Home/Federal/Federal Register/2021-23472

Proposed Rule2021-23472

Securing Updated and Necessary Statutory Evaluations Timely; Proposal To Withdraw or Repeal

Primary source

Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.

Published

October 29, 2021

Issuing agencies

Health and Human Services DepartmentFood and Drug AdministrationPublic Health ServiceCenters for Medicare & Medicaid ServicesChildren and Families Administration

Abstract

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.

Full Text

<html>
<head>
<title>Federal Register, Volume 86 Issue 207 (Friday, October 29, 2021)</title>
</head>
<body><pre>
[Federal Register Volume 86, Number 207 (Friday, October 29, 2021)]
[Proposed Rules]
[Pages 59906-59931]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-23472]

[[Page 59906]]

=======================================================================
-----------------------------------------------------------------------

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: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. 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 <a href="https://www.regulations.gov">https://www.regulations.gov</a>. 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 <a href="/cdn-cgi/l/email-protection#671502110e02100917150a270f0f1449000811"><span class="__cf_email__" data-cfemail="d3a1b6a5bab6a4bda3a1be93bbbba0fdb4bca5">[email&#160;protected]</span></a>; 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

[[Page 59907]]

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.

[[Page 59908]]

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 <a href="https://www.regulations.gov/document/HHS-OS-2020-0012-0501">https://www.regulations.gov/document/HHS-OS-2020-0012-0501</a>) (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

[[Page 59909]]

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

[[Page 59910]]

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

[[Page 59911]]

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 <a href="https://www.hhs.gov/about/agencies/iea/tribal-affairs/consultation/index.html">https://www.hhs.gov/about/agencies/iea/tribal-affairs/consultation/index.html</a>).
---------------------------------------------------------------------------

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:
<bullet> 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;''
<bullet> 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[ ];''
<bullet> 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;''
<bullet> 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;''
<bullet> 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
<bullet> 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

[[Page 59912]]

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 <a href="https://www.hhs.gov/regulations/federal-registry/index.html">https://www.hhs.gov/regulations/federal-registry/index.html</a>), 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,

[[Page 59913]]

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

[[Page 59914]]

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

[[Page 59915]]

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

[[Page 59916]]

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[hyphen]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

[[Page 59917]]

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 <a href="https://advocacy.sba.gov/2017/08/31/a-guide-for-government-agencies-how-to-comply-with-the-regulatory-flexibility-act/">https://advocacy.sba.gov/2017/08/31/a-guide-for-government-agencies-how-to-comply-with-the-regulatory-flexibility-act/</a>) (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

[[Page 59918]]

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

[[Page 59919]]

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 <a href="https://www.acus.gov/sites/default/files/documents/Recommendation%25202014-5%2520%2528Retrospective%2520Review%2529_1.pdf">https://www.acus.gov/sites/default/files/documents/Recommendation%25202014-5%2520%2528Retrospective%2520Review%2529_1.pdf</a>).
\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
<a href="https://www.acus.gov/sites/default/files/documents/Aldy%2520Retro%2520Review%2520Draft%252011-17-2014.pdf">https://www.acus.gov/sites/default/files/documents/Aldy%2520Retro%2520Review%2520Draft%252011-17-2014.pdf</a>).
\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 <a href="https://www.acus.gov/sites/default/files/documents/Redline%20-%20Periodic%20Retrospective%20Review%20-%20Final.pdf">https://www.acus.gov/sites/default/files/documents/Redline%20-%20Periodic%20Retrospective%20Review%20-%20Final.pdf</a>.
\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

[[Page 59920]]

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 <a href="https://www.acus.gov/report/periodic-retrospective-review-report-final">https://www.acus.gov/report/periodic-retrospective-review-report-final</a> (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 <a href="https://www.hhs.gov/about/budget/fy2021/performance/regulatory-reform/index.html">https://www.hhs.gov/about/budget/fy2021/performance/regulatory-reform/index.html</a>). 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
<a href="https://www.fda.gov/food/food-safety-modernization-act-fsma/fsma-rules-guidance-industry#Rules">https://www.fda.gov/food/food-safety-modernization-act-fsma/fsma-rules-guidance-industry#Rules</a> (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

[[Page 59921]]

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.

[[Page 59922]]

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 consider the rule in the time that was allotted for comments
for the SUNSET proposed rule, and, as a result, the procedure may be
vulnerable under the APA.\31\
---------------------------------------------------------------------------

\31\ Because the instant notice proposes to continue the status
quo by withdrawing a rule that has not yet taken effect, and because
commenters have already had the opportunity to submit comments on
the topic, the Department believes that 60 days for commenting at
this stage of the rulemaking is sufficient.
---------------------------------------------------------------------------

E. Vague and Confusing Provisions

The SUNSET final rule states that ``it is crucial to the proper
function of this final rule that the Department and public clearly
understand the scope and timing of the Assessment and Review process.''
86 FR 5721. However, upon reconsideration, the Department has found
many ambiguities that could impede the ability of the Department and
the public to determine the scope and timing of the assessment and
review process. This confusion may increase the burden on stakeholders
trying to navigate the assessment and review process. Process
ambiguities also increase the risk of the automatic expiration of HHS
regulations due to inadvertent noncompliance or misapplication of the
requirements.
The final rule was revised to use the term ``Section'' rather than
``Regulation'' to refer to a section of the CFR. The preamble explained
that this revision would enhance process clarity because ``it is clear
when a section of the CFR was first promulgated.'' Id. However, in
making this revision, the Department failed to consider that the rule
also requires that assessments and reviews be performed on all sections
of the CFR that HHS issued as part of the same rulemaking (and any
amendments or additions that may have been issued thereafter). As a
result, for any rulemakings that include revisions or cross-references
to previously promulgated sections of regulations alongside newly
promulgated sections of regulations, the scope and timing of the
assessment process prescribed in the SUNSET final rule could be
ambiguous.
For example, the FDA rulemaking ``Current Good Manufacturing
Practice, Hazard Analysis, and Risk-Based Preventive Controls for Human
Food'' (Preventive Controls for Human Food) was published on September
17, 2015 (80 FR 55907), and therefore would be expected by stakeholders
to be less than ten years old. However, in addition to new sections
first promulgated in 2015, the rule also included revisions to sections
of the CFR that were first promulgated in 1975, 1979, 1986, 1995, 1997,
2001, 2004, and 2008. Under the final rule, it is not clear how the
Department would determine when to assess CFR parts and sections that
are comprised of pieces initially promulgated at various times.
Commenters also expressed concern about ambiguity in the
categorical exceptions described in the proposed rule and included in
the final rule.\32\ Numerous commenters noted the lack of examples
provided, and stated the lack of clarity for the categorical exceptions
would leave the public unable to know which regulations would be
eligible for the exceptions. Accordingly, some commenters stated that
stakeholders would face a burden to conduct their own legal analysis.
---------------------------------------------------------------------------

\32\ Paragraph (g) in the regulatory text for each rule excluded
(1) Regulations that are prescribed by Federal law, such that the
Department exercises no discretion as to whether to promulgate the
Regulation and as to what is prescribed by the Regulation; (2)
Regulations whose expiration pursuant to this section would violate
any other Federal law; (3) The SUNSET final rule; (4) Regulations
that involve a military or foreign affairs function of the United
States; (5) Regulations addressed solely to internal agency
management or personnel matters; (6) Regulations related solely to
Federal Government procurement; and (7) Regulations that were issued
jointly with other Federal agencies, or that were issued in
consultation with other agencies because of a legal requirement to
consult with that other agency. 86 FR 5729.
---------------------------------------------------------------------------

Upon reexamination, the final rule may have failed to provide
additional meaningful examples of these exceptions and only offered
unspecific direction that categorical exceptions would be ``rare'' or
only applicable to ``a very small category.'' See 86 FR 5731. The
Department now recognizes the possibility that this lack of clarity
could delay the completion of the assessment process and place further
strain on the resources and effort needed to avoid the expiration of
regulations.
In addition, many commenters stated that it was improper for the
final rule to exclude the SUNSET rule itself from the requirements of
paragraph (c) of each of the codified provisions, meaning that under
the rule, the rule itself is not subject to assessment, review, or
expiration. The final rule based this exemption on an assumption that
the SUNSET rule would not ``directly impose on the public costs that
exceed benefits'' because no rules would expire due to lack of
assessment or review. 86 FR 5730. The Department now believes, as
described above, that this assumption was likely incorrect.

VI. Preliminary Regulatory Impact Analysis

A. Introduction, Summary, and Background

Introduction
We have examined the impacts of the proposed withdrawal or repeal
rule under E.O. 12866, E.O. 13563, the Regulatory Flexibility Act (RFA)
(5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub.
L. 104-4). EOs 12866 and 13563 direct us to assess all costs and
benefits of available regulatory alternatives and, when regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety,
and other advantages; distributive impacts; and equity). We believe
that this proposed withdrawal or repeal rule is a significant
regulatory action as defined by E.O. 12866.
The RFA requires us to analyze regulatory options that would
minimize any significant impact of a rule on small entities. Because
the proposed withdrawal or repeal rule would result in cost savings to
regulated entities, we propose to certify that the proposed withdrawal
or repeal rule will not have a significant economic impact on a
substantial number of small entities.

[[Page 59923]]

The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires
us to prepare a written statement, which includes an assessment of
anticipated costs and benefits, before proposing ``any rule that
includes any Federal mandate that may result in the expenditure by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100,000,000 or more (adjusted annually for
inflation) in any one year.'' The current threshold after adjustment
for inflation is $158 million, using the most current (2020) Implicit
Price Deflator for the Gross Domestic Product. This proposed withdrawal
rule would result in an expenditure in at least one year that meets or
exceeds this amount.
Summary of Costs and Benefits
The proposed withdrawal or repeal rule would withdraw or repeal the
SUNSET final rule. This proposed regulatory action would reduce the
time spent by the Department performing retrospective assessments and
reviews of its regulations, and time spent by the general public on
comments related to these assessments and reviews. We would 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
assessment and review, and uncertainty in the amount of time the public
will spend on comments.
In addition to these monetized effects, the proposed withdrawal or
repeal rule would also reduce regulatory uncertainty and regulatory
confusion anticipated under the SUNSET final rule. It would also reduce
the time spent by the Department on other activities that we have not
monetized or quantified, such as the time developing SECGs, and would
reduce the time spent by the public monitoring regulations undergoing
assessment or review and set to expire. The proposed withdrawal rule or
repeal would also result in forgone information as a result of not
performing the assessments and reviews.

Table 1--Summary of Benefits, Costs and Distributional Effects of Proposed Withdrawal Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
Units
------------------------------------
Category Primary Low High Discount Notes
estimate estimate estimate Year rate Period
dollars (percent) covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits:
Annualized Monetized $millions/year....... .......... .......... .......... .......... 7
3
Annualized Quantified..................... .......... .......... .......... .......... 7
3
---------------------------------------------------------------------------------------------------------
Qualitative............................... --Reduction in regulatory
uncertainty and confusion.
--Disbenefits from the information
foregone from not performing
assessments and reviews.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs:
Annualized................................ -$75.5 -$40.1 -$110.9 2020 7 2022-2031 Cost savings from not performing
Monetized $millions/year.................. -69.9 -37.2 -102.7 2020 3 2022-2031 assessments and reviews, and
time spent by the public on
comments.
Annualized Quantified..................... .......... .......... .......... .......... 7
3
Qualitative...............................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Transfers:
Federal Annualized Monetized $millions/ .......... .......... .......... .......... 7
year. 3
---------------------------------------------------------------------------------------------------------
From/To................................... From:
To:
---------------------------------------------------------------------------------------------------------
Other Annualized Monetized $millions/year. .......... .......... .......... .......... 7
3
---------------------------------------------------------------------------------------------------------
From/To................................... From:
To:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Effects:
State, Local or Tribal Government:
Small Business:
Wages:
Growth:
--------------------------------------------------------------------------------------------------------------------------------------------------------

We request comment on our estimates of costs and benefits of this
proposed withdrawal or repeal rule.
Background
On January 19, 2021, HHS issued the ``Securing Updated and
Necessary Statutory Evaluations Timely'' final rule. Under the SUNSET
final rule, all HHS regulations less than ten years old, with certain
exceptions, will cease to be effective ten years after issuance, unless
HHS performs an assessment of the regulation and a more detailed review
of those regulations that have a significant economic impact upon a
substantial number of small entities. The final rule also provides for
regulations older than ten years to cease to be effective unless
assessed and reviewed within an initial five-year period. HHS published
a regulatory impact analysis (SUNSET

[[Page 59924]]

RIA) alongside the final rule, providing estimates of the likely impact
of the policy on Departmental resources and time spent by the general
public related to these efforts. Following the initiation of
litigation, HHS issued an administrative delay of effective date,
effective as of March 19, 2021, which extended the effective date of
the final rule by one year to March 22, 2022. For the purposes of this
analysis, we refer to the January 19, 2021, final rule and March 19,
2021, administrative delay collectively as the SUNSET final rule.

B. Market Failure or Social Purpose Requiring Federal Regulatory Action

The SUNSET final rule establishes automatic expiration dates for
the Department's regulations, and a recurring assessment and review
process that it can follow to avoid such expirations. The SUNSET final
rule's RIA likely underestimates both the time commitment of a credible
assessment and review process, and the time spent by the general public
commenting on regulations undergoing assessment and review. Given the
volume of regulations affected, our revised expectations of the time
commitment necessary to conduct credible assessments and reviews, the
timeframes for completing these retrospective analyses, and subsequent
regulatory actions anticipated as a result of these analyses, it is
likely that regulations will automatically expire without substantive
review. The potential for regulations to automatically expire
introduces regulatory uncertainty, with potential negative
repercussions for stakeholders. The actuality of having regulations
expire automatically could lead to regulatory confusion among
stakeholders and harm the public health in numerous ways, as described
in the preamble to the proposed withdrawal rule. This proposed
withdrawal or repeal rule is therefore needed to improve the
functioning of Government and to reduce the costs to the Department and
the general public associated with the SUNSET final rule.

C. Purpose of the Proposed Withdrawal or Repeal Rule

The purpose of the proposed withdrawal or repeal rule is to revoke
the SUNSET final rule. If finalized, this regulatory action would
directly address the potential harm from the automatic expiration of
the Department's regulations. The proposed withdrawal or repeal rule
would generate cost savings to the Department from reductions in staff
time spent on assessments and reviews, and on related activities. It
would also generate cost savings to the general public by reducing time
spent on public comments related to these assessments and reviews, and
on other activities, such as monitoring potentially expiring
regulations. The proposed withdrawal rule would also reduce any
regulatory uncertainty from the potential automatic expiration of
rules.

D. Baseline Conditions

We adopt a baseline that assumes the requirements of the January
19, 2021, SUNSET final rule \33\ remain in place over the period of our
analysis, accounting for a one-year administrative delay of effective
date.\34\ The SUNSET RIA contains monetized estimates of the costs to
the Department to perform retrospective analyses of existing
regulations and the costs to the public to monitor and respond to
anticipated regulatory actions taken by the Department following these
retrospective analyses. For the purpose of estimating the time spent on
retrospective analyses under the baseline of this analysis, we maintain
the assumption in the SUNSET RIA that the Department will satisfy the
requirements of the SUNSET final rule and no regulations will
automatically expire.\35\ We also maintain various assumptions in the
SUNSET RIA relating to the timing of the effects and treatment of the
one-year waiver provision that allows the Secretary to make one-time,
case-by-case exceptions to the automatic expiration of a rule. We also
maintain the SUNSET RIA's choice of a 10-year time horizon for the
analysis and adopt a base year of 2022 for discounting purposes. In
this section, we reconsider several other assumptions underlying the
cost estimates in the SUNSET RIA, and discuss additional cost drivers
not identified and monetized in the analysis. These revised estimates
inform our baseline scenario of no further regulatory action.
---------------------------------------------------------------------------

\33\ 86 FR 5694.
\34\ 86 FR 15404.
\35\ This approach allows for a more direct comparison with the
estimates contained in the SUNSET RIA and follows a common practice
in regulatory impact analysis to assess costs assuming full
compliance with the regulation. We supplement the full-compliance
estimates by identifying the likely impacts associated with less
than full compliance. The HHS Guidelines for Regulatory Impact
Analysis (available at <a href="https://aspe.hhs.gov/system/files/pdf/242926/HHS_RIAGuidance.pdf">https://aspe.hhs.gov/system/files/pdf/242926/HHS_RIAGuidance.pdf</a>.), Chapter 4 ``Assess Costs,'' contains a more
complete discussion of this approach.
---------------------------------------------------------------------------

Regulations Subject to the SUNSET Final Rule
We adopt the SUNSET RIA's estimate of 17,200 regulations
potentially subject to the SUNSET final rule that would need to be
assessed in the first ten years. For each of these regulations, the
Department will need to perform an assessment to determine whether the
regulation imposes a significant economic impact on a substantial
number of small entities. The SUNSET RIA estimates that roughly five
regulations on average are part of the same rulemaking and could be
assessed at one time. We maintain this assumption and terminology,
which results in a total of 3,600 assessments in the first ten years.
The SUNSET RIA assumes that 11% of these assessments, or 396, impose a
significant economic impact on a substantial number of small entities,
but reduces this figure to 370 to account for rulemakings that are
likely to be reviewed for reasons other than the SUNSET final rule.
This adjustment similarly reduces the estimate of the number of
rulemakings impacted by the SUNSET final rule to 3,574.
For each of these 370 rulemakings, the Department will need to
perform a review, which includes a retrospective regulatory flexibility
analysis. The SUNSET RIA distinguishes between the 44 rulemakings that
predate the Regulatory Flexibility Act and are unlikely to have an
existing prospective regulatory flexibility analysis, and the remaining
326 rulemakings that are assumed to have an existing prospective
analysis. The SUNSET RIA also estimates there will be 160 rulemakings
assessed to have a significant impact on a substantial number of small
entities that have not previously been identified as having a
significant economic impact. An Agency will need to perform a review of
these rulemakings under the SUNSET final rule.
The SUNSET final rule provides for an initial five-year period for
the Department to address regulations older than ten years. We maintain
the assumption in the SUNSET RIA that assessments and reviews required
in the first five years will be completed evenly across this time
period, and that the remaining assessments and reviews will be
completed evenly across the next five-year time period. Table D1
presents the yearly count of assessments and reviews anticipated under
the baseline scenario. These figures are broadly consistent with the
figures contained in the SUNSET RIA; however, unlike that analysis, we
do not reduce the number of assessments under the SUNSET final rule by
the number of reviews

[[Page 59925]]

performed, since these assessments occur first and serve to identify
regulations requiring review.

Table D1--Baseline Assessments and Reviews Under the SUNSET Rule
----------------------------------------------------------------------------------------------------------------
Reviews
Year Total ------------------------------------------------ Total
assessments Pre-RFA Post-RFA Not specified
----------------------------------------------------------------------------------------------------------------
2022............................ 683.0 8.8 61.8 30.6 101.2
2023............................ 683.0 8.8 61.8 30.6 101.2
2024............................ 683.0 8.8 61.8 30.6 101.2
2025............................ 683.0 8.8 61.8 30.6 101.2
2026............................ 683.0 8.8 61.8 30.6 101.2
2027............................ 31.8 0.0 3.4 1.4 4.8
2028............................ 31.8 0.0 3.4 1.4 4.8
2029............................ 31.8 0.0 3.4 1.4 4.8
2030............................ 31.8 0.0 3.4 1.4 4.8
2031............................ 31.8 0.0 3.4 1.4 4.8
-------------------------------------------------------------------------------
Total....................... 3,574.0 44.0 326.0 160.0 530.0
----------------------------------------------------------------------------------------------------------------

Time Per Assessment and Per Review
The SUNSET RIA contains estimates of the time per assessment and
time per review performed under the SUNSET final rule. For each
assessment, the SUNSET RIA assumes that it will require between 3 and
10 hours to assess a rulemaking. For each review, the SUNSET RIA
assumes that it will require between 250 and 500 hours to review
rulemakings that predate the RFA, and between 40 and 100 hours to
review rulemakings that postdate the RFA.
The Department now believes the SUNSET RIA likely underestimates
the time necessary to credibly assess whether a regulation imposes a
significant economic impact on a substantial number of small entities.
The SBA Office of Advocacy published ``A Guide for Government Agencies:
How to Comply with The Regulatory Flexibility Act,'' detailing a step-
by-step approach for analysts.\36\ For each of the 3,574 rulemakings
requiring an assessment under the SUNSET final rule, an Agency will
need to define the problem and describe the regulated entities,
estimate economic impacts by size categories, and determine which size
categories incur significant impacts. The SBA guide presents a two-page
checklist containing the elements of an adequate certification. In
practice, when performing a threshold analysis, analysts will face
novel conceptual issues and data challenges, both of which require
thoughtful consideration and professional judgement. Furthermore, SBA
indicates that it is not sufficient to rely on an assessment made at
the time a regulation was published:
---------------------------------------------------------------------------

\36\ Available at <a href="https://cdn.advocacy.sba.gov/wp-content/uploads/2019/06/21110349/How-to-Comply-with-the-RFA.pdf">https://cdn.advocacy.sba.gov/wp-content/uploads/2019/06/21110349/How-to-Comply-with-the-RFA.pdf</a>.

In some cases, even if an agency was originally able to certify
properly under section 605 of the RFA that a rule would not have a
significant economic impact on a substantial number of small
entities, changed conditions may mean that the rule now does have a
significant impact and therefore should be reviewed under section
610. For example, many more small businesses may be subject to the
rule now than when the rule was promulgated. The cost of compliance
with a current rule may have increased sharply because of a required
---------------------------------------------------------------------------
new technology. (SBA, pp. 80-81)

We assume that, under the baseline scenario of the SUNSET final
rule, the Department will follow the recommendations in the SBA
guidance, and will perform a credible threshold analysis for each
rulemaking to assess whether it imposes a significant economic impact
on a substantial number of small entities. Each assessment will likely
require time by an economist or other analyst to perform and document
the threshold analysis, with input from at least one subject matter
expert on the area of the regulation. Recognizing the need to fully
respond to all the requirements, we modify the assumption in the SUNSET
RIA and adopt an estimate of 40 to 100 hours to complete a credible
threshold analysis for each rulemaking requiring an assessment.
As described earlier, the SUNSET RIA contains two estimates for the
time necessary to perform a retrospective analysis. For rulemakings
published before the RFA was enacted, the SUNSET RIA assumes between
250 and 500 hours per review. For rulemakings published after the RFA
was enacted, the SUNSET RIA assumes that a prospective regulatory
flexibility analysis is available and further assumes that this will
reduce the time necessary to complete a review, adopting a range of 40
and 100 hours per review. For the 160 rulemakings newly found to have a
significant impact, the SUNSET RIA assumes that it will take between 40
and 100 hours to complete a review. The Sensitivity Analysis Section of
the SUNSET RIA acknowledges that ``[o]ne commenter noted that
conducting a retrospective analysis can be as time-consuming and
expensive as a prospective regulatory analysis, suggesting the
Department's estimates of the time and expense of Reviews may be
understated.'' Upon further consideration, the Department believes that
the commenter is likely correct.
For the analysis of this proposed withdrawal rule, we adopt the
SUNSET RIA estimate of 250 to 500 hours for all retrospective analyses,
regardless of when the underlying rulemaking was published. If
previously published prospective or retrospective regulatory
flexibility analyses are generally available, analysts may be able to
build off of these previous analytic efforts when developing a
retrospective analysis under the SUNSET rule. All else equal, this
would suggest the average time per retrospective may be closer to the
lower-bound estimate of 250 hours. If these analyses are not generally
available, this would suggest an average time per retrospective closer
to the upper-bound estimate of 500 hours. We do not address the
assumption in the SUNSET RIA that a prospective regulatory flexibility
analysis is available for every rulemaking published after the RFA was
enacted, because it does not impact the estimate of the overall time
spent on reviews under the baseline scenario. Our approach also allows
us to ignore the apparent internal inconsistency in the SUNSET RIA
underlying the time

[[Page 59926]]

per review of the 160 rulemakings that are newly assessed to have a
significant impact.
The SUNSET RIA is not clear on what activities are included in its
estimates of the time per review other than the time spent developing a
retrospective analysis. We interpret the magnitudes of these estimates
to exclude a consideration of time spent on activities other than
drafting the retrospective analysis. For example, the agency may need
to conduct a study or survey to gather data to inform its analyses. We
therefore include an additional 250 hours to 500 hours per review to
account for this omission. This estimate reflects time spent by the
Department by subject matter experts, lawyers, and other reviewers
informing the retrospective analysis and providing feedback on draft
analyses. It also reflects time spent by economists and other analysts
developing the retrospective analysis to respond to this feedback, and
time spent reading and incorporating evidence from other sources,
including public comments. Table D2 summarizes the assumptions in the
SUNSET RIA and our revised assumptions for the proposed withdrawal rule
of the time per assessment and time per review performed under the
baseline scenario of the SUNSET final rule. Combining the time spent on
retrospective analysis and on other related activities, we estimate
that each review will take between 500 and 1,000 hours to complete.

Table D2--Hours per Assessment and Review
----------------------------------------------------------------------------------------------------------------
Sunset RIA Proposed withdrawal rule
Baseline requirement ---------------------------------------------------------------
Low High Low High
----------------------------------------------------------------------------------------------------------------
Assessment...................................... 3 10 40 100
Review: Retrospective Analysis, pre-RFA 250 500 250 500
regulation.....................................
Review: Retrospective Analysis, post-RFA 40 100 250 500
regulation.....................................
Review: Retrospective Analysis, Not Specified... 40 100 250 500
Review: Other Activities........................ 0 0 250 500
----------------------------------------------------------------------------------------------------------------

Time Spent by the Public To Monitor and Comment
Under the SUNSET final rule, the Department would create a docket
on <a href="http://www.Regulations.gov">www.Regulations.gov</a> for each assessment or review that the
Department is conducting. The public would then be able to submit
comments to the dockets of each rulemaking being assessed or reviewed.
The SUNSET RIA includes a discussion of the costs to the stakeholders
to monitor and comment on regulations as they are undergoing assessment
and review; however, the analysis assigns no costs to the Department
associated with setting up these dockets or engaging with the comments.
The analysis also does not monetize any other costs associated with
operationalization of the SUNSET final rule, which also requires
developing a schedule for activities associated with the SUNSET final
rule, publishing monthly updates, and establishing a website dashboard
to help the public monitor the Department's progress.
When estimating the impact on the public, the SUNSET RIA first
estimates that 53 rulemakings will be rescinded and another 159
rulemakings amended as a result of the retrospective analyses initiated
as a result of the SUNSET final rule, monetizing the time spent by the
public responding to those 212 rulemakings. The SUNSET RIA assumes
that, for each of the 53 rulemakings rescinded following a review
completed under the SUNSET final rule, the public will submit 243
comments; and for each of the 159 rulemakings amended, the public will
submit 486 comments. This will result in an estimated 90,153 comments,
for which the SUNSET RIA assumes that each commenter will spend between
5 and 15 hours. Presumably, this estimate is inclusive of finding out
that the rulemaking is likely to be rescinded or amended, reading and
understanding the rulemaking, completing further research,
communicating with other stakeholders, identifying concerns, and
drafting and submitting comments. The Preamble to the SUNSET final rule
anticipates that the Department will create on its website a dashboard
that shows its progress on its Assessments and Reviews. Therefore, we
assume that any reduction in the time spent by the public attributable
to this dashboard is accounted for in these time estimates. For the
purposes of this analysis, we adopt the SUNSET RIA's assumption about
the time spent per comment.
The SUNSET RIA's discussion of the timing assumptions suggests the
public will wait until the retrospective is complete and an Agency has
announced it intends to rescind or amend a rulemaking before
commenting. Furthermore, for the remaining 3,388 rulemakings subject to
the SUNSET final rule that will be available for public comment prior
to an Agency assessment or review, the SUNSET RIA assumes the public
will offer no comments. These assumptions appear at odds with the
decision to invite public comment during both the assessment and review
processes. Furthermore, as discussed by the SBA,\37\ ``[i]nsights about
an existing regulation received from regulated entities and other
interested parties should be a key component of a retrospective rule
review. By 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.''
---------------------------------------------------------------------------

\37\ Available at <a href="https://cdn.advocacy.sba.gov/wp-content/uploads/2019/06/21110349/How-to-Comply-with-the-RFA.pdf">https://cdn.advocacy.sba.gov/wp-content/uploads/2019/06/21110349/How-to-Comply-with-the-RFA.pdf</a> pg. 83.
---------------------------------------------------------------------------

Upon further consideration, the Department finds it more likely
that the public will comment on rulemakings undergoing assessment and
review rather than wait until learning the specific rulemakings that
will be rescinded or amended as a result of these assessment and
reviews. We adopt the SUNSET RIA's estimate of 486 comments per
rulemaking, but instead apply this to the 570 rulemakings that,
following a threshold analysis in an assessment, an Agency will begin
to review. We believe that the public will submit fewer comments for
rulemakings undergoing an assessment, and adopt an assumption of 25
comments per assessment. Table D3 summarizes a comparison of the
assumptions in the SUNSET RIA and in the baseline analysis of this
proposed withdrawal rule of the comments per assessment and review, and
for the subsequent

[[Page 59927]]

regulatory actions to rescind or amend rulemakings.

Table D3--Baseline Comments per Action
------------------------------------------------------------------------
Proposed
Baseline requirement SUNSET RIA withdrawal rule
------------------------------------------------------------------------
Assessment........................ 0 25
Review............................ 0 486
Rescission........................ 486 N/A
Amendment......................... 243 N/A
------------------------------------------------------------------------

Considerations Related to Rescissions and Amendments
As described earlier, the SUNSET RIA envisions the Department
identifying and rescinding 53 rulemakings and amending 159 rulemakings
following completed reviews under the SUNSET final rule. Upon further
reflection, the Department no longer believes it was appropriate to
unambiguously attribute to the SUNSET rulemaking subsequent regulatory
actions of this nature in the context of a regulatory impact analysis.
Even if the challenging attribution questions could be resolved, we
believe that the SUNSET RIA understates the impact of the SUNSET rule
since it implicitly assumes that the Department would not have to spend
any time to develop and publish subsequent regulatory actions to
rescind or amend existing regulations. This unstated assumption is
difficult to justify. Since these anticipated regulatory actions relate
to regulations that have a significant economic impact on a substantial
number of small entities, we expect that these actions will need to
involve subject matter experts, legal review, policy coordination,
Departmental clearance, and a communications strategy to bring
transparency to the process. For certain regulatory actions, we
anticipate the need for review by the Office of Management and Budget.
We have not attempted to estimate the time associated with developing
these regulatory actions.
Baseline Effect of the SUNSET Rule
To quantify the likely effect of the SUNSET final rule on the
Department, we multiply the number of assessments and number of reviews
from Table D1 by the assumptions relating to the time per assessment
and time per review described in Table D2. To quantify the likely
effect of the SUNSET final rule on the public, we multiply the figures
in Table D1 by the assumptions relating to the comments per assessment
and comments per review described in Table D3. This gives us estimates
for the number of comments, which we then multiply by the time
estimates per comment, described above, to estimate the total time
spent by the public. Table D4 presents yearly estimates of hours spent
related to assessments performed under the SUNSET final rule to the
Department and the public. Table D5 presents comparable figures related
to reviews. Table D6 presents the total time anticipated under the
SUNSET rule related to assessments and reviews.

Table D4--Hours Related to Assessments Under the SUNSET Rule
----------------------------------------------------------------------------------------------------------------
Department Public
Year Assessments ---------------------------------------------------------------
Low High Low High
----------------------------------------------------------------------------------------------------------------
2022............................ 683 27,320 68,300 85,375 256,125
2023............................ 683 27,320 68,300 85,375 256,125
2024............................ 683 27,320 68,300 85,375 256,125
2025............................ 683 27,320 68,300 85,375 256,125
2026............................ 683 27,320 68,300 85,375 256,125
2027............................ 32 1,272 3,180 3,975 11,925
2028............................ 32 1,272 3,180 3,975 11,925
2029............................ 32 1,272 3,180 3,975 11,925
2030............................ 32 1,272 3,180 3,975 11,925
2031............................ 32 1,272 3,180 3,975 11,925
----------------------------------------------------------------------------------------------------------------

Table D5--Hours Related to Reviews Under the SUNSET Rule
----------------------------------------------------------------------------------------------------------------
Department Public
Year Reviews ---------------------------------------------------------------
Low High Low High
----------------------------------------------------------------------------------------------------------------
2022............................ 101 50,600 101,200 245,916 737,748
2023............................ 101 50,600 101,200 245,916 737,748
2024............................ 101 50,600 101,200 245,916 737,748
2025............................ 101 50,600 101,200 245,916 737,748
2026............................ 101 50,600 101,200 245,916 737,748
2027............................ 5 2,400 4,800 11,664 34,992
2028............................ 5 2,400 4,800 11,664 34,992
2029............................ 5 2,400 4,800 11,664 34,992
2030............................ 5 2,400 4,800 11,664 34,992
2031............................ 5 2,400 4,800 11,664 34,992
----------------------------------------------------------------------------------------------------------------

[[Page 59928]]

Table D6--Total Hours Related to the SUNSET Rule
----------------------------------------------------------------------------------------------------------------
Department Public
Year ---------------------------------------------------------------
Low High Low High
----------------------------------------------------------------------------------------------------------------
2022............................................ 77,920 169,500 331,291 993,873
2023............................................ 77,920 169,500 331,291 993,873
2024............................................ 77,920 169,500 331,291 993,873
2025............................................ 77,920 169,500 331,291 993,873
2026............................................ 77920 169,500 331,291 993,873
2027............................................ 3,672 7,980 15,639 46,917
2028............................................ 3,672 7,980 15,639 46,917
2029............................................ 3,672 7,980 15,639 46,917
2030............................................ 3,672 7,980 15,639 46,917
2031............................................ 3,672 7,980 15,639 46,917
----------------------------------------------------------------------------------------------------------------

While these time estimates are significant, they are not inclusive
of all costs expected under the SUNSET final rule. In addition to the
quantified estimates above, we expect that the Department will
experience other costs related to the requirements of the SUNSET rule
under the baseline scenario. For example, the estimates above do not
include time spent reviewing guidance documents related to rulemaking
undergoing assessment and review. They also do not include the time
associated with developing SECGs for the 160 rulemakings newly found to
have a significant impact on a substantial number of small entities, or
the time associated with updating existing guides for other
rulemakings. The figures above also omit the monetary costs to purchase
data and data subscriptions that we anticipate will serve as critical
inputs for the assessments and reviews, and costs associated with
conducting formal evaluations to understand the impact of the rules.
As an additional consideration, we estimate that assessing and
reviewing regulations will require the equivalent of 67 and 146 full-
time employees in each of the first five years of the analysis,
adopting the SUNSET RIA's estimate of 1,160 hours of work per year per
employee. Given current staffing and other Departmental needs and
priorities, we anticipate the need to hire non-government experts to
perform a share of the retrospective work. This approach will likely
result in additional overhead costs that we have not quantified. We
also anticipate the need to spend Departmental resources to find, hire,
train, and transfer personnel with technical expertise to conduct the
analyses, which have not been quantified in this analysis.

E. Benefits of the Proposed Withdrawal or Repeal Rule

The monetized benefits of this regulatory action to withdraw or
repeal the SUNSET final rule are the cost savings to the Department
from not completing the assessments and reviews required under the
baseline scenario, and the cost savings to the public from not
commenting on these assessments and reviews. To monetize these cost
savings, we multiply the hours related to the SUNSET final rule in
Table D6 by the cost per hour of these activities. We adopt the SUNSET
RIA's estimates of 244.98 per hour developing assessments and reviews
and 143.20 per hour spent submitting comments. Table E1 presents the
yearly cost savings to the Department and the public expected under the
proposed withdrawal or repeal rule compared to the baseline scenario.
We combine the low estimates for the Department and the public to
generate an overall low estimate, and similarly combine the high
estimates for the Department and the public to generate an overall high
estimate. We also report an overall primary estimate, which is the
midpoint between the low and high estimates. Finally, we report the
present discounted value (PDV) and annualized cost savings under the
proposed withdrawal or repeal rule for both a 3% and 7% discount rate.
All figures are reported in 2020 dollars, in millions.

Table E1--Cost Savings Under the Proposed Withdrawal Rule
[Millions of $]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Department Public Overall
Year ---------------------------------------------------------------------------------------------------------------
Low High Low High Low Central High
--------------------------------------------------------------------------------------------------------------------------------------------------------
2022.................................... $19.1 $41.5 $47.4 $142.3 $66.5 $125.2 $183.8
2023.................................... 19.1 41.5 47.4 142.3 66.5 125.2 183.8
2024.................................... 19.1 41.5 47.4 142.3 66.5 125.2 183.8
2025.................................... 19.1 41.5 47.4 142.3 66.5 125.2 183.8
2026.................................... 19.1 41.5 47.4 142.3 66.5 125.2 183.8
2027.................................... 0.9 2.0 2.2 6.7 3.1 5.9 8.7
2028.................................... 0.9 2.0 2.2 6.7 3.1 5.9 8.7
2029.................................... 0.9 2.0 2.2 6.7 3.1 5.9 8.7
2030.................................... 0.9 2.0 2.2 6.7 3.1 5.9 8.7
2031.................................... 0.9 2.0 2.2 6.7 3.1 5.9 8.7
PDV, 3%................................. 91.0 197.9 226.1 678.3 317.1 596.7 876.2
PDV, 7%................................. 80.9 176.0 201.1 603.2 282.0 530.6 779.2
Annualized, 3%.......................... 10.7 23.2 26.5 79.5 37.2 69.9 102.7
Annualized, 7%.......................... 11.5 25.1 28.6 85.9 40.1 75.5 110.9
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 59929]]

For comparison, in present value terms, these estimates of
annualized cost savings are more than four times the size of the
annualized cost estimates included in the SUNSET RIA. This reflects
what the Department has now concluded are more reasonable assumptions
about the effect of the SUNSET final rule rather than a claim that the
combination of these two regulatory actions would generate net cost
savings. These cost savings estimates are consistent with a scenario
that the Department returns to its approach to Section 610 reviews that
immediately predate the publication of the SUNSET final rule on January
19, 2021. We believe that this represents a credible and appropriate
approach for estimating the likely cost savings that would be
attributable to the proposed withdrawal or repeal rule, if it is
finalized. Other considerations relating to the appropriate frequency
or nature of retrospective economic analyses of existing Departmental
regulations are beyond the scope of this preliminary regulatory impact
analysis.
In the previous section, we discussed concerns about potential
costs of the SUNSET final rule that were overlooked in the SUNSET RIA.
To the extent that we are unable to quantify or monetize these costs,
such as the purchase of data, conducting studies to evaluate the
impacts of rules, additional overhead costs associated with contracting
with non-government entities to perform a share of the retrospective
work, and other personnel costs, the cost savings anticipated under the
proposed withdrawal or repeal rule would be equally underestimated.
In addition to cost savings, the proposed withdrawal or repeal rule
would generate non-quantified benefits from reduced regulatory
uncertainty. Although we calculate the cost savings estimates in this
analysis by adopting an assumption that the Department will fulfill the
requirements of the SUNSET final rule rather than to let any regulation
expire automatically, it is highly likely that some regulations will
automatically expire without substantive review. Revoking the SUNSET
final rule would remove the expiration provisions, which would also
remove the likelihood of any automatic expiration of regulatory
requirements. The proposed rule would also eliminate the potential for
regulatory confusion among stakeholders, and harm to the public health
related to the actuality of having regulations expire automatically.

F. Costs of the Proposed Withdrawal or Repeal Rule

The costs of the proposed withdrawal or repeal rule would be the
forgone benefits of the information learned from the assessments and
reviews completed under the baseline scenario. We adopt the approach
taken in the SUNSET RIA and make no attempt to quantify or monetize the
value of this information. The SUNSET RIA also describes potential
benefits from subsequent regulatory actions to rescind or amend
existing regulations as a result of the SUNSET final rule; however, the
Department now believes that any effects associated with future
regulatory actions raise challenging questions of attribution (entirely
to those regulatory actions themselves, or at least partially to the
SUNSET final rule). We therefore do not unambiguously identify these as
a source of foregone benefits under the proposed withdrawal rule.

G. Analysis of Regulatory Alternatives to the Proposed Withdrawal or
Repeal Rule

We analyze two alternative options to the proposed withdrawal rule.
First, we consider an option to maintain the general approach of the
SUNSET final rule, but adopt a two-year period following the effective
date to assess and review all regulations older than ten years. This
option, Alternative 1, follows the timeline envisioned under the
November 4, 2020, proposed rule.\38\ Second, we consider an option to
maintain the general approach of the SUNSET rule, but adopt an initial
ten-year period following the effective date to assess and review all
regulations, regardless of when they were first published. This option,
Alternative 2, evenly distributes the time spent by the Department
assessing and reviewing existing regulations.
---------------------------------------------------------------------------

\38\ 85 FR 70096.
---------------------------------------------------------------------------

Table G1 presents the primary estimates of yearly cost savings
under the proposed withdrawal rule and under the two policy
alternatives described above. All three policy options are compared to
the common baseline scenario described in section D. We report the PDV
and annualized cost savings under the proposed withdrawal or repeal
rule and two policy alternatives for both a 3% and 7% discount rate.
All figures are reported in 2020 dollars, in millions. In addition to
the monetized estimates below, Alternative 1 would increase the
likelihood that the Department would need to hire non-government
experts to perform a share of the retrospective work, resulting in
additional overhead costs that we have not monetized. Compared to the
baseline scenario, Alternative 2 reduces this likelihood and thus
reduces these overhead costs.

Table G1--Primary Estimate of Cost Savings Under the Proposed Withdrawal Rule and Alternatives
[Millions of $]
----------------------------------------------------------------------------------------------------------------
Proposed
Year withdrawal rule Alternative 1 Alternative 2
----------------------------------------------------------------------------------------------------------------
2022................................................... $125.2 -$187.8 $59.6
2023................................................... 125.2 -187.8 59.6
2024................................................... 125.2 121.5 59.6
2025................................................... 125.2 121.5 59.6
2026................................................... 125.2 121.5 59.6
2027................................................... 5.9 2.2 -59.6
2028................................................... 5.9 2.2 -59.6
2029................................................... 5.9 2.2 -59.6
2030................................................... 5.9 2.2 -59.6
2031................................................... 5.9 2.2 -59.6
PDV, 3%................................................ 596.7 -26.6 37.5
PDV, 7%................................................ 530.6 -54.5 70.2
Annualized, 3%......................................... 69.9 -3.1 4.4
Annualized, 7%......................................... 75.5 -7.8 10.0
----------------------------------------------------------------------------------------------------------------

[[Page 59930]]

H. Initial Small Entity Analysis

The Department has examined the economic implications of this
proposed withdrawal or repeal rule as required by the Regulatory
Flexibility Act. This analysis, as well as other sections in this
Regulatory Impact Analysis, serves as the Initial Regulatory
Flexibility Analysis, as required under the Regulatory Flexibility Act.
1. Description and Number of Affected Small Entities
The U.S. Small Business Administration (SBA) maintains a Table of
Small Business Size Standards Matched to North American Industry
Classification System Codes (NAICS).\39\ We replicate the SBA's
description of this table:
---------------------------------------------------------------------------

\39\ U.S. Small Business Administration (2019). ``Table of Size
Standards.'' August 19, 2019. <a href="https://www.sba.gov/document/support-table-size-standards">https://www.sba.gov/document/support-table-size-standards</a>.

This table lists small business size standards matched to
industries described in the North American Industry Classification
System (NAICS), as modified by the Office of Management and Budget,
effective January 1, 2017. The latest NAICS codes are referred to as
NAICS 2017.
The size standards are for the most part expressed in either
millions of dollars (those preceded by ``$'') or number of employees
(those without the ``$''). A size standard is the largest that a
concern can be and still qualify as a small business for Federal
Government programs. For the most part, size standards are the
average annual receipts or the average employment of a firm.

The SUNSET rule will potentially impact small entities across at
least NAICS industry sectors 11 (Agriculture, Forestry, Fishing and
Hunting), 31-33 (Manufacturing), 42 (Wholesale Trade), 44-45 (Retail
Trade), 48-49 (Transportation and Warehousing), 52 (Finance and
Insurance), 54 (Professional, Scientific, and Technical Services), 62
(Health Care and Social Assistance), 81 (Other Services (except Public
Administration)), and 92 (Public Administration). Given the wide range
of entities affected, and various sources of uncertainty described in
this section, it is not practical to directly estimate the number of
small entities that would potentially be impacted under the baseline
scenario of the SUNSET rule. Similarly, it is impractical to identify
the small entities that would be impacted by the proposed withdrawal or
repeal rule, if it is finalized. The Congressional Research Service
observes that ``about 97% of all employer firms qualify as small under
the SBA's size standards. These firms represent about 30% of industry
receipts.'' \40\ For practicality, we assume that the bulk of the
potential impacts of the proposed withdrawal or repeal rule to private
sector regulated entities are small entities.
---------------------------------------------------------------------------

\40\ Robert Jay Dilger (2021). ``Small Business Size Standards:
A Historical Analysis of Contemporary Issues.'' Congressional
Research Service Report R40860. Updated May 28, 2021. Page 2.
<a href="https://crsreports.congress.gov/product/pdf/R/R40860">https://crsreports.congress.gov/product/pdf/R/R40860</a>.
---------------------------------------------------------------------------

2. Description of the Potential Impacts of the Rule on Small Entities
Impacts to Small Entities Related to Rescissions and Amendments
When estimating the impact on the public, the SUNSET RIA first
estimates that 53 regulations will be rescinded and another 159
regulations will be amended as a result of the retrospective analyses
initiated as a result of the SUNSET rule. Since the particular
regulations impacted are unknowable prior to conducting the
retrospectives, this results in uncertainty over the types of small
entities that will be affected under the baseline scenario of the
SUNSET rule. The nature of this uncertainty means it is infeasible to
estimate the number of small entities affected by these potential
rescinded or amended regulations without first completing the
retrospectives.
As described earlier, the Department no longer believes it was
appropriate to unambiguously attribute to the SUNSET rulemaking
subsequent regulatory actions of this nature in the context of a
regulatory impact analysis. We therefore do not attribute any impacts
of this nature to the proposed withdrawal or repeal rule, nor do we
identify any impacts to small entities.
Impacts to Small Entities Related to the Automatic Expiration of
Regulations
When identifying the potential benefits of the proposed withdrawal
or repeal rule, we note that, while the Department will seek to fulfill
the requirements of the SUNSET rule rather than to let any regulation
expire automatically, it is highly likely that some regulations will
automatically expire without substantive review. This potential impact
under the SUNSET rule does not introduce similar questions of
attribution; however, there remains uncertainty over the particular
regulations that will be impacted. The nature of this uncertainty means
we cannot identify the small entities that are most likely to be
affected by regulations that automatically expire without substantive
review.
Revoking the SUNSET rule would remove the expiration provisions,
which would also remove the likelihood of any automatic expiration of
regulatory requirements. The proposed withdrawal or repeal rule would
also eliminate the potential for regulatory confusion among
stakeholders, including small entities. We anticipate that a large
share of these non-quantified benefits would accrue to small entities.
Impacts to Small Entities Related to Commenting on Assessments and
Reviews
When identifying the potential benefits of the proposed withdrawal
or repeal rule, we estimate the cost savings to the public from not
commenting on these assessments and reviews that would be performed
under the baseline scenario of the SUNSET rule. Table E1 summarizes
these estimates, including a range of cost-savings to the public sector
between $26.5 million and $79.5 million in annualized terms under a 3%
discount rate. Under a 7% discount rate, the comparable range of cost
savings is $28.6 million and $85.9 million. Although these represent
substantial cost savings in the aggregate, these include comments not
just from small entities but also the general public, larger
businesses, Tribes, States, non-governmental organizations, and other
regulated entities and stakeholders.
To evaluate the likely magnitude of the impact to a single small
entity, we consider an illustrative scenario of a full-time sole
proprietor that submits 1 or fewer comment per year. As described
earlier, we estimate that each comment takes between 5 and 15 hours to
prepare and submit. If the proposed withdrawal or repeal rule is
finalized, this would reduce the time spent on comments for this small
entity by 5 to 15 hours per year. This represents between 0.2% to 0.7%
of annual labor time saved, computed using an assumption that the
individual works 2,087 hours per year. As an additional sensitivity
analysis, we computed the number of comments that a sole proprietor
would need to submit in one year such that the time spent on comments
would exceed 3% of total time spent on labor. Assuming 2,087 hours of
labor time per year, the total time spent on comments to meet this
threshold is about 63 hours. Using a central estimate of 10 hours to
prepare and submit each comment, the sole proprietor could prepare up
to 6 comments per year without exceeding the 3% threshold. We expect
that fewer than 5 percent of small entities will share more than 6
comments per year on regulations undergoing a retrospective analysis
under the SUNSET rule. This indicates that the potential cost savings
to small entities under the proposed

[[Page 59931]]

withdrawal or repeal rule, if it is finalized, are unlikely to be
significant for a substantial number of small entities. The Department
considers a rule to have a significant impact on a substantial number
of small entities if it has at least a three percent impact on revenue
on at least five percent of small entities. This cost-saving benefit is
well below this threshold.

VII. Federalism

We have analyzed this proposed rule in accordance with the
principles set forth in E.O. 13132. We have determined that because the
SUNSET final rule has not become effective, this proposal to withdraw
the final rule, if finalized, will continue the status quo, and
therefore does not contain policies that have substantial direct
effects on the States, on the relationship between the National
Government and the States, or on the distribution of power and
responsibilities among the various levels of government. Accordingly,
we conclude that the rule does not contain policies that have
federalism implications as defined in the E.O. and, consequently, a
federalism summary impact statement is not required.

VIII. Consultation and Coordination With Indian Tribal Governments

We have analyzed this proposed rule in accordance with the
principles set forth in E.O. 13175. Multiple comments from
representatives of several Tribes and related groups expressed concern
that the SUNSET final rule would have significant tribal implications,
if implemented, and that consultation with Tribal governments on the
SUNSET proposed rule was not adequate. We agree.\41\ HHS remains
committed to holding meaningful tribal consultation consistent with the
HHS Tribal Consultation Policy. However, this proposed rule to withdraw
or repeal the final rule, if finalized, will continue the status quo,
and therefore does not contain policies that would have a substantial
direct effect on one or more Indian Tribes, on the relationship between
the Federal Government and Indian Tribes, or on the distribution of
power and responsibilities between the Federal Government and Indian
Tribes. Based on this status, as well as the comments already received
on this issue, we do not believe tribal consultation is required. We
plan to provide notice to Tribes of this proposed rule, acknowledging
tribal concerns with the lack of tribal consultation on the earlier
rulemaking and encouraging them to share any additional feedback by
providing written comments on this proposed withdrawal or repeal.
---------------------------------------------------------------------------

\41\ As explained in greater detail in the Administrative Delay
Order, Tribes should have been ``afforded an opportunity to comment
meaningfully on the rule's impact,'' but ``HHS failed to consult
with Tribal governments (or even notify them regarding the
proposal).'' 86 FR 15407.
---------------------------------------------------------------------------

IX. Analysis of Environmental Impacts

HHS had determined that the proposed rule will not have a
significant impact on the environment.

X. Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 and its
implementing regulations, 44 U.S.C. 3501-3521; 5 CFR part 1320,
appendix A.1, the Department has reviewed this proposed rule and has
tentatively determined that it proposes no new collections of
information.

XI. References

1. OIRA das

[…truncated; see source link]

View on FederalRegister.gov →Plain-text source

Indexed from Federal Register on October 29, 2021.

This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.