedback mitigates the discomfort voters have with unelected officials issuing regulations that have the potential to limit their lives in meaningful and significant ways./8

By allowing agency officials to eliminate regulations without public input, the proposed SUNSET rule violates the APA. More importantly, perhaps, the SUNSET rule undermines a bedrock democratic principle of the regulatory state: the public has a say in developing and revising regulations. This vital principle has an impact on the everyday life of voters. Under this proposed regulation, HHS could allow rules governing the ability of Medicare beneficiaries to appeal adverse coverage decisions to expire without hearing from Medicare beneficiaries on the potential impact. HHS could let rules governing pre-existing conditions lapse, not as a result of some deliberative process, but as a result of agency inaction. Such power would make the regulatory process less democratic since there would be no public record to hold the agency accountable.

The potential rescission of regulations through agency inaction may strengthen an agency's resolve to complete a regulatory review, but it is likely to degrade the policymaking process and lead to inferior rulemaking. Public comment fills in the gaps of regulators' knowledge - allowing agencies to access the "dispersed knowledge" of stakeholders with expertise and experience unknown to them. Such public input can bring a fuller set of policy options to the attention of regulators. Overall, public feedback reduces the likelihood of faulty decisions and judgments./9

Enabling agencies to delete a presently undefined set of existing rules simply because HHS fails to make an Assessment is antithetical to the development of sound public policy.

In fact, the APA already provides for the extraordinary circumstances when agencies are permitted to significantly modify existing regulations without going through the ordinary notice-and-comment process. Section 553(b) of the APA allows agencies to discard public notice-and-comment where doing so would be 'impractical, unnecessary or contrary to the public interest." According to the statute, agencies may move ahead without public input in the case of:

1. Emergencies;

2. Circumstances where prior notice would subvert the underlying statutory scheme; and 3. Situations where Congress intends to waive Section 553's requirements."/10

The assertion that agencies are generally disincentivized to complete regulatory reviews is an interesting comment on the nature of bureaucracy, but it is insufficient to dismantle the normal regulatory process envisioned by the APA./11

Indeed, the sheer number of regulations that could be affected by this regulation is evidence that the narrowly tailored exceptions in section 553(b) do not apply.

The proposed rule is a draconian measure to eliminate regulations that cannot be justified by the practices of other governments. The preamble of the regulation cites numerous examples of foreign and sub-national entities engaging in periodic regulatory review, but few actually support the approach in this proposed rule. The New Jersey statute cited includes an expiration after seven years, but also requires a notice of the expiration in the original rulemaking./12

The New York statute cited requires an agency to not only provide "an analysis of the need for and legal basis of such rule," but to invite public comment on the continuation or modification of the rule; the same statute also calls for a notice-and-comment rulemaking if there is a determination that the regulation in question needs to modified./13

The Texas statute cited requires the regulatory review to include the same procedure as undertaken for the original adoption of the rule./14

The Korean law cited would remove regulations "once they are found to lack feasibility."/15

The preamble cites numerous examples of periodic regulatory review, but the vast majority of them require some kind of public notice and comment - either as part of the original enactment of the regulation or following the review process. The same is also true for guidance by previous Administrations, which sought simply to review regulations in a systematic and focused effort.

The Department cites its own failure to comply with the Regulatory Flexibility Act (RFA) as the impetus for this proposed rule, but the statute itself only addresses the periodic review of regulations, not the automatic expiration of rules that have not been reviewed. Under the RFA, regulatory review may not be optional as the Department asserts, but there is no mention in the statute of automatic expiration. Congress could have included such a requirement in the RFA, but it did not; instead, it provided for judicial review of an agency's failure to comply with its provisions./16

The text of the law is clear: "the purpose of the review shall be to determine whether such rules should be continued" (emphasis added). The statute calls for nothing more than an agency decision of future action. Nor is there is language in the RFA that amends the APA or its requirement for notice-and-comment rulemaking. Just as HHS cannot use the SUNSET NPRM to avoid the APA's requirements for revoking rules, it also cannot substitute its own judgment about the best remedy for failure to comply with RFA for what Congress decided.

The Department does not provide a reasoned basis for the expiration of a presently unknown set of regulations, based on its future failure to comply with the deadlines imposed by the SUNSET rule. HHS offers only that it needs the added incentive of the expiration in order to meet its existing obligations. The implication is that with the sword of Damocles hanging over its head - and occasional deadline reminders by the affected public - all "important Regulations"/17 will be assessed and reviewed in time. But the Department does not address why it failed to perform the required regulation reviews in the past, nor how the incentive will make the difference./18

Nor does the Department cite any reason why such regulatory review - whatever its consequences - should be triggered by the age of a regulation or why ten years should be the trigger. A regulatory review could just as well be based on the subject matter of the regulation, its economic impact, or the number of people affected by the current regulation. In fact, the Department cites a number of foreign and sub-national entities that mandate the reviews of regulation after five or seven years. Since there are other options for the frequency of regulatory review, the proposal to have such rules automatically expire after ten years is arbitrary and capricious.

Disrupting Public Health Programs

The proposed SUNSET rule would apply to thousands of federal regulations that address the financing of health care for millions of people who rely on the Medicare and Medicaid programs and the millions of people who get their health care coverage through exchanges. As the 10th anniversary of the Affordable Care Act approaches, numerous implementing regulations would expire if they were not reviewed over the next two years. Regulations governing insurance market reforms, essential health benefits, risk adjustment, and reinsurance could expire without any change in the underlying law - causing significant uncertainty for all stakeholders. For example, each of the 50 states would be free to define modified adjusted gross income methodologies and income counting rules, with no consistency or accountability. The rule would also apply to critical regulations governing Medicaid, including regulations on how states should assure access to home and community-based services, either through waivers or through the Community First Choice Program, which became part of Medicaid as part of the ACA. Adopting such a rule would leave low-income people with disabilities and providers of long-term supports and services uncertain about the availability of such care or how such care must be delivered.

While adopting this proposed rule would create a harmful paralysis during relatively "normal" times, it would be particularly dangerous during a pandemic and an economic recession when the health system is straining to care for people.

The Proposed Rule Would Limit the Ability of the Agency to Address Urgent Tasks The AFL-CIO is concerned that the proposed regulation would divert a sizeable number of HHS staff from the urgent task it currently faces: addressing the public health emergency caused by the novel coronavirus. The proposed regulation would require at least 90 staff working full-time to review 12,400 rules. This additional work comes at a time when the Department is leading an unprecedented effort to develop, approve and distribute a novel vaccine to nearly the entire U.S. population. The vaccine will likely require the Department to address new and potentially controversial policy issues concerning access to the vaccine, compensation for vaccine-related injuries, and the safety of the health care workforce. The Department will likely need to develop regulatory guidance to inform public health officials at the state and local level and messaging to educate a public that is skeptical of the vaccine. There will likely need to be further regulation and guidance to respond to the concerns of providers and health plans around the financing of this vaccine. The proposed SUNSET rule will divert HHS staff from tackling these crucial and time-sensitive tasks.

For the above reasons, the AFL-CIO urges the Department to revoke this proposed rulemaking and focus on the urgent health care needs faced by working families in this country everyday.

Sincerely,

Lee Goldberg

Health Policy Specialist

[email protected]

(240) 393-7328

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Footnotes:

1/ 85 Federal Register 7097, no. 214, November 4, 2020.

2/ 5 U.S.C. Sec. 551, et seq.

3/ Todd Garvey, A Brief Overview of Rulemaking and Judicial Review, Congressional Research Service, March 27, 2017. https://fas.org/sgp/crs/misc/R41546.pdf

4/ 5 U.S.C. Sec. 551(5) (defining "rule making" to include "agency process for formulating, amending, or repealing a rule"); see also Perez v. Mortg. Bankers Ass'n, 575 U.S. 92, 101 (2015) (explaining that Sec. 551 "mandate[s] that agencies use the same procedures when they amend or repeal a rule as they used to issue the rule in the first instance").

5/ Friends of Anmials v. Bernardt, 961 F.3d 1197, 1205 (DC Cir. 2020).

6/ 85 Fed. Reg. at 70104.

7/ Id. at 70109.

8/ 8 Kristin E. Hickman, Interim-Final or Temporary Regulations: Playing Fast and Loose with the Rules (Sometimes), February 1, 2018. https://www.yalejreg.com/nc/interim-final-or-temporary-regulations-playing-fastandloose-with-the-rules-sometimes-by-kristin-e-hickman/

9/ Jennifer Nash and Daniel E. Walters, Public Engagement and Transparency in Regulation: A Field Guide to Regulatory Excellence, University of Pennsylvania Law School Research Paper Prepared for the Penn Program on Regulation's Best-in-Class Regulator Initiative, June, 2015. https://www.law.upenn.edu/live/files/4709-nashwalterspprresearchpaper062015.pdf

10/ Garvey, supra.

11/ Hickman, supra.

12/ Title 52 - State Government, Departments and Officers. Section 52:14B-5.1 - Expiration of rules; continuation. N.J. Stat. Ann sec 52:14B-5.1(b)

13/ N.Y. A.P.A. Law Sec. 207 Revising of Existing Rules

14/ Title X, Subtitle A, Chapter 2001. Sec. 2001.039 (Agency Review of Existing Rules).

15/ OECD, Latest Developments on Korea's Regulatory Policy, at 2. https://www.oecd.org/gov/regulatorypolicy/ 45347364.pdf.

16/ 5 U.S.C. Sec. 611.

17/ 85 Fed. Reg. at 70109. The Department does not offer any information for how the public should understand the difference between an "important Regulation" that the Department anticipates would not expire due to the Department's failure to Assess or Review it before the deadline and an unimportant regulation that might so expire.

18/ William Funk, HHS Proposes to Sunset Regulations It Fails to Review Retrospectively, December 1, 2020. https://www.yalejreg.com/nc/hhs-proposes-to-sunset-regulations-it-fails-to-review-retrospectively-by-william-funk/.

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The proposed rule can be viewed at: https://www.regulations.gov/document?D=HHS-OS-2020-0012-0001

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