Rule2022-15567
Department of Health and Human Services Repeal of HHS Rules on Guidance, Enforcement, and Adjudication Procedures
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
July 25, 2022
Effective
August 24, 2022
Issuing agencies
Health and Human Services Department
Abstract
The Department of Health and Human Services (HHS or the Department) is issuing a final rule that repeals the regulations issued under two final rules: "Department of Health and Human Services Good Guidance Practices," published in the Federal Register of December 7, 2020; and "Department of Health and Human Services Transparency and Fairness in Civil Administrative Enforcement Actions," published in the Federal Register of January 14, 2021. This action removes HHS regulations regarding guidance, enforcement, and adjudication procedures.
Full Text
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<title>Federal Register, Volume 87 Issue 141 (Monday, July 25, 2022)</title>
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[Federal Register Volume 87, Number 141 (Monday, July 25, 2022)]
[Rules and Regulations]
[Pages 44002-44025]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-15567]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Part 1
[HHS-OS-2020-0008; HHS-OS-2021-0001]
RIN 0991-AC29
Department of Health and Human Services Repeal of HHS Rules on
Guidance, Enforcement, and Adjudication Procedures
AGENCY: Office of the Secretary, Department of Health and Human
Services.
ACTION: Final rule.
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SUMMARY: The Department of Health and Human Services (HHS or the
Department) is issuing a final rule that repeals the regulations issued
under two final rules: ``Department of Health and Human Services Good
Guidance Practices,'' published in the Federal Register of December 7,
2020; and ``Department of Health and Human Services Transparency and
Fairness in Civil Administrative Enforcement Actions,'' published in
the Federal Register of January 14, 2021. This action removes HHS
regulations regarding guidance, enforcement, and adjudication
procedures.
DATES: This rule is effective August 24, 2022.
ADDRESSES: For access to the docket to read background documents or
comments received, go to <a href="https://www.regulations.gov">https://www.regulations.gov</a> and insert the
docket number found in brackets in the heading of this final rule into
the ``Search'' box and follow the prompts.
FOR FURTHER INFORMATION CONTACT: Daniel J. Barry, Deputy General
Counsel, 200 Independence Avenue SW, Washington, DC 20201. Email:
<a href="/cdn-cgi/l/email-protection#1f5870707b586a767b7e717c7a5f77776c31787069"><span class="__cf_email__" data-cfemail="87c0e8e8e3c0f2eee3e6e9e4e2c7efeff4a9e0e8f1">[email protected]</span></a>. Telephone: 877-696-6775.
SUPPLEMENTARY INFORMATION:
I. Overview
HHS is repealing two procedural rules that were issued in December
2020 and January 2021 to implement Executive orders (EOs) issued on
October 9, 2019. One rule relates to guidance document procedures and
the other relates to civil administrative enforcement and adjudication
procedures (collectively, the Final Rules). The Department codified the
Final Rules in 45 CFR part 1.
On January 20, 2021, President Biden, under a new Administration,
revoked both EOs that served as the basis for the Final Rules and
directed agencies to promptly take steps to rescind any rules and
policies implementing or enforcing the revoked EOs, as appropriate and
consistent with applicable law. Accordingly, the Department has
reconsidered the Final Rules. We now conclude that they create
unnecessary hurdles that hinder the Department's ability to issue
guidance, bring enforcement actions, and take other appropriate actions
that advance the Department's mission. The Department continues to
abide by its longstanding commitment to follow applicable principles of
due process and administrative law; however, upon further reflection,
we now conclude that the Final Rules establish procedures well beyond
anything required by applicable law. Moreover, in significantly
burdening the Department, these procedures are inconsistent with the
policies and goals of the current Administration to ensure that HHS can
appropriately leverage administrative tools to protect and advance the
public health and welfare. In addition, the Final Rules created a
single set of procedures for guidance documents and civil enforcement
for the entire Department, which we believe is contrary to the
efficient and effective administration of the wide array of programs
carried out by the Department, given the diversity of those programs.
For these reasons, we issued a notice of proposed rulemaking on
October 19, 2021, to repeal the Final Rules. 86 FR 58042 (Oct. 20,
2021) (Repeal NPRM). As discussed in greater detail in the Repeal NPRM
and in this document, and consistent with the President's January 20,
2021, directive, we are now repealing the Final Rules in their
entirety.
II. History of the Rulemaking
On October 9, 2019, the White House issued two EOs: Executive Order
13891, ``Promoting the Rule of Law Through Improved Agency Guidance
Documents,'' 84 FR 55235 (Oct. 15, 2019) (E.O. 13891), and Executive
Order 13892, ``Promoting the Rule of Law Through Transparency and
Fairness in Civil Administrative Enforcement and Adjudication,'' 84 FR
55239 (Oct. 15, 2019) (E.O. 13892). These EOs served as the basis for
the Final Rules, which were promulgated by the Department in December
2020 and January 2021: ``Department of Health and Human Services Good
Guidance Practices,'' 85 FR 78770 (Dec. 7, 2020) (the Guidance rule,
effective January 6, 2021), and ``Department of Health and Human
Services Transparency and Fairness in Civil Administrative Enforcement
Actions,'' 86 FR 3010 (Jan. 14, 2021) (the Civil Enforcement rule,
effective January 12, 2021). The Department codified the Final Rules
collectively in 45 CFR part 1. Shortly after the rules became
effective, on January 20, 2021, President Biden, under a new
Administration, issued Executive Order 13992, which revoked both EOs
that served as the basis for these rules and instructed agencies to
rescind, ``as appropriate and consistent with applicable law,'' any
rules that were based on the revoked EOs. 86 FR 7049 (Jan. 25, 2021).
Consistent with that instruction, the Department carefully reconsidered
the Final Rules and then published the Repeal NPRM explaining why it
proposed to repeal the Final Rules. 86 FR 58042 (Oct. 20, 2021).
[[Page 44003]]
A. Revoked Executive Orders
E.O. 13891, ``Promoting the Rule of Law Through Improved Agency
Guidance Documents,'' required agencies, among other things, to: treat
guidance documents as non-binding both in law and in practice, except
as incorporated into a contract; take public input on certain guidance
documents into account; and make all guidance documents available on a
single website. 84 FR 55235. E.O. 13892, ``Promoting the Rule of Law
Through Transparency and Fairness in Civil Administrative Enforcement
and Adjudication,'' imposed a number of procedural hurdles on agencies
engaged in civil administrative enforcement or adjudication. 84 FR
55239. As noted, both EOs have since been revoked. 86 FR 7049.
However, prior to the revocation of these EOs, and consistent with
the directive in E.O. 13891, the Department published the Guidance
rule. Although E.O. 13892 did not require rulemaking, the Department
also published a final rule to implement E.O. 13892, the Civil
Enforcement rule.
B. Guidance Rule
On August 20, 2020, consistent with the requirements of E.O. 13891,
HHS published a notice of proposed rulemaking entitled ``Department of
Health and Human Services Good Guidance Practices,'' the stated purpose
of which was to ``promote the appropriate issuance and use of guidance
documents . . . .'' 85 FR 51396. The rule's stated intent was to
increase accountability, improve the fairness of guidance issued by the
Department, guard against unlawful regulation through guidance, and
safeguard the important principles underlying the United States
administrative law system. Id.
The major provisions of the proposed Guidance rule were: (1) a
requirement that each guidance document issued by the Department
generally include certain information, including a statement that the
guidance does not have the force and effect of law and is not binding
unless specifically incorporated into a contract; (2) heightened
procedures for ``significant guidance documents,'' including a period
of notice and comment, a requirement for HHS Secretary (Secretary)
approval on a non-delegable basis, and a requirement for submission to
the Office of Information and Regulatory Affairs (OIRA) in the Office
of Management and Budget (OMB) for review under Executive Order 12866;
(3) creation of a repository for all guidance documents along with a
provision stating that guidance documents not in the repository are not
effective and will be considered rescinded; and (4) procedures for the
public to petition the Department to withdraw or modify any particular
guidance document.
HHS proposed that its new requirements for guidance would apply to
all components of the Department except for the Food and Drug
Administration (FDA). 85 FR 51396. The preamble to the proposed
Guidance rule explained that FDA already operates under a set of Good
Guidance Practice (GGP) regulations, see 21 CFR 10.115, as required by
the Federal Food, Drug, and Cosmetic Act (FD&C Act), 21 U.S.C. 371(h);
no other agency within HHS functions under a similar set of regulations
or statutory provisions. 85 FR 51396. FDA's GGP regulations have been
in effect for more than two decades. See 21 CFR 10.115. The preamble
also explained that FDA would be proposing amendments to its GGP
regulations to address E.O. 13891 separately. 85 FR 51396.
During the comment period for the notice of proposed rulemaking,
the Department received nearly 90 comments on the proposed rule. 85 FR
78771. The comments are available at <a href="https://www.regulations.gov/document/HHS-OS-2020-0008-0001/comment">https://www.regulations.gov/document/HHS-OS-2020-0008-0001/comment</a>.
The Department issued the Guidance rule on December 7, 2020. 85 FR
78770. In response to public comment and the Department's further
consideration of the policies addressed in the rule, the Guidance rule
made several changes to the proposed rule. First, in addition to the
requirement in the proposed rule that the Secretary approve, on a non-
delegable basis, all significant guidance documents, the final rule
added the requirement that the Secretary approve, on a non-delegable
basis, all non-significant guidance documents that the Secretary
determines would implicate a policy matter of priority to the
Secretary, potentially create a serious inconsistency, or otherwise
interfere with an action taken or planned by another HHS agency or the
Office of the Secretary. Id. at 78786.
Second, the Guidance rule added more detail on what information the
Department needs to provide when responding to a petition to amend or
withdraw guidance, including a statement on whether the Department
agrees or disagrees with the petition and its rationale. 85 FR 78787.
Third, although FDA had been excluded from the scope of the HHS
proposed Guidance rule, the final Guidance rule included FDA within its
scope. 85 FR 78785. The preamble to the final Guidance rule explained
that one commenter had urged HHS to amend FDA's GGP regulations to be
consistent with the requirements in the HHS Guidance rule. 85 FR 78771.
HHS agreed with this comment, and then explained that, because the FDA
regulations had not yet been amended to address E.O. 13891, FDA would
be included in the Guidance rule until the Secretary issued a final
rule amending FDA's separate GGP regulations. Id.\1\ The Department did
not reopen the comment period to invite comments on the inclusion of
FDA within its scope.
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\1\ In fact, the Department did not issue a proposed or final
rule to amend FDA's GGP regulations to address E.O. 13891 before
January 20, 2021, when E.O. 13891 was revoked.
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The Department codified the Guidance rule in 45 CFR 1.1 through
1.5.
C. Civil Enforcement Rule
On January 14, 2021, HHS issued a final rule entitled ``Department
of Health and Human Services Transparency and Fairness in Civil
Administrative Enforcement Actions.'' 86 FR 3010 (Jan. 14, 2021). The
Civil Enforcement rule, which was issued as a procedural rule without
notice-and-comment rulemaking, stated that it was intended to provide
regulated parties with greater transparency and fairness in
administrative actions and to be consistent with the requirements of
E.O. 13892. 86 FR 3010. The Department stated that ``[t]he rule is
designed to ensure accountability, fairness of how the Department uses
guidance, proper use of guidance documents, and opportunities for third
parties to be heard, and to safeguard the important principles
underlying the United States administrative law system.'' 86 FR 3011.
The rule contains a number of provisions, including the following:
(1) a requirement that the agency avoid unfair surprise by only
applying standards and practices in a civil enforcement action that
have been publicly stated; (2) a requirement that, if the agency relies
on a decision to assert new or expanded claims of jurisdiction, it must
publish the initial decision in the Federal Register or the
Department's guidance repository before the conduct over which the
jurisdiction is sought occurs; and (3) a requirement that the
Department give parties--before the agency takes a civil enforcement
action--written notice of its initial legal and factual determinations,
an opportunity to respond in writing and in certain cases orally, and a
written response to the affected entity (when timely requested).
[[Page 44004]]
The Department codified the Civil Enforcement rule in 45 CFR part
1, by revising Sec. Sec. 1.1 and 1.2, and adding Sec. Sec. 1.6
through 1.9.
D. Repeal NPRM
On October 19, 2021, HHS issued the Repeal NPRM proposing to repeal
the Final Rules in their entirety. 86 FR 58042. The preamble explained
that, after the Biden-Harris Administration revoked the EOs that served
as the basis for these rules and directed agencies to promptly take
steps to rescind any rules and policies implementing or enforcing the
revoked EOs, as appropriate and consistent with applicable law, the
Department reconsidered the Final Rules. That review led the Department
to conclude that the Final Rules create unnecessary hurdles that hinder
the Department's ability to issue guidance, bring enforcement actions,
and take other appropriate actions that advance the Department's
mission. The preamble further explained that these rules significantly
burden the Department and are inconsistent with the policies and goals
of the current Administration. We received approximately thirty comment
submissions on the Repeal NPRM, which we have reviewed and considered.
Our responses to the comments are discussed in Section IV.
III. Legal Authority
The legal authority for this final repeal rule is 5 U.S.C. 301.
That provision states in relevant part 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.'' The Guidance rule,
the Civil Enforcement rule, and the Repeal NPRM relied on the same
authority.
In addition, Congress's grant of broad, discretionary rulemaking
authority necessarily includes the authority not to promulgate--and
therefore also to repeal--a proposed or final rule. See Natural Res.
Def. Council, Inc. v. Securities and Exchange Commission (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). In addition, ``[t]he power to reconsider is inherent in the
power to decide,'' Albertson v. Federal Communications Commission
(FCC), 182 F.2d 397, 399 (1950), and, thus, ``[a]dministrative agencies
have an inherent authority to reconsider their own decisions.''
Trujillo v. Gen. Elec. Co., 621 F.2d 1084, 1086 (10th Cir. 1980).
IV. Discussion of Final Repeal Rule
This rule repeals the Final Rules, which had been codified in 45
CFR part 1. HHS will reserve 45 CFR part 1.
The thirty comments we received on the Repeal NPRM were mixed, but
a substantial majority favored repeal. Commenters in favor of repeal
consisted of non-profit policy and advocacy groups; a law school
clinic; trade organizations; and an insurance company. Commenters in
favor of retaining the Final Rules consisted of non-profit policy and
advocacy groups; a law school clinic; trade associations; a state
government agency; and individuals. This section summarizes and
responds to the comments received and discusses the Department's
overall conclusions regarding issues related to repealing the Final
Rules. In a few instances, the public comments offered were outside the
scope of the proposed rule and will not be addressed in this preamble.
A. Comments on the Policy Basis for Repeal
1. The Final Rules Run Counter to the Administration's Goals of
Advancing Public Health and Welfare
As discussed in the Repeal NPRM, the Biden-Harris Administration is
committed to using available tools of Federal administrative agencies
to, among other things: confront the urgent challenges facing the
nation; equip executive departments with flexibility to use robust
regulatory action to address national priorities; 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; and
protect and strengthen Medicaid and the Affordable Care Act (ACA) and
make high-quality healthcare accessible and affordable for every
American.\2\
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\2\ See ``Revocation of Certain Executive Orders Concerning
Federal Regulation,'' 86 FR 7049 (Jan. 25, 2021) (E.O. 13992);
``Advancing Racial Equity and Support for Underserved Communities
Through the Federal Government,'' 86 FR 7009 (Jan. 25, 2021) (E.O.
13985); ``Strengthening Medicaid and the Affordable Care Act,'' 86
FR 7793 (Feb. 2, 2021) (E.O. 14009); ``Continuing to Strengthen
Americans' Access to Affordable, Quality Health Coverage,'' 87 FR
20689 (April 8, 2022) (E.O. 14070).
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Many of the procedures in the Final Rules run counter to those
goals. As the Repeal NPRM explained, the Final Rules were issued by the
previous Administration to advance its policy goals, as reflected in
Executive orders (EOs 13891 and 13892) issued under that
Administration. The current Administration revoked both EOs 13891 and
13892 and directed agencies to take all necessary steps to halt
implementation and enforcement of those EOs as appropriate and
consistent with applicable law. See E.O. 13992. Accordingly, many
procedural rules--like the Final Rules--that were issued by other
departments and agencies under the previous Administration, have
already been repealed.\3\
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\3\ See
<bullet> Architectural and Transportation Barriers Compliance
Board, ``Procedures for Issuing Guidance Documents; Recission'' 87
FR 5692 (Feb. 2, 2022) (rescinding rule creating internal procedural
requirements on the issuance, public availability, and modification
or withdrawal of guidance documents);
<bullet> Environmental Protection Agency, ``On-Site Civil
Inspection Procedures; Rescission,'' 86 FR 74371 (Dec. 30, 2021)
(rescinding rule on civil inspection procedures);
<bullet> National Endowment for the Arts final rule,
``Procedures for Guidance Documents,'' 86 FR 58809 (Oct. 25, 2021)
(rescinding rule on issuing guidance);
<bullet> Department of Education final rule, ``Rulemaking and
Guidance Procedures,'' 86 FR 53863 (Sept. 29, 2021) (rescinding rule
on rulemaking and guidance procedures);
<bullet> Department of Justice interim final rule, ``Processes
and Procedures for Issuance and Use of Guidance Documents,'' 86 FR
37674 (July 16, 2021) (revoking regulations regarding the issuance
and use of guidance documents);
<bullet> Department of Housing and Urban Development final rule,
``Implementing Executive Order 13992, Revocation of Certain
Executive Orders Concerning Federal Regulation,'' 86 FR 35391 (July
6, 2021) (removing regulations on guidance procedures);
<bullet> Department of Energy final rule, ``Procedures for the
Issuance of Guidance Documents,'' 86 FR 29932 (June 4, 2021)
(withdrawing final rule on issuing guidance);
<bullet> Federal Mediation and Conciliation Service final rule,
``Recission of Federal Mediation and Conciliation Rule on
Administrative Guidance,'' 86 FR 29196 (June 1, 2021) (rescinding
rule on guidance);
<bullet> Tennessee Valley Authority final rule, ```Promoting the
Rule of Law Through Improved Agency Guidance' Regulations;
Rescission,'' 86 FR 28488 (May 27, 2021) (rescinding rule on
guidance);
<bullet> Environmental Protection Agency final rule, ``EPA
Guidance; Administrative Procedures for Issuance and Public
Petitions; Rescission,'' 86 FR 26842 (May 18, 2021) (rescinding rule
on guidance);
<bullet> National Endowment for the Humanities and National
Foundation on the Arts and the Humanities final rule, ``Processes
and Procedures for Issuing Guidance Documents,'' 86 FR 26184 (May
13, 2021) (rescinding rule on guidance);
<bullet> U.S. Office of Government Ethics final rule, ``Removal
of U.S. Office of Government Ethics Guidance Documents
Regulations''86 FR 25801 (May 11, 2021) (rescinding rule on
guidance);
<bullet> Railroad Retirement Board final rule, ``Guidance
Documents,'' 86 FR 22866 (Apr. 30, 2021) (rescinding rule on
guidance);
<bullet> Social Security Administration final rule, ``Rescission
of Rules on Improved Agency Guidance Documents'' 86 FR 20631 (Apr.
21, 2021) (rescinding regulations on guidance);
<bullet> Department of Interior final rule, ``Procedures for
Issuing Guidance Documents,'' 86 FR 19786 (Apr. 15, 2021)
(rescinding regulations on issuing guidance);
<bullet> Council on Environmental Quality final rule, ``Guidance
Document Procedures Rescission,'' 86 FR 19149 (Apr. 13, 2021)
(rescinding regulations on issuing guidance);
<bullet> U.S. Agency for International Development final rule,
``Procedures for the Review and Clearance of USAID's Guidance
Documents; Rescission'' 86 FR 18444 (Apr. 9, 2021) (rescinding
regulations on issuing guidance);
<bullet> Department of Transportation final rule,
``Administrative Rulemaking, Guidance, and Enforcement Procedures,''
86 FR 17292 (Apr. 2, 2021) (removing regulations regarding issuing
guidance and conducting enforcement actions, among other things);
<bullet> Pension Benefit Guaranty Corporation final rule,
``Rescission of Pension Benefit Guaranty Corporation Rule on
Guidance,'' 86 FR 17066 (Apr. 1, 2021) (rescinding rule on issuing
guidance);
<bullet> Department of Labor final rule, ``Rescission of
Department of Labor Rule on Guidance,'' 86 FR 7237 (Jan. 27, 2021)
(rescinding rule on issuing guidance).
We note that most of these rules were issued and repealed
without engaging in notice-and-comment proceedings.
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[[Page 44005]]
At least one commenter objected to the repeal of the recently
promulgated rules because the process of promulgating and repealing
rules in a short time period unnecessarily creates inconsistency and
confusion and muddies the waters of the administrative world. We
generally agree that the scenario of issuing rules that are then
quickly repealed is regrettable. However, we disagree that the Final
Rules should be retained merely for the sake of consistency,
considering the substantial adverse impacts from these rules, as
discussed in the Repeal NPRM, the comments, and this preamble. Given
that both Final Rules involve matters relating to agency procedure and
practice, the decision of one Administration to quickly issue
procedural rules in the final weeks of its term to govern the
operations of the next Administration can be seen as questionable and
ill-timed. In sum, the Department now believes that the prior
Administration's decision to issue these rulemakings was ill-advised,
and it is necessary to repeal the resulting regulations, consistent
with the revocation of similar rules by other departments and agencies.
2. The Final Rules Impose Burdensome Standards and Procedures
As described in the Repeal NPRM, the Final Rules impose burdensome
standards and procedures that interfere with HHS's ability to respond
efficiently to public health matters. Contrary to the policy of the
current Administration that agencies must be equipped with flexible and
robust tools to address national priorities, including the COVID-19
pandemic, economic recovery, racial justice, and climate change, see
E.O. 13992, these rules inappropriately constrict and impede the
Department's ability to: (1) efficiently direct and operate in the
interest of public health; (2) quickly communicate its regulatory
interpretations, policies, and recommendations, such as by unduly
extending the time needed to promulgate significant guidance, and by
limiting the use of tools such as circulars, bulletins, advisories, and
other guidance documents; and (3) take swift enforcement action when
appropriate.
Several commenters agreed with the Department's position on this
issue as explained in the Repeal NPRM and reaffirmed that the Final
Rules impose burdensome standards and procedures that interfere with
HHS's ability to respond quickly and efficiently to public health
matters. Commenters noted, for example, that the Guidance rule's
notice-and-comment requirements at 45 CFR 1.3 were especially onerous
and time-consuming and needlessly hinder HHS's ability to timely issue
critical information on public health and HHS programs. This additional
burden harms not only HHS programs, but also the people who rely on
those programs. The commenters explained, for example, that robust,
swift, efficient, and effective guidance can be a critical tool for
conveying health and safety information to the public on accessing
medical and preventive care services and communicating allocation of
funding decisions to state health administrators. Commenters also noted
that guidance is essential for Medicaid, Medicare, and ACA program
enrollees, who often look to such guidance to explain complicated
program rules and requirements. We discuss other comments regarding
burdensome procedures in Sections IV.D. and E.
Although no commenter disputed that the Final Rules' requirements
increase the burdens on the Department, several argued that these
requirements were nonetheless necessary to increase transparency,
accountability, and public participation in the regulatory process, and
provide for a more robust and efficient administration. We disagree
that the Final Rules are necessary to accomplish these ends. In the
several months that these rules have been in effect, we have seen no
evidence of benefit such as those suggested in comments from their
operations. Further, the comments supporting the original rules do not
cite any evidence to support their opinions. As one commenter in favor
of repeal explained, although the Final Rules stated that they were
intended to enhance transparency, fairness, and stakeholder engagement,
the Final Rules accomplish none of these goals. Instead, the Final
Rules hinder the Department and frustrate its mission by creating new,
confusing, and unnecessary bureaucratic inefficiencies that slow down
or halt Department initiatives.
One commenter expressed concern that a repeal of the Guidance
rule's notice-and-comment provisions would deprive stakeholders \4\ of
a framework for providing input on future Departmental guidance defined
as significant under the rule. While the Department recognizes that
repealing the Guidance rule will eliminate a Department-wide formal
process for providing public input on such draft guidance, HHS agencies
have adequate processes in place to obtain meaningful input from
stakeholders on significant guidance without the Guidance rule's
cumbersome requirements. Moreover, we now conclude that any benefit
derived from the ability to formally comment on guidance and providing
the Department's responses to comments--which, by operation of law, is
non-binding and does not have the force and effect of an agency rule--
is outweighed by the Department's interest in quickly and responsively
communicating current thinking on its rules and policies. Further,
because compliance with these provisions diverts HHS labor to time-
consuming comment analysis and response, eliminating these provisions
would expedite the publication of guidance, enhance agency efficiency,
and reduce administrative burden.\5\
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\4\ In the context of this document, ``stakeholder'' means
anyone who may be affected or interested in a guidance document or
civil enforcement action, including regulated entities, states,
tribes, and local governments, groups working with beneficiaries,
and individual members of the public.
\5\ As noted, FDA already operates under its own set of GGP
regulations, see 21 CFR 10.115, as required by the FD&C Act, 21
U.S.C. 371(h), and these authorities require that certain categories
of FDA guidance documents be implemented only after an opportunity
for public comment is provided. This rulemaking does not intend to
question or limit those authorities as applied specifically to FDA.
As we discuss in Section IV.A.4.b. below, we do not believe it is
efficient or effective for a Department as large and diverse as HHS
to mandate a single set of procedures for guidance documents and
civil enforcement for the entire Department.
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3. The Final Rules Harm Historically Underserved Constituencies
As discussed in the Repeal NPRM and above, see Section IV.A.1., the
Federal Government under the Biden-Harris Administration is pursuing a
comprehensive approach to advancing equity for all, including people of
color and others who have been historically
[[Page 44006]]
underserved, marginalized, and adversely affected by persistent poverty
and inequality. See E.O. 13985. Accordingly, the current Administration
directed Federal agencies to recognize and work to redress inequities
in their policies and programs that serve as barriers to equal
opportunity. Id. The current Administration also aims to protect and
strengthen Medicaid and the ACA and to make high-quality healthcare
accessible and affordable for every American. E.O. 14009; E.O. 14070.
To accomplish that policy goal, the current Administration directed
HHS, among others, to examine its regulations and policies to better
ensure that they help provide 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 Exchanges or the
individual, small group, or large group markets for health insurance in
the United States.
As the Repeal NPRM further explained, both Final Rules
disproportionately impact marginalized and historically underserved
communities, because they make it harder for HHS agencies to take
action to protect public health or remove bad actors from the market,
which, in turn, harms those who need HHS services the most. In
addition, because HHS frequently issues guidance to clarify policies
and beneficiary protections under Medicaid, the additional regulatory
hurdles and confusion created by the Guidance rule would delay the
issuance of Medicaid guidance and thereby undermine HHS' goals of
supporting program beneficiaries.
Several commenters agreed that the Guidance rule harms underserved
groups by imposing burdensome requirements that impede HHS' ability to
timely communicate important guidance on health programs. Commenters
explained that Medicaid and other HHS programs that serve marginalized
communities frequently rely on guidance to provide current information
on program rules and requirements to program participants. Timely
issuance of guidance is therefore essential to ensure that participants
receive the most up-to-date information and can access needed services.
The Guidance rule, however, introduces unnecessary bureaucratic
inefficiencies for guidance that slow down or prevent the publication
of this information, to the potential detriment of program
beneficiaries. Commenters noted that, during the COVID-19 pandemic, the
Department has issued and continues to issue and update guidance on a
range of topics affecting underserved communities, including vaccine
coverage, healthcare safety net programs, and non-discrimination in the
provision of health care among other topics. Subjecting these guidance
documents to the Guidance rule's burdensome publication requirements
has the potential to impede their release and harm individuals who rely
on Medicaid and other HHS programs. Further, commenters noted that the
automatic rescission provision of the guidance document repository,
discussed in greater detail in Section IV.D.5 below, creates confusion
for individuals seeking information about Medicaid, Medicare, and other
HHS programs.
We agree with these comments. We believe that interested groups and
individuals--in particular, beneficiaries of Medicaid, ACA, and other
HHS programs relied upon by underserved communities and individuals--
would be better served with a more nimble, less cumbersome, and clearer
process that ensures the expeditious release of program information
needed to access services. The Guidance rule frustrates this goal by
imposing unnecessary, burdensome, and ambiguous requirements that slow
down the guidance process and in turn delay dissemination of
information needed to access Medicaid, ACA, and other HHS programs.
4. The Final Rules Impede Department Flexibility
a. Codified, Binding Rules Are Too Rigid for Department-Wide
Implementation, and the Final Rules Open the Door to Opportunistic
Litigation
In addition to HHS's concerns about the substance of the Final
Rules, HHS also has concerns about the procedural choice to implement
them through binding, Department-wide regulations. Binding regulations
have drawbacks that, in HHS's view, make them ill-suited for the
Department-wide procedures at issue here.
First, binding regulations can be inflexible. This inflexibility
raises several concerns regarding the ability to adapt to different
circumstances. For example, the Final Rules impact a wide range of
agency actions that come under the umbrella of guidance and civil
enforcement proceedings, and the range and diversity of these types of
actions are shaped by the various missions and underlying authorities
of each of HHS's individual agencies. When HHS hastily issued these
rules, it did not--and could not--fully consider all of these actions
and how the rules would affect them. For example, HHS did not consider
how the Guidance rule's procedures could slow down the work of other
agencies, such as when HHS seeks to issue joint guidance, as it has
with the Department of Labor and the Department of the Treasury.
Similarly, the Civil Enforcement rule imposed a formalized system of
written communication regarding a potential issue of non-compliance,
without adequately considering that HHS agencies already have
procedures and practices in place that allow for other options, such as
in-person discussions, depending on the context. Since issuing these
binding regulations, the Department has been tethered to specific
procedures and cannot adjust its procedures as appropriate in specific
circumstances.
Codified requirements also make it more difficult for the
Department to adapt its procedures over time. The Department recognizes
that a variety of factors--such as changing circumstances, new
priorities, public health emergencies, input from interested parties,
new technology, changes in applicable legal precedent, and agency
experience--may require HHS to modify its procedures. It is unrealistic
to expect any set of procedures to fully account for the range of
circumstances that may confront HHS now or in the future. Codification
of regulations, however, makes the modification process more
burdensome. The issue is particularly pronounced considering the
decision to issue the Guidance rule through notice-and-comment
rulemaking, which may make revisions and updates more cumbersome.
Indeed, most of the other Federal departments and agencies, in issuing
(and repealing) similar regulations under the prior Administration, did
not use notice-and-comment rulemaking procedures. See Section IV.A.1. n
3.
This inflexibility is especially problematic when the Department
does not necessarily know, at least without more experience, which
procedures would most effectively achieve its goals. For example, the
Guidance rule mandates the use of a centralized HHS guidance
repository, but many commenters were critical of its current
functionality. Commenters explained that the search function often
failed to find the most relevant documents and instead retrieved
irrelevant ones. Some commenters suggested that the search function may
be improved by separating the database by HHS agency to help ensure
more focused responses to queries. HHS explained in the Repeal
[[Page 44007]]
NPRM that, while it proposed to repeal the regulation governing the
guidance document repository, HHS intended to retain the repository
itself (absent the automatic rescission provision) with changes to
improve its functionality. Repealing the regulation will facilitate
making improvements to the functionality of the centralized repository
to address the problems related to its initial set-up, and to adapt to
technological changes going forward--without considering whether those
changes require amending the regulation.
Second, HHS no longer believes it is appropriate to create an
opportunity for lawsuits on these procedural rules, in which a litigant
may cite to binding regulations to allege a cause of action against the
Department. As noted elsewhere in this preamble, the procedural
requirements in the Guidance and Civil Enforcement rules are self-
imposed and go beyond the requirements in preexisting law, such as the
Administrative Procedure Act (APA). Both because these rules establish
new procedural requirements and because many provisions in the rules
are opaque and susceptible to multiple interpretations, HHS is
concerned about the risk of opportunistic litigation here, which can
consume time and resources even when the litigation lacks merit. In
addition, other Federal departments and agencies under the previous
Administration, in issuing similar procedural rules, expressly provided
that the regulations were ``not intended to, and do[] not, create any
right or benefit, substantive or procedural, enforceable at law or in
equity by any party against the United States, its agencies or other
entities, its officers or employees, or any other person.'' See, e.g.,
84 FR 71729 (Dec. 27, 2019). HHS, however, did not include such a
provision in the Final Rules. Thus, it is possible that, if the Final
Rules are not repealed, litigants will attempt to sue HHS based on non-
compliance with these procedural regulations.
Expending resources on this type of litigation is wasteful: even if
the Department had no concerns with the substance of the procedures
(which it does, as explained elsewhere), HHS believes that its
resources are far better spent on public health initiatives that can
improve the health and safety of Americans than on defending challenges
concerning compliance with self-imposed procedures.
b. The Final Rules Are Not Tailored to the Various HHS Agencies
Another concerning aspect of the Final Rules is their establishment
of a single set of procedures for guidance documents and civil
enforcement for the entire Department, which is incompatible with the
efficient and effective administration of a Department as large and
diverse as HHS. The Department's mission is to enhance the health and
well-being of all Americans, and it accomplishes that mission through
the work of many individual agencies, including the Administration for
Children and Families (ACF), the Administration for Community Living
(ACL), the Centers for Disease Control and Prevention (CDC), the
Centers for Medicare & Medicaid Services (CMS), FDA, the Health
Resources and Services Administration (HRSA), the Indian Health Service
(IHS), the National Institutes of Health (NIH), and the Office for
Civil Rights (OCR). Each of HHS's agencies plays a critical role in
protecting and advancing public health by, for example, confronting the
COVID-19 pandemic; administering and overseeing the Medicaid and
Medicare programs and ACA Exchanges; providing Federal health services
to more than two million American Indians and Alaska Natives; taking
action to protect consumers from unapproved, misbranded, or adulterated
human or animal medical products or tobacco products; investigating,
detaining, and recalling contaminated foods; addressing medical product
shortages; enforcing age-restrictions or other controls around access
to certain regulated products; and quickly distributing grant funds
that help marginalized populations, low-income families, elderly
Americans, Indian tribes, and persons with disabilities to receive key
resources, especially during the COVID-19 pandemic. Each agency within
HHS serves the overall mission but does so in unique ways, often
addressing different stakeholders and using specialized regulatory
tools.
Several commenters confirmed that they share these concerns
regarding the imposition of inflexible requirements on all HHS
agencies. Regarding the Guidance rule, one commenter explained that the
uniform requirements imposed by the rule primarily serve to make the
issuance of guidance more cumbersome and less responsive to the needs
of the communities who benefit from HHS programs. Another comment
explained that burdensome, one-size fits-all procedural requirements
that the Guidance rule imposes on CMS are the epitome of practices that
present unnecessary barriers to individuals and families seeking
Medicaid coverage. Regarding the Civil Enforcement rule, a commenter
explained that application of the new enforcement requirements to all
HHS agencies may cause confusion as various agencies under the HHS
umbrella each already have procedural regulations, some of which have
been specifically designed to govern a particular type of proceeding.
We agree with these comments and find that they raise valid concerns
supporting repeal.
In contrast, one commenter asserted that the Final Rules did not
establish a single set of procedures for the Department; instead, the
Final Rules merely expressed broad principles--consistent with the APA
and due process--that allow HHS agencies to retain discretion to devise
procedures for carrying out their statutory mandates that are
consistent with those broad principles. Another commenter similarly
claimed that the Repeal NPRM erred in asserting that the notice
requirements in the Civil Enforcement rule conflict with or undermine
preexisting procedures. We disagree with both comments because the
Final Rules created actual conflicts and inconsistencies with
preexisting agency procedures. For example, with respect to procedures
for issuing guidance, the FD&C Act and the Guidance rule provide for
different circumstances when guidance will be subject to prior notice
and comment and different criteria for a guidance to be exempt from
prior notice and comment. Compare 21 U.S.C. 371(h)(1)(C)(1) and 45 CFR
1.3(b). While the FD&C Act provides for an appeals mechanism when FDA
employees are not using guidance in accordance with the FD&C Act, the
Guidance rule provided that this should be addressed in a petition.
Compare 21 U.S.C. 371(h)(4) and 45 CFR 1.5(a)(2). For petitions, the
Guidance rule specifies one set of requirements regarding their
submission, response time, and substantive review and response, 45 CFR
1.5, while FDA regulations provide different governing requirements in
each of those areas for its citizen petitions, 21 CFR 10.20 and
10.30(b) (submission), (e)(2) & (4) (response time), and (e)(1) & (3)
and (h) (substantive review and response).
FDA also has regulations governing various types of adjudicatory
hearings, see 21 CFR parts 12, 16, and 17, which conflict with the
Civil Enforcement rule. For example, the Civil Enforcement rule
provides for a series of limitations on the grounds for civil
enforcement actions, 45 CFR 1.6 through 1.8, which are not consistent
with FDA's governing regulations for civil money penalty
[[Page 44008]]
(CMP) proceedings. 21 CFR 17.1, 17.5. FDA's CMP regulations establish
an adjudicatory process that is similar to the Federal process for
civil adjudication, with a complaint, answer, motions, and hearing.
See, e.g., 21 CFR 17.5, 17.9. In contrast, the Civil Enforcement rule
requires that, after the affected entity responds to the initial
notice, HHS must respond to the affected entity in writing,
articulating the ``basis for its final decision.'' 45 CFR 1.9. That
requirement makes no sense in the context of 21 CFR part 17. Having two
sets of regulations governing FDA guidance practices, citizen petitions
related to FDA guidance documents, and CMP proceedings creates
practical difficulties and confusion.
Other provisions that do not directly conflict with existing
processes create additional layers of process. For example, while the
FD&C Act only requires uniform internal procedures for the approval of
guidance and provides discretion to the FDA to develop appropriate
processes, the Guidance rule required Secretarial approval of
significant guidance documents. Compare 21 U.S.C. 371(h)(1)(D)(2) and
45 CFR 1.3(b)(1). The FD&C Act requires FDA to make its guidance
documents available to the public, but the HHS Guidance rule required
all guidance documents to be included in the repository and deemed
guidance documents not included in the repository withdrawn. Compare 21
U.S.C. 371(h)(1)(A) and 45 CFR 1.4(a)(2).
Accordingly, the Department no longer believes that a one-size-
fits-all approach to Department guidance or civil administrative
enforcement is appropriate. The imposition of one set of requirements
for HHS' vastly different agencies hinders the agencies' abilities to
efficiently address public health issues, including but not limited to
public health emergencies, and creates confusion.
5. The Final Rules Divert Limited Department Resources
In the Repeal NPRM, the Department expressed the concern that the
Final Rules divert agency resources without providing adequate
compensating benefit, and that they are unnecessary. 86 FR 58049,
58051. Several commenters confirmed that, in their view, the Final
Rules divert finite Department resources to unnecessary and unhelpful
ends. The commenters were concerned that this diversion would delay
Department activities that protect and advance the public health and
welfare. For example, one comment asserted that the Final Rules make it
harder for the Department to timely respond to emergencies, to address
the glaring disparities in provision of services that have been
highlighted during the COVID-19 pandemic, and to respond to and help
shape the rapid changes in the healthcare delivery system. One comment
disagreed and asserted that the Department's statement in the Repeal
NPRM--that ``[h]aving a robust, efficient guidance system has been
especially critical during the COVID-19 emergency''--``proves that the
Rule does not impede the Department's effective use of guidance.''
We agree with the comments expressing concern about the diversion
of resources. Our experience with the Final Rules thus far is that they
create unhelpful impediments to achieving Department goals, and
addressing those impediments diverts resources from other Department
priorities. The fact that the Department has devoted substantial
resources to the COVID-19 crisis both before and after the Final Rules
became effective does not undermine the Department's position that the
Final Rules impose unnecessary and burdensome requirements. For
example, one comment explained that CMS guidance has played a critical
role in addressing the COVID-19 pandemic and the Afghan mission.
Although many of these important CMS guidance documents predate the
Final Rules, those that followed the rules were required to adhere to
the more onerous procedures of the Final Rules without any apparent
benefits. We discuss below some examples in connection with
consideration of specific provisions of the Final Rules. See Section
IV.F.2.e.
In another example of resource diversion caused by the new
procedures, the Department recently issued a response to a petition
that purported to be submitted under the Guidance rule and that was
addressed to HHS, CDC, and FDA. Attorneys from HHS, CDC, and FDA, as
well as CDC and FDA subject matter experts, reviewed and deliberated on
the petition. Ultimately, the Department concluded that petitioner had
not properly invoked the Guidance rule procedures or appropriately
included FDA in its request. Given the short timeline for responding to
petitions under the Guidance rule, Departmental staff were forced to
prioritize those deliberations over other, more significant matters.
In addition, as discussed above, because the Final Rules impose
rigid requirements and do not disclaim any right of action based on
them, it is possible that litigants will sue HHS based on non-
compliance with these procedures. The Department has concluded that
expending resources on litigating internal procedural rules is
wasteful, and that its resources are far better spent on public health
initiatives that can improve the health and safety of Americans than on
defending challenges concerning compliance with self-imposed
procedures.
B. Comments on Consideration of Purported Benefits of Final Rules
Some commenters urged the Department to retain the Final Rules and
identified several purported benefits. A few commenters asserted that
the Final Rules helpfully clarify that guidance are simply non-binding,
interpretive statements, consistent with the APA. One commenter
asserted that Federal agencies have relied on guidance to reinterpret
or expand the law. Another commenter asserted that CMS had taken
enforcement actions against it for violating policies based only on
guidance, and therefore the Final Rules were appropriate to reaffirm
basic principles of administrative law. Relatedly, another commenter
urged the Department to provide greater clarity to the public on its
rulemaking obligations related to Medicare pursuant to the Supreme
Court's opinion in Azar v. Allina Health Servs., 139 S. Ct. 1804
(2019). Another commenter asserted that the Final Rules provide notice
and clarity by aggregating guidance documents in one central location.
The same commenter suggested that the additional requirements for
issuing significant guidance would help the Department screen for
whether the guidance content would be more appropriately issued through
rulemaking.
As discussed in more detail throughout this preamble, the
Department has considered all comments on the purported benefits of the
Final Rules and does not find that there are any significant benefits
to retaining the Final Rules that outweigh the many detriments
identified in the comments and summarized in the Repeal NPRM and in
this preamble.
We disagree with the commenters who asserted that the Final Rules
are necessary or appropriate to reaffirm the APA's principles of
administrative law. As explained in the Repeal NPRM, ``the APA governs
agency conduct concerning guidance without the need for agency
regulations.'' 86 FR 58049. Appropriate parameters and procedures for
guidance issued by HHS agencies will remain in place after the
Department repeals the Final Rules; and, repealing the Final Rules does
not give an agency license to use guidance
[[Page 44009]]
to establish or change policies where rulemaking is otherwise required,
or to require outside parties to take or refrain from taking certain
actions that are not addressed by statute or regulation. See generally
Azar v. Allina Health Servs., 139 S. Ct. 1804 (2019) (finding, with
respect to the Medicare program, that statements of policy that
establish or change a substantive legal standard governing the scope of
benefits, the payment for services, or the eligibility of individuals,
entities, or organizations to furnish or receive services or benefits
must be promulgated through the notice-and-comment rulemaking process).
Accordingly, repealing the Final Rule will not transform guidance into
binding rules with the force and effect of law.
The commenter who expressed disappointment that the Department has
yet to apprise stakeholders of the agency's rulemaking obligations
under section 1871 of the Social Security Act (SSA), as outlined in
Allina, 139 S. Ct. at 1804, also requested that the Department provide
greater clarity to the public on these rulemaking obligations, given
the central role of the Medicare program in the Department's rulemaking
and guidance procedures. We agree that the Medicare program is central
to certain parts of the Department's rulemaking and guidance
procedures. However, this specific request is outside of the scope of
the Repeal NPRM, and therefore, the Department will take this request
under advisement. In the interim, we invite those seeking information
on CMS' rulemaking obligations under the Medicare Act to review the
already-existing guidance available at <a href="https://www.cms.gov/regulations-and-guidance/regulations-and-policies/cms-rulemaking">https://www.cms.gov/regulations-and-guidance/regulations-and-policies/cms-rulemaking</a>.
We disagree with another commenter's assertion that the process
outlined for significant guidance in the Guidance rule is needed or
helpful to screen for content that should be issued as a legislative
rule. In particular, the comment opined that the Guidance rule's
criteria for significant guidance documents will identify procedural
defects in proposed guidance documents and thus effectively screen for
guidance documents that are more likely to require notice and comment.
The Guidance rule itself, however, made clear that its criteria for
significant guidance documents does not necessarily correspond to the
criteria for legislative rules. 85 FR 78776 (noting that to qualify as
guidance, as opposed to a legislative rule, a document must reflect,
implement, interpret, or describe a legal obligation imposed by a pre-
existing, external source or advise the public prospectively of the way
the agency intends to exercise a discretionary power).
With respect to the comment that repealing the Guidance rule erases
the benefit of enhanced notice resulting from the aggregation of
guidance documents in one central location, the Department plans to
maintain a central guidance repository even after the Guidance rule is
repealed, without the problematic rescission requirement for documents
not in the repository. This topic is discussed in more detail in
Section IV.D.5. below.
C. Comments on HHS Repealing the Final Rules in Their Entirety
As the Department explained in the Repeal NPRM, the Final Rules:
frustrate the Department's ability to efficiently direct and operate in
the interest of public health; are inconsistent with the policies and
goals of the current Administration; make Department operations more
cumbersome and burdensome; impede the Department's ability to quickly
communicate its regulatory interpretations, policies, and
recommendations; and prevent the Department from using robust tools to
protect and advance the public health and to promote the Department's
mission. For those reasons, HHS proposed to repeal the Final Rules in
their entirety and remove 45 CFR part 1.
The Repeal NPRM further explained that HHS had rejected the
alternative approach of addressing these problems by revising the Final
Rules. For the reason described in Section IV.A.4.b. above, it would be
difficult to establish definitions, standard descriptors, policies, and
procedures that are clear and workable across the Department's many
components. Rather than codified, Department-wide procedures, the
Department prefers a more flexible approach. With the repeal of the
Final Rules, HHS agencies would be able to continue to follow or
develop their own procedural policies, practices, and rules, consistent
with applicable law and as appropriate to their context, and they would
be able to update these over time and to address specific circumstances
as warranted. See Section IV.A.4.b. This more decentralized approach is
also consistent with the revocation of E.O. 13891, under which the
previous Administration had taken a relatively centralized and
standardized approach.
A few commenters objected to this aspect of our proposal, asserting
that our concerns can be better addressed by fine-tuning the Final
Rules rather than scrapping them entirely. One commenter, for example,
asserted that the concerns noted by HHS in the Repeal NPRM (and raised
by other comments submitted in earlier stages of the rulemaking) could
be addressed by targeted revisions to the Final Rules such as creating
new exemptions for particular matters of concern.
We have considered these suggestions and reject the approach
proposed by these commenters. We address these proposals in greater
detail in Section IV.F.2.h. below, including the reasons for rejecting
specific proposals for modifying the Final Rules. Here we explain, as a
matter of policy, why we have chosen repeal over modification.
Although it may be possible, as the commenter asserts, to address
some of the concerns noted by HHS in the Repeal NPRM though revisions
and exemptions, HHS sees no value in doing so. Codifying procedural
policies and practices as rules makes them more rigid. Updates and
changes would become resource-intensive. None of this is desirable or
necessary for these types of procedural policies and practices.
For example, the Guidance rule required Secretarial approval for
guidance documents under certain circumstances. The Repeal NPRM
expressed concern that this requirement could delay the issuance of
these guidance documents by drawing on the Secretary's finite time and
resources. A commenter asserted that the Secretarial approval
requirement should be maintained to avoid a greater drain on the
Secretary's time to fix guidance issued in error. We disagree with this
comment and its underlying assumption. It is entirely speculative to
assert that guidance will be issued in error if not done under the
Secretary's signature. In any event, the Secretary is best positioned
to determine how to appropriately allocate their time and resources,
without having to publish a Federal Register document to codify a new
set of procedures.
We are not convinced by the comments that there are benefits to
mandating the procedures required by the Final Rules through codified
regulations. As discussed elsewhere in this preamble, codification
impedes the Department's flexibility to adapt its rules to different
contexts across the broad spectrum of matters regulated by HHS
agencies, opens the door to opportunistic litigation, and increases the
burden and difficulty of adjusting and modernizing procedures.
Improving processes less formally allows for efficient updates to
respond to a variety of factors, including changed circumstances, new
priorities, public
[[Page 44010]]
health emergencies, stakeholder input, and new technology.
D. Comments on Specific Issues Related to the Guidance Rule
1. The Guidance Rule Created Administrative Hurdles That May Delay or
Prevent Issuing Guidance
In the Repeal NPRM, the Department expressed the concern that both
Final Rules delay or prevent the issuance of guidance documents. 86 FR
58046, 58047. In particular, we noted that the Guidance rule
established substantial, time-consuming, and resource intensive
requirements for the issuance of ``significant guidance documents,''
such as requirements to submit such documents to OIRA for review prior
to publication; provide a public notice-and-comment process; generate
an agency response to major concerns raised during the comment period;
comply with applicable requirements for significant regulatory actions
as set forth in Executive orders; and obtain approval by the Secretary
on a non-delegable basis. See 45 CFR 1.3(b). Under the Guidance rule,
all of these steps are required in combination before a significant
guidance can be finalized. The Guidance rule also adds steps to the
process of issuing nonsignificant guidance, such as requiring
Secretarial approval of guidance that they determine will (1)
implicate, including potentially impede, any policy matter of priority
to the Secretary, or (2) potentially create a serious inconsistency, or
otherwise interfere, with an action taken or planned by another
operating division or the Office of the Secretary. 85 FR 78780.
Several commenters confirmed that, in their view, the rules create
bureaucratic inefficiencies that slow down or halt the important
guidance that stakeholders require to adequately understand and comply
with agency rules. These commenters explained that agency guidance
documents provide necessary, valuable information to stakeholders. For
example, one commenter asserted that healthcare service providers rely
heavily on timely guidance, including policy clarification notices, for
program operations to ensure timely delivery of care and treatment to
their patients. Some commenters asserted that the COVID-19 pandemic has
shown the need for HHS to be able to move quickly, especially when
public health and human life are on the line, to keep abreast with the
rapid-fire pace of new laws and evolving public health needs, and to
respond to the high volume of important stakeholder questions. In
contrast, one commenter who supported retention of most of the Guidance
rule stated that the Department's concern with potential delays from
the new procedures for significant guidance documents was misplaced
because there would be relatively few guidance documents that qualify
as significant.
We agree with the commenters that explained that the Guidance rule
established unnecessary and burdensome inefficiencies, and we disagree
with the commenter who suggested that our concerns should be mitigated
by the commenter's assertion that relatively few guidance documents
would qualify as significant. The definition of ``significant
guidance'' is susceptible to broad interpretation, as noted in the
Repeal NPRM. 86 FR 58046. Indeed, although HHS stated in the preamble
to the final Guidance rule that it believed there would be relatively
few significant guidance documents, 85 FR 78775, we no longer consider
that statement to accurately represent past practice. Moreover, the
Guidance rule makes it harder for the Department to timely issue
guidance to respond to emergencies, rapid changes in the healthcare
delivery system, and other critical needs. The additional
administrative processes require significant additional time and could
serve as a disincentive or obstacle to issuing guidance, particularly
for matters requiring expediency. Even the clearance of non-significant
guidance takes significant time, because the Department would need to
affirmatively decide whether a guidance implicates or potentially
impedes any policy matter of priority to the Secretary, or will
potentially create a serious inconsistency, or otherwise interfere,
with an action taken or planned by another operating division or the
Office of the Secretary. These hurdles in turn could make it harder for
the Department to expediently respond to stakeholder needs, especially
in the cases of public health emergencies or where other critical needs
are at issue. Thus, the Department has determined that the delay or
non-issuance of guidance could have substantial negative consequences
for the public, including for regulated entities.
At least one commenter indicated that these concerns are
speculative, overstated, and can be better addressed by fine-tuning the
Guidance rule rather than scrapping it entirely. One commenter asserted
that our concerns regarding burdens were based on a misreading of the
regulations, in that, while the Guidance rule requires that the
Secretary must approve certain guidance, the decision on whether a
guidance requires Secretarial approval can be delegated. We disagree
with the comments and find the delegation point unconvincing because
the distinction being drawn by the commenter is not material. Based on
our experience, we know that each step in the drafting of a document
and any associated analysis, review, and clearance process takes time.
In the case of significant guidance documents, the Department would
have to draft: (1) an initial version of the guidance for public
comment; (2) a second version of the guidance taking comments into
account; (3) responses to major concerns raised during the comment
period; and (4) the analyses required for significant regulatory
actions as set forth in Executive orders. Further, we know that adding
more steps in the clearance process that include the Department and
other Departments throughout the Administration will undoubtedly take
even more time. Because this assessment is based on our experience, we
disagree with the commenter's assertion that our concern is
``speculative.'' We address the proposals to modify the Guidance rule
in greater detail in Section IV.F.2.h., but we note here that we can
think of no fine-tuning that would provide adequate time savings,
beyond rescinding the rule.
In the case of public health emergencies, some commenters suggested
that the exceptions processes for significant guidance documents were
sufficient to allow the Department to rapidly respond. Under Sec.
1.3(b)(2)(ii) of the Guidance rule, HHS could elect not to conduct a
comment period on significant guidance if it were to find that notice
and public comment are impracticable, unnecessary, or contrary to the
public interest. Additionally, under Sec. 1.3(b)(4), the Guidance rule
permits significant guidance documents to be exempted from applicable
requirements ``if the Secretary [of HHS] and the Administrator of OIRA
agree that exigency, safety, health, or other compelling cause warrants
the exemption.''
The Department disagrees that the exceptions processes for
significant guidance documents provide sufficient flexibility for the
Department to respond to public health emergencies quickly and
effectively. To rely on the exception under Sec. 1.3(b)(2)(ii), the
Department would still need to make findings that public comment would
be impracticable, unnecessary, or contrary to the public interest and
incorporate the findings and a statement of the reasons into the
guidance document. And, to rely on Sec. 1.3(b)(4), the Secretary and
OIRA Administrator must come to
[[Page 44011]]
the described agreement, the Secretary ``must make this finding,'' and
``the significant guidance document must incorporate the finding and a
brief statement of reasons in support.'' See 45 CFR 1.3(b)(4). Even if
the exceptions could be met during a public health emergency, these
additional processes would still need to be followed and would still
consume time and resources in a situation where time is of the essence
and limited human resources are better allocated to directly responding
to the emergency rather that addressing the procedural requirements of
the Guidance rule.
2. The Guidance Rule's Notice and Comment Process Is Not Necessary for
Guidance
In the Repeal NPRM, the Department expressed the concern that the
additional procedures provide little value, because the Department
already has all the tools it needs to ensure adequate public notice and
participation in the guidance process. The Repeal NPRM indicated that
the Department has reconsidered the relative merits of an efficient,
flexible guidance process and weighed them against the processes
finalized in the Guidance rule, and that the Department favors an
approach that is consistent with the APA, which exempts non-binding
documents like interpretive rules and general statements of policy from
notice-and-comment rulemaking requirements.
Some commenters expressed concerns that the Guidance rule
selectively applied portions of the APA to guidance documents,
requiring heightened procedural requirements to apply to significant
guidance documents in ways not contemplated or authorized by the APA,
and that HHS failed to explain the statutory basis authorizing it to
apply notice-and-comment requirements to significant guidance. Another
commenter stated that the Guidance rule imposes burdensome requirements
akin to rulemaking for significant guidance, despite the Department's
history and practice of providing adequate public notice and
stakeholder participation in the guidance process.
We agree with these commenters' concerns that the Guidance rule's
notice and comment is not necessary for most Department guidance
because it is not required by law (except for certain FDA guidance) \6\
and because the Department already has a history and practice of
providing adequate public notice and stakeholder participation in the
guidance process. Moreover, the Department continues to believe that
the relative merits of an efficient, flexible guidance process outweigh
the alleged benefits of the processes finalized in the Guidance rule.
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\6\ See Section IV.A.2. n. 4.
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Guidance holds an important--and legally distinct--place in the
Department's regulatory toolbox: it provides an approach to
communicating the Department's policies and interpretations that can be
more immediate and clearer than case-by-case adjudication, as well as
being faster and more flexible than legislative rulemaking. Through
guidance, traditionally, the Department has been able to communicate
quickly and responsively its agencies' non-binding current thinking
regarding legal interpretations, recommendations, and policies. Timely
issuance of guidance is particularly important to parties that are
subject to Department regulation because guidance can assist regulated
industries by helping guard against unequal treatment, unnecessary
costs, and unnecessary risk. Having a robust, efficient guidance system
has been especially critical during the COVID-19 emergency. Retaining
the Guidance rule, with its relative lack of flexibility and procedural
burdens that go far beyond what is required both by law and practice
for a transparent and inclusive guidance process, unduly hampers the
Department's mission, particularly at this critical time.
3. The Guidance Rule's Vague Standards Are Confusing
In the Repeal NPRM, the Department expressed concern that the
Guidance rule contains vague standards that are likely to cause
confusion. For example, the Repeal NPRM noted that the definition of
``guidance'' in 45 CFR 1.2 is vague and overly broad and could lead to
confusion over the type of documents subject to the rule's
requirements. ``Guidance'' is defined, in part, as a ``Department
statement of general applicability, intended to have future effect on
the behavior of regulated parties and which sets forth a policy on a
statutory, regulatory, or technical or scientific issue, or an
interpretation of a statute or regulation.'' See 45 CFR 1.2(a). In
addition, the preamble to the proposed Guidance rule provided that
``guidance may come in a variety of forms, including, but not limited
to, letters, memoranda, circulars, bulletins, advisories, and preambles
and may include video, audio, and Web-based formats.'' 85 FR 51396. The
Repeal NPRM stated that this broad definition and understanding could
be read to encompass an entire range of documents not intended to serve
as guidance, such as resolution documents, agreements, case closure
letters, and memoranda published on Department agency websites to
inform and educate the general public and regulated entities about
agency enforcement activities. 85 FR 78772.
Several commenters agreed with our concern that the definition of
``guidance'' is too vague. Some commenters remarked that the Department
further muddles its definition of guidance documents by stating that
material contained within non-guidance could be guidance: ``[M]aterial
embedded within an advisory opinion or similar letter that otherwise
satisfies the definition of `guidance document' would still be guidance
for purposes of this rule. If a document addressed to specific
individuals nonetheless contains a statement of general applicability
setting forth a relevant policy or interpretation that is intended to
have future effect by guiding the conduct of other regulated parties,
then the document would be a guidance document.'' 85 FR 78772.
We agree with these concerns. The broad spectrum of documents
encompassed by the definition, as well as the nested feature of
guidance-within-non-guidance, could make it difficult for stakeholders
to ascertain which documents are ``intended'' to be guidance documents.
We believe it is reasonable to anticipate that this could lead to
confusion over the types of documents subject to the rule's
requirements.
The Repeal NPRM also raised concerns with generalized statements in
the Guidance rule on the role and effect of guidance that are not
necessary and could cause confusion. For example, Sec. 1.3(a)(1)
states, ``[u]nder the [APA], the Department may not issue any guidance
document that establishes a legal obligation that is not reflected in a
duly enacted statute or in a regulation lawfully promulgated under a
statute.'' The Department continues to see little benefit in this
provision if it is intended to capture a current understanding of
principles established by the APA. The APA itself governs agency
conduct concerning guidance without the need for agency regulations to
do so.
4. Uniform Requirements for the Disclaimer Are Confusing
The Repeal NPRM expressed concern that the Guidance rule imposed
identical requirements on agencies with different legal authorities and
mechanisms for achieving their mission. In particular, Sec.
1.3(a)(3)(i) of the Guidance rule requires every guidance document,
regardless of the authoring agency or program, to bear the following
[[Page 44012]]
statement: ``The contents of this document do not have the force and
effect of law and are not meant to bind the public in any way, unless
specifically incorporated into a contract. This document is intended
only to provide clarity to the public regarding existing requirements
under the law.'' The Repeal NPRM indicated that this universal
statement is not appropriate for and cannot cover the range of HHS
documents that fall within the definition of ``guidance document''
under Sec. 1.2(a).
Several commenters expressed concern that the required disclaimer
is both confusing and unnecessary. Some commenters remarked that the
Department failed to address the confusion created with a guidance
document that simultaneously clarifies obligations and declares it has
no legal effect. Additionally, some commenters remarked that the
Guidance rule fails to explain why a disclaimer is needed, or what
problem a disclaimer is attempting to solve; and that ultimately,
courts decide the degree of deference to afford agency action,
including guidance. We agree with these concerns. For example, if a
guidance clarifies underlying legal obligations, but then states that
the guidance has no force and effect of law, it is reasonable to
anticipate that many regulated entities may be confused about how the
disclaimer applies to the obligations described in the guidance. Or, if
the guidance describes how an HHS agency views certain scientific
questions, or how it intends to exercise enforcement discretion, it may
be confusing or even nonsensical for the cover to state that the
guidance ``only'' clarifies ``existing requirements under the law.''
That said, we acknowledge there may be some circumstances where
some form of a disclaimer about the nature of a guidance may be helpful
and would not cause confusion. To the extent a disclaimer could be
useful for some guidance, the Department does not believe that the
solution is to impose a one-size-fits all disclaimer on all guidance.
This attempt to fit vastly different documents into one rubric is
unnecessary, counterproductive, and likely to confuse the public about
the role of different documents. The Department maintains its position
described in the Repeal NPRM that a better approach would be for each
agency to provide information that is appropriate to the agency's
stakeholders and the expected uses of the document.
Another concern raised in the Repeal NPRM is that the public may be
confused by the required statement that incorporation of provisions of
a guidance document into a contract would render the guidance binding.
One commenter disagreed that this statement would cause confusion
because the commenter stated it is common that contracts may
incorporate specifically enumerated guidance documents as binding on
the contracting party, and it is well understood that compliance with
the guidance document becomes mandatory through the party's affirmative
acceptance of the contract. This statement may not be confusing to some
stakeholders in some situations, but it may not always be so clear-cut,
including for guidance that are unrelated to contracts. In addition,
the Department continues to be concerned with the ambiguity of the term
``contract,'' especially as it relates to assistance agreements, such
as grants and cooperative agreements. While it is understood that
assistance agreements have contractual aspects, in several other
contexts the Department draws a clear legal and programmatic
distinction between contracts and assistance agreements. Nevertheless,
both contracts and grants require entering into an agreement that binds
both parties to its terms, including in some instances terms found in
guidance. Thus, it is reasonable to anticipate that the undefined
nature of such a key term in a required disclaimer term could create
uncertainty and confusion with some stakeholders, as well as within the
Department itself.
5. The Provisions Governing the Guidance Repository Are Problematic
The Guidance rule provides for a repository that includes all
Department guidance documents, and the rule deems any guidance document
not in the repository to be automatically rescinded. 45 CFR 1.4. The
Repeal NPRM stated that the Department considers the provisions of the
Guidance rule governing the repository to be inappropriate and
unnecessary, particularly with respect to the rescission requirement
for documents not in the repository. The Department expressed concern
that the rescission requirement creates additional burdens among
stakeholders by causing confusion about which guidance documents have
been rescinded, superseded, or otherwise become obsolete. Under the
Guidance rule, rescission can occur simply because a guidance is not
uploaded to or is removed from the repository due to human error or
technical failures, even if it is publicly available elsewhere.
Moreover, the Department questioned whether this rescission approach is
consistent with the APA, which requires an agency to consider relevant
factors and make policy choices based on those factors.
Several commenters agreed with this assessment, noting the
troubling implications of the repository provision. In particular, some
commenters expressed concern with 45 CFR 1.4(a)(3)(ii), which rescinds
guidance documents previously issued by HHS that are not included in
the repository. One commenter noted that since the repository was
created, it has been unclear whether omissions in the repository were
purposeful or accidental, and that this has been particularly
concerning given that the rule intended for the absence of a guidance
document from the repository to in effect rescind that document. The
commenter indicated that members of the public--particularly
individuals seeking information about Medicaid, Medicare, and other HHS
programs--will likely be confused if a guidance document appears on an
HHS website, but it is not included in the repository. Commenters
further noted that, even if stakeholders petition to reinstate guidance
omitted from the repository, such a process would be time consuming,
burdensome, and cause uncertainty among the public and regulated
entities. Commenters also noted potential confusion regarding joint
guidance HHS has issued with other Federal agencies. In particular,
they mention a joint guidance regarding the ACA, which appears on HHS
and Department of Labor websites, but does not appear in the HHS
guidance repository.
We agree with these concerns. Although the Department intends to
maintain a centralized location for guidance, which may offer
convenience to some users, these comments illustrate how the Guidance
rule's recission provision is counterproductive and creates confusion.
For example, certain users may find it easier to access guidance on an
HHS agency or program website rather than in the repository. Once they
locate a guidance on the HHS program website, users should not have to
take the additional step of searching the repository to determine
whether a guidance is in effect. Moreover, if a guidance document is
deemed ``rescinded'' under the Guidance rule because it does not appear
in the repository, it is reasonable to anticipate that regulated
entities would face a high degree of uncertainty as to the Department's
current thinking, particularly considering the possibility that the
guidance may have been unintentionally rescinded because of human error
or technical failure. The
[[Page 44013]]
rescission requirement creates additional burdens among stakeholders by
causing confusion about which guidance documents have been rescinded,
superseded, or otherwise become obsolete. Additionally, if a guidance
document is listed in the repository, but a regulated entity cannot
access or view it (for example, as the result of a ``broken link'' to
the guidance document), the regulated entity may act based on a
misunderstanding of the Department's current interpretations and
policies. Alternatively, they might choose to engage with the HHS
agency about the status of the guidance, which would consume time and
resources for both the requestor and the Department.
These concerns are not speculative. One commenter described
difficulties when performing searches of exact guidance names in the
``keyword search'' function of the repository. Those guidance documents
would not always appear in the search results. In addition, filtering
guidance documents by topics, HHS division or offices, or language did
not always guarantee a guidance document would be retrieved in the
search results. The commenter remarked that it has not been uncommon to
perform the same search on different days and obtain different search
results, many times which did not contain the guidance document an
individual is looking for. The commenter stated that the guidance
repository appeared to not be working at all on some days, with an
error page showing up after a search was performed. Accordingly, this
difficulty in finding documents has led to confusion over whether a
guidance had been rescinded.
Many commenters supported the existence of a central repository,
stating that having a centralized location to search for and identify
relevant guidance improves regulated entities' compliance with agency
policies and applicable law. We agree. Consistent with the discussion
in the Repeal NPRM, we continue to believe that having a central
repository for guidance is a helpful tool, both for stakeholders and
the Department, and the Department still plans to maintain a guidance
repository. However, the Guidance rule is not needed for the Department
to maintain a central repository, and the automatic rescission
provision is likewise unnecessary.
The Department continues to believe that the better approach would
be to engage with its individual agencies to develop the most efficient
and user-friendly repository system that has the flexibility to change
with improving technology and experience, and not to be constrained by
regulatory requirements. The Department intends for the repository at
<a href="http://www.hhs.gov/guidance">www.hhs.gov/guidance</a> to remain active, but the additional requirements
imposed by the Guidance rule (for example, that removal from the
repository would affect rescission of a guidance) would be removed.
Guidance will remain validly issued regardless of whether they were
ever inadvertently not included in the repository.
In the Repeal NPRM, the Department invited stakeholders to comment
on their experience with the repository and to comment on how the
Department can improve its usability and utility. In response to this
request, the Department received several helpful comments on how to
improve the usability of the repository. We appreciate the comments,
and we will continue to consider them as we work to ensure the
repository is as complete, user-friendly, and current as possible.
6. The Guidance Petition Process Is Unnecessary and Burdensome
Section 1.5 of the Guidance rule established a petition process
under which an interested party may petition the Department to withdraw
or modify any particular guidance document. The provision requires the
Department to issue a substantive response within 90 days regardless of
the petition's subject matter or merits or competing public health
priorities. The Department has decided to repeal this new guidance
petition process because it is unnecessary, burdensome, and not legally
required.
One commenter noted that it had commented earlier on the proposed
Guidance rule that it was unclear how this provision impacted the
status of guidance or any right to challenge guidance under the APA,
and the final Guidance rule did not address its concerns. However,
because the Department has decided to repeal the regulation
establishing the new petition process, it is unnecessary for us to
clarify what the effects of this provision would have been on the
status of guidance or any right to challenge guidance under the APA.
Another comment opined that eliminating the petition process
entirely would effectively leave interested parties with no formal
methods other than litigation to seek the withdrawal or modification of
improper or unwise guidance. We disagree. As discussed in the Repeal
NPRM, the new guidance petition process created by the Guidance rule is
unnecessarily duplicative of other already existing methods through
which stakeholders can challenge agency decisions relating to guidance
applicability or request changes in or the rescission of existing
guidance. These methods include (but are not limited to): FDA's citizen
petitions process related to ``any . . . form of administrative
action,'' 21 CFR 10.25(a); FDA's GGP regulation providing that affected
parties may suggest at any time that FDA withdraw an already existing
guidance document and may elevate concerns that an FDA employee has not
followed the procedures in the GGP regulation or has treated a guidance
document as binding, 21 CFR 10.115(f)(4) & (o); the appeals process for
facilities that disagree with decisions involving application of
guidance governing Medicare eligibility and participation, 42 CFR part
498; and already-existing relationships between regulated entities and
HHS agencies that allow stakeholders to express comments, suggestions,
or concerns with guidance in their formal and informal discussions with
agency employees. Furthermore, we note that, while stakeholders have a
right to petition government agencies under the First Amendment, the
Petition Clause does not require ``government policymakers to listen or
respond to individuals' communications on public issues.'' Minn. State
Bd. for Cmty. Colleges v. Knight, 465 U.S. 271, 285 (1984); see also We
the People Found., Inc. v. United States, 485 F.3d 140, 143 (D.C. Cir.
2007); Small Bus. in Transp. Coal. v. U.S. Dep't of Transp., 2021 WL
4399581, at *14 (D.D.C. Sept. 27, 2021).
The same commenter further stated that, in the Repeal NPRM, the
Department's ``real concern'' with the new guidance petition process
was that the current deadline is too short, rather than its stated
concern that process itself is unworkable in practice. The comment
further asserted that HHS had offered insufficient evidence that this
90-day deadline for responding to petitions had proven unworkable in
practice.
We agree with the comment to the extent that it acknowledges our
concern with the 90-day deadline, but that represents only part of the
problem. In practice, since the inception of the good guidance petition
process, most submissions that have come to the Department through this
process have not been petitions ``to withdraw or modify any particular
guidance document.'' 45 CFR 1.5. The Department has expended
substantial resources to respond to submissions asserted to be
petitions under Sec. 1.5 that: ask about where to find information in
the guidance repository; complain about vaccination policies; query for
[[Page 44014]]
information for how to file personal medical claims; and request the
agency to take action to withdraw policies with which the petitioners
disagree. Even though these submissions do not qualify as good guidance
petitions under the Guidance rule, they require significant time and
effort to determine whether the submission meets the Guidance rule's
requirements and draft a substantive response. For petitions that do
qualify under the Guidance rule, even more effort is necessary to
review the scope and nature of the request, draft and revise responses
to the petitions, and complete any necessary clearance.
For example, one petition ostensibly submitted under Sec. 1.5,
requested that HHS, CDC, FDA, and ``all other component agencies of
HHS'' revise each guidance document, order, and regulation that related
to mask-wearing or vaccine administration for children in the context
of COVID-19. As noted above, although the Department ultimately
concluded that petitioner had not properly invoked Sec. 1.5,
deliberating over and responding to the petition consumed a substantial
amount of time from attorneys and subject matter experts in the Office
of the Secretary, CDC, and FDA, and, because of the deadline, those
deliberations were prioritized over other matters that had more
potential to advance public health.
It is not necessary or appropriate to establish a special guidance
petition pathway. In operation, it has led HHS agencies to sort through
submissions that were not submitted properly under the Guidance rule.
Moreover, we no longer see any utility in retaining a process that
forces the agency to expend its valuable resources when stakeholders
already have other methods to bring guidance-related concerns to the
agency. As explained in the Repeal NPRM and borne out in actuality, the
guidance petition process is structured in a way that leads to wasting
Government resources on potentially meritless petitions. For example,
the process allows a petitioner to petition for hundreds of guidance
documents to be rescinded at once, and/or allows one or many
petitioners to re-petition regarding a single guidance document
multiple times.
Finally, one comment expressed concern that rescinding the Final
Rule would result in only some agency components with petition
processes in place, and that this would be less effective than keeping
one petition process for the whole Department. As we discuss in Section
IV.A.4.b. above, a single set of procedures for guidance documents and
civil enforcement for the entire Department is incompatible with the
efficient and effective administration of a Department as large and
diverse as HHS. We therefore disagree that it is overall less effective
to have different petition processes depending on the agency component.
7. Comments Raising Issues Specific to CMS Do Not Support Retention of
the Guidance Rule
One commenter, who did not believe HHS should pursue a wholesale
repeal of the Guidance rule, instead recommended that the agency take
steps to systematically re-evaluate its guidance practices. In
particular, the commenter believed CMS should consider the timing of
rulemaking and guidance for the Medicare Part D prescription drug
program and recommended that regulations be issued earlier to allow
time for development of guidance and for stakeholders to prepare for
and implement new regulatory requirements before the start of the
applicable plan year. This commenter also believed HHS should address
the limits of guidance and when it is inappropriate to use. As an
example, the commenter noted that the requirements included in
contracts with Part D plan sponsors should be subject to full notice-
and-comment rulemaking.
We appreciate these suggestions and will take these recommendations
into consideration when planning future rulemaking, including for the
Part D program. However, for the reasons discussed in the Repeal NPRM,
we continue to believe it is necessary to repeal the Guidance rule to
enable efficient and effective administration of all HHS programs.
Another commenter opined that the Medicare program would
significantly benefit from the Guidance rule and urged HHS to retain
it. Unregulated guidance documents, this commenter stated, have a
significant impact on healthcare organizations, particularly in the
case of accrediting organizations (AOs), due to the unique nature of
the deeming partnership with CMS. The commenter further stated that
certain Department communications can go beyond the informational
purposes mentioned in the proposed rule and may contain meaningful
policy changes that can be unnecessarily disruptive and costly, and
therefore should undergo public review. For example, the commenter
stated that CMS often issues guidance to states and agency regional
offices that impact healthcare organizations and accredited bodies.
These documents may contain new requirements that can impact AOs and
accredited organizations, despite not having undergone a notice-and-
comment period. The commenter further stated that healthcare
organizations and the public are often unaware of certain policy
memoranda and frequently do not know where to find them for review. For
example, the commenter said certain memoranda are kept in a portal for
state and regional offices and thus stakeholders may not know when new
ones are published.
We disagree with the characterization that, without the Guidance
rule, Department guidance in general, and CMS guidance in particular,
is unregulated. We note that, although we are repealing the Guidance
rule, we are still bound by the APA and--when administering the
Medicare program--the Allina holding (interpreting section 1871 of the
Social Security Act), both of which require rulemaking whenever we
``establish[] or change[] a substantive legal standard governing the
scope of benefits, the payment for services, or the eligibility of
individuals, entities, or organizations to furnish or receive services
or benefits under [Title XVIII of the Social Security Act].'' In the
particular context of Medicare, we expect the same level rulemaking
activity after the repeal as previously, including while the Guidance
rule has been in effect. The APA requires all enforceable standards to
go through notice-and-comment rulemaking; to the extent that CMS
continues to issue sub-regulatory guidance, they are intended to
provide additional information, not establish or change substantive
legal standards. Finally, we note that section 1865 of the Social
Security Act only requires accrediting organizations to demonstrate to
CMS that their accreditation programs indicate that our ``applicable
conditions or requirements . . . are met or exceeded.'' The statute
does not require accrediting organizations to adopt any CMS guidance or
other sub-regulatory policies or methodologies.
In contrast, other CMS stakeholders supported repeal of the Final
Rules. For example, one commenter supported repeal of the Guidance rule
because it promotes confusion among beneficiaries, state agencies, and
other Medicaid and Children's Health Insurance Program (CHIP)
stakeholders. The commenter further stated that the Guidance rule
created a central guidance repository that duplicates and undermines
the guidance compilation maintained by the Center for Medicaid and CHIP
Services. We thank the commenter for its input and agree that the
Guidance rule should be repealed.
[[Page 44015]]
8. The Guidance Rule Conflicts With Preexisting FDA Regulations
The Guidance rule has presented unique implementation problems for
FDA. As explained in the preamble to the Repeal NPRM and above, FDA,
unlike the other divisions of HHS, has long operated under a statutory
provision concerning guidance and has its own GGP regulations, which
address FDA's practices related to guidance documents, including
practices and procedures for issuing, revising, and implementing
guidance documents. See 21 U.S.C. 371(h); 21 CFR 10.115. FDA also
operates under longstanding regulations regarding citizen petitions,
see 21 CFR 10.30, 10.31, which interested persons have used to request
that FDA take certain actions with regard to FDA guidance documents.
The Repeal NPRM discussed several problems with applying the
Guidance rule to FDA. First, it noted that the Guidance rule
establishes standards and processes that overlap with but are distinct
from FDA's existing requirements, which creates practical difficulties
and confusion. For example, 21 U.S.C. 371(h) and 45 CFR 1.3(b)(4)
contain different standards for dispensing with prior public
participation for certain guidance documents. Second, the application
of the Guidance rule to FDA guidance presents complex unaddressed
challenges. For example, if a guidance document is erroneously
rescinded under Sec. 1.4(a)(2) of the Guidance rule, FDA would need to
consider how to repromulgate its guidance in a manner consistent not
only with the Guidance rule, but also with its own statute and
regulations. Third, it is inefficient and confusing for regulated
entities as well as FDA staff to toggle back-and-forth between HHS and
FDA Guidance rules to try to figure out what the requirements are and,
in some instances, to meet the requirements of the HHS Guidance rule,
the FD&C Act, and FDA's GGP regulation.
One commenter discussed whether the Guidance rule should apply to
FDA, particularly considering the agency's preexisting regulations.
Although the commenter did not support repeal of the Final Rules
overall, it did recommend that FDA be exempted from the Guidance rule
because ``the superimposition of the HHS rule has led to some
confusion.'' HHS agrees that this superimposition has led to problems,
including confusion, and that the rule should not apply to FDA. Prior
to the Guidance rule, stakeholders were familiar with FDA practices and
processes, which had been in effect for twenty years. The Guidance rule
has called those processes into question and introduced new, burdensome
procedures that will make it more difficult for regulated entities to
receive important non-binding information. HHS continues to believe
that repealing the Guidance rule is important to stabilize and clarify
the regulatory regime for FDA guidance documents.
E. Comments on Specific Issues Related to the Civil Enforcement Rule
1. The Civil Enforcement Rule Established an Unnecessary and Confusing
Overlay of New Procedural Requirements
In the Repeal NPRM, the Department explained that the requirements
in Sec. Sec. 1.6 through 1.9 create conflicts with existing agency
processes and regulations. The various agencies under the HHS umbrella
each have procedural regulations, some of which have been specifically
designed to govern a particular type of proceeding. See, e.g., 21 CFR
part 17 (procedures governing hearings concerning the imposition of
civil money penalties by FDA); 42 CFR part 488 (CMS and State Agency
survey, certification, and enforcement procedures for Medicare
providers and suppliers); 42 CFR part 498 (appeals procedures for
determinations that affect participation in the Medicare Program); 45
CFR part 160, subpart E (procedures governing hearings challenging the
imposition of civil monetary penalties in Health Insurance Portability
and Accountability Act (HIPAA) cases). The procedures required under
the Civil Enforcement rule do not adequately account for these pre-
existing, agency-specific procedures, nor do they account for the
differences between agencies within the Department. Instead, the Civil
Enforcement rule dictates an overlay of new, and in some cases
redundant, requirements.
Commenters confirmed these concerns. For example, one comment
explained that the Civil Enforcement rule undermines the well-developed
procedures and plans that are tailored by each agency to govern
specific types of proceedings.
The Department agrees with this comment. HHS agencies have designed
their procedural regulations to comply with principles of due notice,
fairness, and transparency. Parties that are subject to civil
administrative enforcement actions and adjudications under the existing
procedures established prior to the Civil Enforcement rule are
routinely provided with sufficient notice of the action, adequately
informed of laws and regulations to which they are subject to, fully
instructed on contesting or appealing agency determinations prior to
actions of legal consequence, and protected from unfair surprise. To
the extent the requirements of the Civil Enforcement rule diverge from
the existing procedures, the conflict creates confusion for both HHS
agencies and regulated parties and could delay or prevent civil
enforcement.
2. Hurdles Will Leave Bad Actors in the Market for Longer
In the Repeal NPRM, the Department explained that the processes and
procedures set forth in the Civil Enforcement rule create unnecessary
hurdles and roadblocks for agency actions, to the detriment of the
public health and other national priorities. 86 FR 58050. Comments
confirmed that the Civil Enforcement rule creates unnecessary hurdles
for the Department. One comment further explained that the lengthy
procedures established by the rule hamper enforcement which results in
leaving bad actors (such as those committing billing fraud) in the
market for a lengthier period of time. The comment further noted that,
although the Civil Enforcement rule contains an exception for ``health,
safety, or a similar emergency,'' this exception was inadequate to
address the concern that the rule institutes rigid requirements that
could create roadblocks to agency enforcement actions.
The Department agrees with these comments. For example, Sec. 1.9
requires the Department to follow certain steps before taking civil
enforcement actions, including providing parties with an initial notice
of the agency's legal and factual determinations, an opportunity to
object or respond, and the Department's ``written response'' to the
affected party's objections. In issuing the Civil Enforcement rule, the
Department stated that it anticipated that existing HHS procedures
already satisfied the requirements established in Sec. 1.9. 86 FR
3012. Upon reconsideration, the Department now finds that the Civil
Enforcement rule creates a rigid, burdensome, and resource-intensive
path for Department staff, which is unnecessary when other tools in
use, such as informal negotiation, could be more efficient and
effective. See, e.g., FDA's Regulatory Procedures Manual section 10-3
(describing FDA's use of ``regulatory meetings'' as an option in
seeking industry compliance) (available at <a href="https://www.fda.gov/media/71765/download">https://www.fda.gov/media/71765/download</a>).
Section 1.7(a) prohibits the Department from applying ``standards
or
[[Page 44016]]
practices'' in a civil enforcement action that have not been ``publicly
stated.'' That new restriction on the Department's authority is not
required under settled case law,\7\ and it could interfere with the
Department's ability to enforce new laws and address emerging threats,
particularly through the use of adjudicatory proceedings.
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\7\ See SEC v. Chenery Corp., 332 U.S. 194, 203 (1947)
(``[P]roblems may arise in a case which the administrative agency
could not reasonably foresee . . . . Hence, we refuse to say that
the Commission, which had not previously been confronted with the
problem of management trading during reorganization, was forbidden
from utilizing this [adjudicatory] proceeding for announcing and
applying a new standard of conduct''); Martin v. Occupational Safety
& Health Rev. Comm'n, 499 U.S. 144, 154 (1991) (``Within traditional
agencies . . . adjudication operates as an appropriate mechanism not
only for factfinding, but also for the exercise of delegated
lawmaking powers, including lawmaking by interpretation.'').
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We also agree with the commenters that the exception in Sec. 1.9
involving ``a serious threat to health, safety, or similar emergency,''
86 FR 3013, does not adequately address the concerns with that
regulation. For example, the exception does not address fraudulent
actors who drain the Department's resources when allowed to remain in
Departmental programs. It is not in the public interest for an HHS
agency such as CMS to take fewer enforcement actions against providers
and suppliers who fraudulently bill patients and harm the Medicare
trust funds. Delayed action against fraudulent billing would allow
further diversion of taxpayer dollars and loss of program funding,
forcing divisions to reprioritize program resources. Additionally, the
exception does not alleviate the burden on the Department, because the
process, including the Department's written response to the party's
objections, must still be followed ``as soon as practicable.'' 86 FR
3013. Finally, analyzing whether a particular action falls into the
exceptions set forth in Sec. 1.9(c) would itself require an
expenditure of time and resources that could delay actions needed to be
taken on a time-sensitive basis.
3. ``Fairness and Notice'' Provisions Exceed Existing Legal
Requirements and Are Burdensome
The Civil Enforcement rule imposed a series of limitations on
enforcement actions by requiring prior notice of various positions in a
variety of contexts. For example, the rule imposes a requirement that,
if the agency intends to rely on a decision to assert new or expanded
claims of jurisdiction, it must have published the initial decision in
the Federal Register or the HHS guidance repository before the conduct
subject to enforcement occurs. 45 CFR 1.8. Similarly, the Civil
Enforcement rule prohibits an agency in taking civil enforcement action
from applying standards and practices that have not been publicly
stated or citing guidance that does not appear in the HHS guidance
repository. 45 CFR 1.6 &1.7. Although the preamble to the Civil
Enforcement rule and some commenters attached a ``fairness and notice''
label to provisions, that preamble conceded that the requirements in
the regulations ``exceed the requirements imposed by the Due Process
clause'' and ``may impose a burden by delaying the time until HHS can
take actions with legal consequence.'' See 86 FR 3013.
Several commenters supported the ``fairness and notice''
requirements and thus opposed their repeal. The comments noted that, in
the Civil Enforcement rule preamble, HHS had explained that these
regulations would give regulated parties a method to challenge certain
types of unfair enforcement. The commenters maintain that the Repeal
NPRM provided an inadequate explanation as to why the Department had
changed its mind. One comment suggested that the ``fairness and
notice'' requirements could be revised to narrow their scope and reduce
their burden.
We disagree with the positions advocated by these commenters. As
the Civil Enforcement rule acknowledged and we agree, these ``fairness
and notice'' provisions exceed the requirements of existing law. We
also find that neither the Civil Enforcement rule nor the commenters
provided a persuasive explanation as to why these additional regulatory
hurdles are necessary to advance the interests of justice. As we
explained in the Repeal NPRM and above, the Department continues to
abide by its longstanding commitment to follow applicable principles of
due process and administrative law, and these well-established
requirements guarantee that fair notice is provided to the subjects of
civil enforcement actions. Accordingly, we conclude that these
additional regulatory hurdles are unnecessary to ensure fairness.
The preamble to the Civil Enforcement rule also acknowledged that
these ``fairness and notice'' procedures would burden and delay HHS
enforcement actions. See 86 FR 3013. Again, we agree with that
assessment. The preamble to the Repeal NPRM also raised the additional
concern that ambiguities in the new procedural requirement could lead
to spurious challenges to valid enforcement actions and adjudications,
which would significantly impede the Department's ability to take
enforcement actions and would divert resources from mission-critical
activities. Although the Civil Enforcement rule concluded that these
provisions would benefit regulated industry, or at least those who are
the subject of enforcement actions, there was no explanation of how
these provisions protect or advance public health and welfare. Indeed,
by impeding legitimate enforcement actions against bad actors, the
Department now concludes that these provisions adversely impact the
public health and welfare.
As described in this preamble, the Department has changed its
position on the value of the entirety of the Final Rules, in that they
impose a rigid layer of bureaucracy that impedes the effective
operations of the Department and will deflect resources from mission
critical endeavors. The ``fairness and notice'' requirements are no
exception. They would require extra steps as prerequisites to
enforcement action, which slow the initiation of such actions, create
new grounds for challenging Department actions, and absorb resources
that would otherwise be dedicated to other Department objectives. As
such, they are contrary to the policies and goals of the Biden-Harris
Administration to ensure that HHS can appropriately leverage
administrative tools to protect and advance the public health and
welfare and to efficiently and effectively administer its wide array of
programs.
F. Comments on Legal Issues
1. Take Care Clause and Separation of Powers Doctrine
Several commenters noted that the Final Rules create procedural
requirements beyond those in existing law. One commenter disagreed with
that view, stating that the rules strike no new legal ground and only
capture existing law under the Fifth Amendment, the Appointments
Clause, the separation-of-powers doctrine, the APA, and the Freedom of
Information Act (FOIA). The commenter stated that repeal of the rules
would amount to HHS actively ignoring or overruling relevant law and
would constitute a violation of the Take Care Clause, U.S. Const. art.
II, sec. 3, and the separation-of-powers doctrine. The commenter
further stated that E.O. 13992 was unlawful and could not provide an
adequate basis for the repeal because the President cannot make a
policy choice to derogate portions of the Nation's laws.
HHS agrees with the commenters who stated that the Final Rules go
beyond
[[Page 44017]]
existing legal requirements and disagrees with the arguments that the
repeal is unlawful. For example, for significant guidance, as defined
in 45 CFR 1.2(a), the Department is required to submit such documents
to OIRA for review prior to publication, provide public notice-and-
comment process, generate an agency response to major concerns raised
during the comment period, comply with applicable requirements for
significant regulatory actions as set forth in Executive orders, and
obtain approval by the Secretary on a non-delegable basis. 45 CFR
1.3(b). The rules also create a special process for the submissions and
review of petitions related to guidance, which includes a 90-day
deadline for the Department's response. 45 CFR 1.5. The Department is
not aware of any prior existing law that mandates these procedures.
Indeed, when HHS promulgated the Final Rules, it acknowledged that the
rules went beyond existing law. See, e.g., 85 FR 78777 (relying on
agencies' authority to ``grant additional procedural rights in the
exercise of their discretion'' as a basis for the rule); 86 FR 3013
(``[Sec. 1.9] may exceed the requirements imposed by the Due Process
clause of the Constitution'').
Because the Final Rules go beyond existing legal requirements and
constitute an exercise of HHS discretion, HHS has discretion to
eliminate these self-imposed procedural requirements. The President's
EOs referenced in this comment, including E.O. 13992, did not direct
agencies to derogate portions of the nation's laws; rather, they
provided policy direction in the application of the Department's
discretion.
Furthermore, even assuming that some portions of the regulations
only codify existing legal principles, HHS does not agree that it is
required as a matter of law to retain these portions of the
regulations. The commenter cited the Take Care Clause and the
separation-of-powers doctrine, which require the President and
executive officials to adhere to existing law. See, e.g., Youngstown
Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952). But the Department can
adhere to the law, and fully intends to do so, without maintaining
regulations that attempt to codify that law. The requirements of
existing law from applicable statutes, case law, and the Constitution
already bind HHS, and there is no legal requirement that HHS duplicate
them in regulation. Nor does HHS agree that such a requirement takes
hold only once the regulations have already been promulgated. We are
not aware of any legal principle that requires agencies to maintain
regulations seeking to codify existing law after they have been issued.
The Department's choice to repeal the Final Rules in no way
reflects disagreement with or a rejection of its legal duties. On the
contrary, given the evolving nature of the law and the complexity of
current precedent, as discussed in Section IV.F.2.c. below, HHS
believes it will be better positioned to comply with the law and to
``take Care that the Laws be faithfully executed'' by repealing these
regulations. U.S. Const. art. II, sec. 3.
2. Administrative Procedure Act
a. Adequate Justification for Repeal
Several commenters asserted that, as a general matter, HHS had not
adequately justified the repeal under the APA and the Supreme Court's
precedents in Motor Vehicle Mfrs. Ass'n of the U.S., Inc. v. State Farm
Mut. Auto. Ins. Co., 463 U.S. 29 (1983) and Dep't of Homeland Sec.
(DHS) v. Regents of the Univ. of Cal., 140 S. Ct. 1891 (2020).
HHS disagrees with the commenter's assertion that the repeal does
not comply with the APA. In State Farm and Regents, the Supreme Court
considered the rescission of two different substantive policies and
laid out certain standards for agencies to meet in justifying their
rescission decisions. E.g., 463 U.S. at 42 (requiring ``reasoned
analysis'' and ``consideration of relevant factors''). However, as an
initial matter, it is not clear that these standards apply equally to
rules governing agency procedures. The Supreme Court has recognized a
``very basic tenet of administrative law that agencies should be free
to fashion their own rules of procedure.'' Vt. Yankee Nuclear Power
Corp. v. Natural Res. Def. Council, 435 U.S. 519, 544 (1978); see also
Ass'n of Bus. Advoc. Tariff Eq. v. Hanzlik, 779 F.2d 697, 701 (D.C.
Cir. 1985) (``It is too well-established to be seriously questioned
that agencies are empowered to order their own proceedings and control
their own dockets.''). This principle is an ```outgrowth of the
congressional determination that administrative agencies and
administrators will be familiar with the industries which they regulate
and will be in a better position than federal courts or Congress itself
to design procedural rules adapted to the peculiarities of the industry
and the tasks of the agency involved.''' Id. at 525 (quoting FCC v.
Schreiber, 381 U.S. 279 (1965)). When rules are procedural in nature,
it makes sense for courts to give agencies greater leeway to organize
their operations and deploy resources as they see fit. HHS and its
agencies are uniquely suited to understand which procedures will best
facilitate the execution of its duties. The Final Rules constitute
self-imposed procedural requirements governing agency, not private,
conduct. Now that HHS has determined that these procedures will not
best enable the Department to serve its mission, these discretionary
revisions of its procedural rules are not subject to the APA standards
for changing substantive policy under State Farm and Regents.
Indeed, it is not clear that there can be any judicial review of
these discretionary procedural rules, let alone under the standards
applied to the review of substantive rules. The statutory authority
cited as the bases for the Final Rules provides in relevant part 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.'' 5 U.S.C. 301. As the Supreme Court has explained, the APA
at 5 U.S.C. 701(a)(2) ``makes it clear that `review is not to be had'
in those rare circumstances where the relevant statute `is drawn so
that a court would have no meaningful standard against which to judge
the agency's exercise of discretion.''' Lincoln v. Vigil, 508 U.S. 182,
191 (1993) (quoting Heckler v. Chaney, 470 U.S. 821, 830 (1985)).
Because 5 U.S.C. 301 contains no judicially manageable standard, the
repeal of the Final Rules should not be subject to judicial review.
Even assuming the APA standards for changing substantive policies
apply, HHS's decision is adequately justified under State Farm and its
progeny. As discussed in more detail elsewhere in this preamble, HHS's
reasons for repealing the Final Rules include that the Final Rules: (1)
run counter to the Administration's goals of advancing public health
and welfare; (2) impose burdensome standards and procedures; (3) harm
marginalized constituencies; (4) impede Department flexibility; and (5)
divert limited Department resources. The Supreme Court has explained
that, when changing course, an agency ``need not demonstrate to a
court's satisfaction that the reasons for the new policy are better
than the reasons for the old one; it suffices that the new policy is
permissible under the statute, that there are good reasons for it, and
that the agency believes it to be better, which the conscious change of
course adequately indicates.'' FCC v. Fox TV Stations, Inc.,
[[Page 44018]]
556 U.S. 502, 515-16 (2009). HHS's new policies, as articulated in this
preamble and in the Repeal NPRM, are permissible under the statute and
are supported by good reasons; therefore, this repeal action complies
with the APA.
HHS recognizes that, in some cases, an agency is required to
provide a more detailed justification for rescinding a policy than what
would suffice for a new policy. This may be true ``when, for example,
[the] new policy rests upon factual findings that contradict those
which underlay its prior policy.'' Id. at 515. HHS believes its
justification for this repeal is far more detailed and comprehensive
than what was provided for the Final Rules' promulgation. For example,
HHS has described its current experience with the rule (see Section
IV.F.2.e.) and has explained in detail the specific reasons why this
repeal is appropriate.
Regardless, because the Final Rules were grounded mainly in policy
and political justifications rather than factual findings, the
Department does not believe the ``more detailed justification''
standard applies. For example, the preambles to the Final Rules cited:
the previous Administration's regulatory reform initiative; generalized
policy views that the additional procedures were favorable because they
would increase accountability, transparency, and fairness; and two
Executive orders that have since been revoked. For the most part, the
preambles to the proposed Guidance rule and both Final Rules did not
identify specific factual concerns that the Department sought to
address through the rulemakings.\8\ Indeed, one commenter in this
rulemaking criticized the Guidance rule for ``fail[ing] to provide any
evidence-based discussion to support its contention that the [Guidance
r]ule would benefit `the public, and, in particular, regulated
parties.' '' Overall, both rules were justified mainly on policy
grounds, which, in HHS's current view, overlooked serious drawbacks of
the requirements. Given those high-level and cursory justifications, we
believe that the justifications provided in this repeal rulemaking are
more than adequate.
---------------------------------------------------------------------------
\8\ One exception is a statement in the preamble to the Guidance
rule that regulated entities have difficulty locating and
identifying operative guidance documents, which HHS intended to
address through the guidance repository. 85 FR 78781. However, as
discussed in Section IV.D.5 above, HHS plans to maintain the
guidance repository and to work towards improving it functionality,
but without the automatic rescission provision and without a
governing regulation.
---------------------------------------------------------------------------
As noted above, State Farm requires agencies to consider ``relevant
factors.'' Some commenters identified factors that they believed HHS
should have considered in its decision-making, such as asserted
benefits of these rules. Although HHS is not convinced the State Farm
standard applies, those factors are addressed individually in Section
IV.F.2.e and f below.
b. Clear Error of Judgment
One commenter asserted that State Farm requires HHS to demonstrate
how the adoption of the guidance and civil enforcement rules was ``a
clear error of judgment'' in order to justify the repeal.
HHS does not agree that State Farm requires an agency to show that
the prior policy choice was ``clear error,'' even assuming the State
Farm standard applies here. In State Farm, the Supreme Court stated
that in reviewing an agency's explanation for a repeal, it ``must
consider whether the decision was based on a consideration of the
relevant factors and whether there has been a clear error of
judgment.'' 463 U.S. at 43 (internal quotations omitted). This language
requires courts to evaluate whether the repeal decision was ``clear
error''; it does not require an agency to show that the prior policy
was clear error. E.g., State Farm Mut. Auto. Ins. Co. v. Dole, 802 F.2d
474, 486 (D.C. Cir. 1986) (``clear error'' standard applies for a court
to ``overturn agency action''). As noted elsewhere in this preamble, to
justify a repeal, an agency needs to adequately explain why the new
policy is permissible under the statute and that there are good reasons
for its new position. FCC v. Fox TV Stations, Inc., 556 U.S. 502, 515-
16 (2009). An agency ``need not demonstrate to a court's satisfaction
that the reasons for the new policy are better than the reasons for the
old one.'' Id. HHS has met that standard, as discussed in the previous
comment response.
Nevertheless, the Department now believes the Final Rules represent
a misjudgment. The Final Rules were based on policies announced in
Executive orders that this President revoked because those policies
were counter to the objectives of the Biden-Harris Administration. As
explained, these current objectives include using available tools of
Federal administrative agencies to, among other things: confront the
urgent challenges facing the Nation; equip executive departments with
flexibility to use robust regulatory action to address national
priorities; 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; and protect and strengthen the ACA and make high-
quality healthcare accessible and affordable for every American.
Because the Final Rules place obstacles to achieving these objectives,
their issuance was contrary to the best interests of the public health
and welfare, and therefore represents a clear error in judgment.
Moreover, these procedural regulations were issued at the tail end of
one Administration to govern the procedures to be followed by the next
Administration, which in itself is a regrettable misjudgment.
c. Reflection of Existing Law
Some commenters asserted that portions of the Final Rules track
existing judicial precedent and questioned HHS's rationale under the
APA for repealing the rules where they reflect existing law. For
example, one commenter stated that HHS should maintain the definition
of guidance because it matches existing law. Another commenter objected
to HHS's grounds for repealing Sec. 1.7 because, in the commenter's
view, Sec. 1.7 codifies existing law under Christopher v. SmithKline
Beecham Corp., 567 U.S. 142 (2012). One commenter stated that HHS
lacked a ``satisfactory explanation'' for the rescinding the Final
Rules because the rules are based on binding Federal-court precedent.
This argument is similar to the argument discussed in Section
IV.F.1. above in the context of the Take Care Clause and separation-of-
powers doctrine, only here the comments are relying on the APA. As
explained in that comment response, HHS does not agree that the Final
Rules only capture existing legal precedent. The Final Rules go beyond
existing law, such as by imposing new procedures on the issuance of
guidance.
For example, with respect to Sec. 1.7, HHS continues to believe
that provision is not required under settled case law. In Christopher
v. SmithKline Beecham Corp., the Supreme Court declined to give
controlling deference to an agency interpretation of an ambiguous
regulation that was advanced in an amicus brief, based in part on
concerns about unfair surprise. Instead, the Court analyzed the
interpretation under the ``Skidmore deference'' framework and accorded
the agency's interpretation ``a measure of deference proportional to
the `thoroughness evident in its consideration, the validity of its
reasoning, its consistency with earlier and later pronouncements, and
all those factors which give it power to persuade.' '' 567 U.S. at 159
(quoting
[[Page 44019]]
United States v. Mead Corp., 533 U.S. 218, 228 (2001)). Under this
framework, the Court determined that the agency's interpretation was
unpersuasive. The Court did not invalidate the interpretation on
procedural grounds or state, as a matter of law, that agencies cannot
announce and apply new legal standards in enforcement proceedings. Yet
that is what Sec. 1.7 provides: it bars HHS from applying standards or
practices in civil enforcement proceedings that have not been
``publicly stated.'' That position is inconsistent with SEC v. Chenery
Corp., in which the Supreme Court held that agencies can use
adjudicatory proceedings to announce and apply new standards of
conduct. 332 U.S. 194, 203 (1947). Although the commenter suggests that
Christopher overruled Chenery, the Christopher decision does not take
on the same question or even mention Chenery.\9\
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\9\ The commenter cites ExxonMobil Pipeline Co. v. U.S.
Department of Transportation, 867 F.3d 564 (5th Cir. 2017), for the
proposition that Christopher establishes that regulatory agencies
cannot announce and apply new legal standards in enforcement
proceedings. However, like Christopher, ExxonMobil Pipeline
addressed unfair surprise in the context of applying deference to an
agency's interpretation. See 867 F.3d at 573. Moreover, also like
Christopher, ExxonMobil Pipeline does not mention Chenery and does
not suggest that that Christopher overruled that case.
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Insofar as there are portions of the regulations that only codify
existing legal principles, this rulemaking is not intended to reflect
objection to or disagreement with these principles. HHS is fully
committed to complying with applicable law. Nevertheless, HHS is opting
not to retain regulations seeking to codify existing precedent for
several reasons. First, many of the legal principles at issue here are
nuanced. HHS recognizes that there is risk in attempting to reduce
these principles to regulatory language and believes that it will be
difficult for the Department to ensure that its regulations fully
capture the context and meaning of relevant court decisions, even with
great thought and care. Second, amending rules codified in the CFR is
generally time-consuming and resource-intensive. Thus, as legal
precedent evolves, the regulations could become outdated and could
create administrative challenges, confusion, and potential conflicts
for the Department. Third, as noted in the Repeal NPRM, we see little
benefit in these provisions because the APA already governs agency
conduct without the need for agency regulations. 86 FR 58049. In light
of these considerations, we have decided that the practical and
procedural risks outweigh any benefits of attempting to codify existing
legal principles, and so we have determined not to retain such
regulations.
d. Reliance on Executive Orders
One commenter stated that the current Administration's Executive
orders, including E.O. 13992, do not provide adequate justification for
rescinding regulations, citing California v. Bernhardt, 472 F. Supp. 3d
573, 605 (N.D. Cal. 2020). In that case, the court explained that
Executive orders cannot eliminate statutory mandates. Id.
We do not find the comment persuasive for several reasons. First,
E.O. 13992 does not eliminate any statutory mandates; rather, it
revokes Executive orders issued by the previous Administration and
provides policy direction in the application of the Department's
discretion, as noted in Section IV.F.1 above. Second, given that HHS
has discretion in this area, it is entirely appropriate for the
Department to cite to the policy direction set forth in the current
Administration's Executive orders as part of its rationale for
repealing the Final Rules. Indeed, we note that the Final Rules
themselves were based on policy direction in Executive orders issued by
the previous Administration. Third, as explained in this preamble and
in the Repeal NPRM, HHS has reasons beyond the inconsistency with the
Executive orders for repealing the Final Rules. Other reasons include
that the Department no longer believes that the Final Rules will best
equip it to serve its mission, no longer agrees with codifying these
types of Department-wide procedures in regulation, and no longer
supports a one-size-fits-all approach to guidance and civil enforcement
procedures for HHS. These reasons are sufficient under relevant case
law. This is particularly true where the Final Rules govern only agency
processes and were based almost entirely on policy justifications,
including (now-revoked) Executive orders.
e. Specific Examples
One commenter objected to HHS's harm-based rationale for repealing
the Final Rules because the Repeal NPRM lacked sufficient specific
examples. The commenter asserted that HHS had only ``speculate[d]''
that harms could ensue and offered ``purely hypothetical concerns.''
The commenter indicated that a ``satisfactory explanation'' under State
Farm requires HHS to produce specific examples of harm caused by the
Final Rules over the past nine months, such as examples of how the
guidance processes have caused delay or details about the resources
expended on guidance petitions.
HHS's concerns about the harms of these rules are not speculative
or hypothetical. In the relatively short time that the Final Rules have
been in effect, they have required HHS agencies to prioritize and
divert resources to, for example: clearing a Medicaid guidance under
the more cumbersome new processes, which took weeks longer than
anticipated and delayed the timely communication of needed information
to program beneficiaries; responding to petitions submitted under 45
CFR 1.5 that were ultimately found not to even satisfy the requirements
for a guidance petition but nevertheless demanded significant time and
effort; quickly uploading guidance documents into the guidance
repository to avoid automatic rescission; preparing the analysis of the
economic impact of certain significant guidance documents, which is
especially challenging given the non-binding nature of guidance;
responding to questions from stakeholders who are confused by the new
guidance disclaimer language; and modifying certain civil
administrative procedures even though they generally would have
included notice and opportunities for engagement, because those
procedures did not include the scripted process in the Civil
Enforcement rule. These and other experiences have informed HHS's
decision-making for this repeal.
The Department also notes that the procedures for significant
guidance are modeled on procedures for issuing legislative rules, and
HHS and the public are aware of the difference in time required to
issue a guidance (at least prior to the Guidance rule) as compared with
a legislative rule. Considering this well-established differential, we
are puzzled that anyone would dispute that these significant guidance
procedures will cause delay in the issuance of significant guidance.
Beyond these harms, the Repeal NPRM cited various other examples of
harm, including CMS's difficulties with the guidance repository, the
inconsistency between the HHS and FDA guidance requirements, and the
confusion created by a new overlay of civil administrative enforcement
procedures on existing procedures. 86 FR 58048, 58050, 58051. HHS also
previously discussed how the Guidance rule causes confusion when it
described commenters' concerns about the definition of guidance, the
definition of significant guidance, and the disclaimer requirement. 85
FR 78772, 78774, 78778. Comments in this rulemaking have reiterated
that confusion and the uncertainties created by the rules, among other
problems.
[[Page 44020]]
HHS's decision to repeal these rules is also based on a risk of
significant future harm. That risk exists because the rules are
susceptible to broad interpretation and multiple meanings. The Repeal
NPRM gave some examples of these concerns, such as the potential for
the definition of significant guidance to be construed broadly, the
opaque language in the civil enforcement rule that could result in
opportunistic litigation, and the possibility of overwhelming guidance
petition obligations. 86 FR 58046, 58049, 58051. Indeed, although HHS
stated in the preamble to the final Guidance rule that it believed
there would be relatively few significant guidance documents, 85 FR
78775, we no longer think that accurately represents past practice. The
risks of these harms--some of which may not yet have materialized--
supply additional ``good reasons'' to eliminate these self-imposed
procedural requirements.
Finally, we note that HHS does not need to demonstrate any specific
harms, or even risk of harm, in order to justify the repeal of these
rules. These rules govern agency procedures, and agencies are generally
free to fashion their own rules of procedure in a manner that will
maximize the execution of their duties. At most, HHS must show that the
decision is permissible under the statute and that there are good
reasons for it. FCC v. Fox TV Stations, Inc., 556 U.S. at 515-16. HHS
has cited a range of good reasons for this final repeal rule, as noted
throughout this preamble. Given that the record for promulgation of
these rules contained mainly policy justifications, without citing
concrete issues that needed to be solved, HHS does not now believe that
it is required to meet a higher burden, cataloging specific facts and
examples, in order to justify reversal.
f. Specificity and Consistency
One commenter opined that the Repeal NPRM should have identified
which existing procedural regulations comply with principles of due
notice, fairness, and transparency in order to support HHS's position
that the Civil Enforcement rule is not required. The commenter also
asserted that HHS's position in the Repeal NPRM was contradictory
because the Department both stated that its preexisting regulations
provide sufficient fairness and transparency and stated that the Civil
Enforcement rule may conflict with the preexisting regulations; the
comment stated that the Civil Enforcement rule ``cannot simultaneously
be coextensive with and in conflict with preexisting enforcement
regulations.''
HHS believes that all of its preexisting procedural regulations
comply with principles of due process, fairness, and transparency, and
it is not aware of any information to the contrary. When the Civil
Enforcement rule was issued, HHS did not identify any specific
deficient processes. In fact, HHS indicated the opposite; for example,
it conveyed that existing HHS procedures generally already satisfy the
standards in Sec. 1.9. 86 FR 3012. Furthermore, the comments on the
Repeal NPRM, including this comment, did not identify specific
procedural defects that would be solved through the Civil Enforcement
rule. Based on this record, HHS is not aware that any of its
preexisting procedures are problematic, and it does not agree that it
now has a burden to cite and explain how each of its procedures comport
with fairness and due process.
The commenter also misunderstands HHS's position in the Repeal
NPRM. HHS does not consider the Civil Enforcement rule and its
preexisting regulations ``coextensive,'' but does consider its
preexisting regulations to comply with principles of due notice,
fairness, and transparency. The preexisting regulations can comply with
these principles without, for example, meeting the specific process
laid out in in 45 CFR 1.9 of (1) written notice of the initial legal
and factual determinations, (2) an opportunity to respond in writing,
and (3) a written response from the Department upon request, each of
which, under the regulation, must occur ``prior'' to the Department
taking a civil enforcement action.\10\ The Civil Enforcement rule
itself contemplated that Sec. 1.9 was not mandated by principles of
due process; it stated that the process ``may exceed the requirements
imposed by the Due Process clause of the Constitution and may impose a
burden by delaying the time until HHS can take actions with legal
consequence.'' \11\ 86 FR 3013. HHS's processes can vindicate the goals
of due notice and fairness through methods other than the prescriptive
steps and documentation required under Sec. 1.9, such as engagement
through regulatory meetings.
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\10\ The preamble to the Civil Enforcement rule states that the
final ``written response may be issued contemporaneous to the
Department taking the action with legal consequence.'' 86 FR 3012.
However, HHS is concerned that a court may not find that statement
accurate or persuasive in light of the regulatory language itself,
which provides that the Department ``shall provide'' the response
``prior'' to the civil enforcement action. See, e.g., Wyo. Outdoor
Council v. U.S. Forest Serv., 165 F.3d 43, 53 (D.C. Cir. 1999)
(``[L]anguage in the preamble of a regulation is not controlling
over the language of the regulation itself.'').
\11\ The Civil Enforcement rule referred to Sec. 1.6, rather
than Sec. 1.9, in this sentence. We now believe this was an error,
and was intended to refer to Sec. 1.9, because the rule describes
the relevant provision as providing a ``process'' with ``an
opportunity to respond in writing before the Department takes an
action that has (potentially costly) legal consequence.'' 86 FR
3013. Section 1.6 relates to Department reliance on guidance
documents and does not establish a process with an opportunity to
respond in writing.
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g. Benefit-Cost Analysis
One commenter stated that HHS failed to fully consider the benefits
of the Final Rules and argued that, under the APA, HHS must weigh the
costs of the repeal against its benefits. Another commenter stated that
the costs of the Guidance rule outweigh its benefits but recommended
that HHS summarize those costs and benefits in a designated Regulatory
Impact Analysis (RIA) section.
HHS disagrees that the APA requires a benefit-cost analysis such as
an RIA for rulemaking in general and more particularly for the
procedural rules that are the subject of this rulemaking. We also note
that nothing in 5 U.S.C. 301, which provided the statutory authority
for the Final Rules as well as this repeal, requires a benefit-cost
analysis. Nevertheless, HHS has considered the advantages and
disadvantages of these rules and has determined that they should be
repealed. In making this decision, the Department considered the
benefits of the rules cited by commenters, which are addressed
throughout this preamble. For example, HHS has considered that the
Guidance rule requires more process for significant (and other)
guidance, which may have the benefit of refining guidance to a greater
extent, but also has the disadvantage of delaying, and possibly
preventing, the communication of valuable information. With respect to
the uniform and mandated disclaimer for guidance, HHS recognizes that
there is benefit in acknowledging a document's non-binding nature but
has concluded that there is greater harm in requiring one consistent
disclaimer across the Department. HHS is also aware that some regulated
entities would prefer for all standards and practices to be publicly
stated before they are applied in civil enforcement proceedings, but
has determined there is greater benefit to the public if the Department
is not constrained in taking appropriate actions and positions as
circumstances arise. More broadly, overall, HHS believes there is a net
negative in establishing these Department-wide procedures by
regulation, regardless of the merits of
[[Page 44021]]
the underlying policies. However, the Department intends to retain some
of the policies without the regulations, such as the guidance
repository, so the associated benefits will continue. In these and
other ways, HHS has balanced the pros and cons, and its determination
is both reasonable and well supported.
HHS agrees with the commenter who stated that the harms of the
Guidance rule outweigh its benefits. The comment noted that the
Guidance rule creates costs in terms forgone health benefits, costs to
regulated entities, and increased monitoring burdens on the public.
Accordingly, HHS has included an assessment of the impacts of this
final repeal rule in the ``Required Regulatory Analyses'' section, see
Section V.A. below.
h. Consideration of Alternatives
One commenter proposed various modifications to the rules as an
alternative to repeal and questioned whether HHS had adequately
justified a repeal of the Final Rules in their entirety in light of
these proposed alternatives. The commenter's proposed modifications
include: (1) revising Sec. 1.1 to exempt FDA from the scope of the
guidance regulation; (2) revising Sec. 1.2(a) to clarify that the
definitions in that section do not apply to FDA to the extent they
conflict with FDA's GGP regulations and that ``[d]ifferent definitions
may be provided in Federal statutes or regulations that apply more
specifically to particular programs or activities;'' (3) revising Sec.
1.3(a)(3)(i) to require HHS and each of its components to ``prepare a
template statement (or multiple template statements,[] . . .) that
disclaims any binding effect,'' and until they do so, require agency
components to include the disclaimer provided in the original Sec.
1.3(a)(3)(i); (4) revising Sec. 1.4(a)(2) to provide that guidance
documents not included in the guidance repository will not be
considered automatically rescinded upon the Secretary making certain
findings, including that the failure to include was inadvertent, or
alternatively, eliminating the automatic rescission language
altogether; (5) revising Sec. 1.5(d) to permit the Secretary to extend
the deadline for the Department's response to petitions for review of
guidance if they ``present a complex question that cannot reasonably be
responded to within 90 business days,'' or adding a third basis for
suspension of the deadline; and (6) revising Sec. 1.7(a) to remove the
requirement that, in civil enforcement actions, the Department may only
apply standards or practices ``that have been publicly stated.''
HHS disagrees with the commenter that the commenter's proposed
modifications to the Final Rules are better alternatives to address the
concerns with the rules and that these alternatives would obviate the
need to repeal the rules in their entirety. As a threshold matter, it
is not clear that the Department must consider modifications to these
procedural rules prior to rescinding them. Under State Farm and
Regents, ``[w]hen an agency rescinds a prior policy its reasoned
analysis must consider the `alternative[s]' that are `within the ambit
of the existing [policy].'' DHS v. Regents of the Univ. of Cal., 140 S.
Ct. 1891, 1913 (2020) (quoting State Farm, 463 U.S. at 51). Under this
standard, an agency must give ``adequate reasons for its abandonment''
of any such alternatives. State Farm, 463 U.S. at 51. However, as
explained in Section IV.F.2.a. above, it is not clear that the
standards set forth in this precedent apply equally to rules governing
agency procedures such as the Final Rules. See Vt. Yankee, 435 U.S. at
544 (recognizing agency autonomy to develop its own procedural rules as
a ``very basic tenet of administrative law''). Moreover, the Department
notes that to the extent State Farm and Regents apply to its decision
to repeal these procedural rules in their entirety, those precedents
make clear that an agency is ``not required to . . . `consider all
policy alternatives in reaching [its] decision' '' and is ``not
compelled to explore `every alternative device and thought conceivable
by the mind of man.' '' Regents, 140 S. Ct. at 1914 (first quoting
State Farm, 463 U.S. at 51; then quoting Vt. Yankee Nuclear Power Corp.
v. Natural Res. Def. Council, Inc., 425 U.S. 519, 551 (1978)); see
State Farm, 463 U.S. at 51 (``Nor do we broadly require an agency to
consider all policy alternatives in reaching decision. It is true that
a rulemaking cannot be found wanting simply because the agency failed
to include every alternative device and thought conceivable by the mind
of man regardless of how uncommon or unknown that alternative may have
been.'') (internal punctuation omitted).
Nevertheless, to the extent that HHS is required to consider
modifications to the existing rules prior to rescinding them, HHS has
satisfied that requirement. HHS has considered modifications to the
Final Rules, including the commenter's proposed modifications, and has
determined that any such modifications are not better than repeal for
several reasons.
As explained in previous comment responses and elsewhere throughout
this preamble, HHS has determined that codifying the practices and
procedures set forth in the Final Rules, even if modified as the
commenter suggests, is not necessary or appropriate for several
reasons. As noted previously in the Repeal NPRM, neither of the Final
Rules required notice-and-comment rulemaking before promulgation. See
86 FR 58045-46. Moreover, the Department does not find it appropriate
to codify these practices and procedures regarding guidance and civil
enforcement because doing so would inhibit the ability of HHS agencies
to update and revise these practices and procedures as needed over time
in response to a variety of factors, including changed circumstances,
new priorities, public health emergencies, stakeholder input, new
technology, changes in applicable legal precedent, and agency
experience. Such revisions would be generally time-consuming and
resource-intensive if these practices and procedures remained codified
in a regulation. HHS does not believe that its finite resources are
best used to undertake such efforts, especially given the limited
utility of the Final Rules. The Department's desire to retain
flexibility to modify practices and procedures regarding guidance and
civil enforcement is consistent with Congress's objective that the APA
should allow ``agencies . . . latitude in organizing their internal
operations,'' Mendoza v. Perez, 754 F.3d 1002, 1023 (D.C. Cir. 2014)
(internal quotation marks omitted) (recognizing this principle as a
ground for Congress's exemption of agency procedural rules from the
requirement to conduct notice-and-comment rulemaking); Am. Hosp. Ass'n
v. Bowen, 834 F.2d 1037, 1045 (D.C. Cir. 1987) (``The reading of the
[section] 553 exemptions that seems most consonant with Congress'
purposes in adopting the APA is to construe them as an attempt to
preserve agency flexibility in dealing with limited situations where
substantive rights are not at stake.''); see also Vt. Yankee, 435 U.S.
at 544 (``agencies should be free to fashion their own rules of
procedure'').
Additionally, HHS has determined that codifying the Final Rules or
any modification of them is not appropriate because implementing a one-
size-fits-all approach to the practices and procedures regarding
guidance and civil enforcement cannot accommodate the needs of the
diverse range of HHS agencies. As explained in Section IV.A.4.b above,
each of the HHS agencies serves the Department's overall mission in
unique ways, often addresses different stakeholders, uses specialized
[[Page 44022]]
regulatory tools and existing processes for guidance and civil
enforcement, and is subject to unique statutory authorities. To develop
practices and procedures applicable to and appropriate for all HHS
agencies, the Department would need to consider and accommodate these
different stakeholders, tools, existing processes, and statutory
authorities. The Department now believes that the Final Rules did not
adequately address this issue. Even assuming it would be possible or
practical for the Department to do so in the context of a single
rulemaking, the Department does not find it appropriate to commit its
limited resources to such a time-consuming and resource-intensive task.
Although the commenter's proposal to exempt FDA from the Guidance rule
addresses some of these concerns for one agency and one rule (the
commenter does not propose to exempt FDA from the civil enforcement
rule), that approach does not address the unique considerations
presented by each of the other HHS agencies.
HHS has determined that the commenter's proposed modifications to
the Final Rules are not preferable to repeal for other reasons, as
well, including that they do not address the Department's following
additional concerns regarding such provisions.
First, the commenter's proposal to revise Sec. 1.2(a)--to exempt
FDA from its definition of ``guidance document'' and acknowledge that
``[d]ifferent definitions may be found in Federal statutes'' but retain
the rule's original ``guidance document'' definition--does not
adequately address the Department's concerns that the ``guidance
document'' definition is vague and overly broad, could lead to
confusion over the type of documents subject to the rule's
requirements, and could be read to encompass a range of documents not
intended to serve as guidance. The commenter asserts that the
definition is not vague or confusing because it is consistent with the
APA's definition of a rule as well as ``definitions that have long been
used by courts and agencies to define the categories of agency
documents that are properly considered guidance.'' Moreover, the
commenter suggests that any difficulty in interpreting Sec. 1.2(a)'s
definition of guidance is not attributable to that section's language
but ``inheres in the nature of [defining] agency guidance,'' which
courts have described as `` `fuzzy' and `enshrouded in considerable
smog,' '' and that ``to the extent the Department believes further
clarification is needed to explain how the definition of guidance
applies to specific documents, it should provide clarity through
further preamble guidance explicating how HHS understands this term.''
However, as discussed in the Section IV.F.2.c. above, the nuanced
nature of determining whether an agency document constitutes guidance
counsels against attempting to reduce the relevant legal principles to
regulatory language and makes it difficult for the Department to ensure
that any regulatory definition fully captures the context and meaning
of relevant court decisions. Furthermore, the Department does not agree
with the commenter's assertion that Sec. 1.2(a)'s definition
ameliorates difficulty in identifying agency guidance documents by
``adding clarifications that discuss specifically how HHS documents are
likely to fit or not fit within the definition.'' The Department sees
limited value in the examples provided in the definition, which
primarily include legislative rules and documents that clearly fall
outside the definition of guidance, see, e.g., 45 CFR 1.2(a) (providing
that ``guidance documents'' do not include ``rules promulgated pursuant
to notice and comment under 5 U.S.C. 553,'' ``decisions of agency
adjudication under 5 U.S.C. 554,'' ``legal briefs and other court
filings,'' ``grant solicitations and awards,'' and ``contract
solicitations and awards''), or essentially reiterate the legal
principles already incorporated into the general definition, see id.
(providing ``guidance document'' does not include ``internal guidance
directed to the Department or other agencies'' but would include such
documents if they were ``intended to have substantial future effect on
the behavior of regulated parties''); see also id. (excluding from the
definition of ``guidance document'' various ``[p]re-enforcement
rulings'' but acknowledging that ``[i]f, however, . . . the content of
the document is designed to guide the conduct of other regulated
parties, such a document would qualify as guidance'').
Second, the commenter's proposed revisions to Sec. 1.3(a)(3)(i)--
to require HHS and each of its agencies to individually ``prepare a
template statement (or multiple template statements,[] . . .) that
disclaims any binding effect,'' but until they do so, require them to
use the disclaimer provided in the original Sec. 1.3(a)(3)(i)--are not
a better alternative to rescission of this section in its entirely.
Although requiring each HHS agency to develop its own templates for
guidance documents represents an improvement on the rule's original
requirement that a uniform statement be used for all Department
documents, it is not clear that this approach would provide each agency
with enough flexibility to specify the information most appropriate to
each HHS agency's stakeholders and the expected uses of each particular
document or type of document. As discussed in Section IV.D.4. above,
the Department believes that a flexible approach is preferable so that
each HHS agency can develop an approach to help ensure that the
statement is as clear and useful as possible, informed by the unique
considerations applicable to that agency and using the regulatory tools
it deems best suited to the task. Although FDA's GGP regulation
contains a requirement cited by the commenter as a model, neither the
FD&C Act nor FDA's GGP regulation codify the wording of the disclaimer
statement; rather they broadly require that FDA guidance documents
indicate the non-binding nature of the document. See 21 U.S.C.
371(h)(2) and 21 CFR 10.115(i)(1)(iv). The Department does not find it
necessary or appropriate to promulgate a regulatory requirement that
all agency components undertake such an effort, given the numerous
demands on the Department's finite resources, the unique considerations
presented by the various guidance documents issued by each of the
Department's components, and existing law establishing the non-binding
effect of guidance documents regardless of inclusion of a disclaimer of
legal effect.
Additionally, the Department rejects the commenter's proposal to
require HHS agencies, pending their adoption of a template, to include
in all guidance documents Sec. 1.3(a)(3)(i)'s original disclaimer
statement, given the Department's determination that the original
disclaimer statement is not appropriate for inclusion across the
diverse range of guidance documents issued by agency components. The
commenter asserts that the rule's original disclaimer statement is an
appropriate fit for all Department guidance documents because it
``accurately and clearly restates core principles of administrative
rulemaking applicable to all agencies,'' namely, that ``guidance may
not carry `the force and effect of law.' '' However, as explained in
Section IV.D.4. above, the Department sees little utility in issuing a
regulation to require a disclaimer that simply seeks to capture a
current understanding of principles established by the APA, and any
attempt to do so incurs the risk of confusion to the extent that the
language does not fully capture
[[Page 44023]]
the context and meaning of relevant court decisions.
Third, the commenter's proposed revisions to Sec. 1.4(a)(2)--to
provide that guidance documents not included in the guidance repository
will not be considered automatically rescinded if the Secretary makes
certain findings--also does not present an adequate alternative. This
proposed process for averting or reversing inadvertent rescissions
would create additional burdens for the Department because it would
require the Secretary to make specific, narrow and undefined findings
about each rescission that: ``[t]he guidance document was omitted from
the guidance repository inadvertently due to a technological or human
error;'' ``[r]egulated parties had fair notice of the guidance document
during the period it did not appear in the guidance repository;'' and
``[t]he guidance document was added to the guidance repository promptly
after the Department learned of its inadvertent omission.'' Moreover,
providing the possibility that the Secretary could proactively prevent
rescission by making certain findings will not prevent automatic
rescission from happening inadvertently. And, as discussed in Section
IV.D.5, automatic rescission due to inadvertent exclusion would create
additional burdens on stakeholders by causing unnecessary confusion
about which guidance documents have been rescinded, superseded, or
otherwise become obsolete. Furthermore, this proposed alternative for
reinstating automatically rescinded guidance would likely exacerbate
stakeholder confusion because the effectiveness of guidance could flip
back and forth depending on technical glitches with the website and
whether the Secretary has been able to address them.
The commenter proposed, as an alternative revision to Sec. 1.4, to
retain Sec. 1.4's requirement to establish and maintain a guidance
document repository but provide that failure to include a guidance
document in the repository would not be grounds for treating the
guidance document as rescinded. We agree with the proposal to maintain
a centralized repository and eliminate the automatic rescission
provision. However, we conclude that it is unnecessary and unhelpful to
retain the codified regulation. Removing the automatic rescission
language in Sec. 1.4 would leave only the requirement that the
Department maintain the guidance repository along with certain
specifications for the repository. As discussed in Section IV.D.5, the
Department intends to retain the guidance repository and to improve the
utility of the repository based on stakeholders' input and other
developments, such as new technology. We see no benefit in directing
the Department's efforts with a codified regulation.
Fourth, the commenter's proposed revisions to Sec. 1.5(d) are also
not a preferable alternative to rescission. Although permitting the
Secretary to extend the deadline for the Department's responses to
petitions that present a ``complex question that cannot reasonably be
responded to within 90 business days,'' or adding additional bases for
tolling the deadline, may in some ways alleviate the Department's
concerns regarding its ability to respond to such petitions in such a
short timeframe, these proposed mitigation measures do not sufficiently
address the unnecessary diversion of resources to this new petition
pathway. The commenter does not address the Department's concerns
regarding the other ways in which Sec. 1.5 is likely to strain
unnecessarily the Department's resources, as discussed in Section
IV.D.6., by, for example, permitting stakeholders to file, and
requiring the Department to timely respond to, an indefinite number of
petitions, each of which could challenge any number of guidance
documents at a time or challenge the same guidance document multiple
times. Furthermore, requiring the Secretary to make determinations
regarding whether individual petitions present a ``complex question''
and whether the Department ``cannot reasonably . . . respond[ ] . . .
within 90 business days,'' or whether a basis for tolling exists, would
create an additional burden on the Department's finite resources.
Moreover, the commenter does not explain why such burdens would be
justified, given the existence of other formal and informal processes
by which stakeholders can communicate their views on guidance to the
Department. Although the commenter asserts that these processes are not
an ``equally effective and comprehensive alternative'' to Sec. 1.5's
petition process and that FDA's citizen petition process is ``largely
inadequate,'' it does not provide persuasive support for such
assertions. Nor does the commenter support the underlying premise that
petitions regarding guidance documents should be provided a special
pathway and be prioritized above other petitions as well the
Department's other work. In any event, HHS need not show that the
existing processes that it chooses to rely upon in the alternative are
``equally effective'' or ``comprehensive;'' rather, at most, HHS need
only show that there are good reasons for abandoning Sec. 1.5's
petition process and that it believes doing so is the better approach,
which it has done here. See FCC v. Fox TV Stations, Inc., 556 U.S. at
515-16 (to justify a repeal, an agency needs to adequately explain why
the new policy is permissible under the statute and that there are good
reasons for its new position).
Finally, the commenter's proposed modification to Sec. 1.7(a)--to
remove the requirement that in civil enforcement actions the Department
may only apply standards or practices ``that have been publicly
stated''--is also inadequate compared to rescission because it
addresses only one aspect of the Civil Enforcement rule. Although the
commenter's proposal would remove a restriction on the Department's
authority that goes beyond settled case law, see Section IV.F.2.c; 86
FR 58050, that limited change would not address the Department's
concerns regarding other provisions of the Civil Enforcement rule. See
Section IV.E (concerns with the Civil Enforcement rule include that the
newly required procedures do not adequately account for pre-existing,
agency-specific procedures regarding civil enforcement actions, may
conflict with or diverge from such existing procedures, may create
confusion for both HHS agencies and regulated parties, and could create
unnecessary burdens that delay or prevent civil enforcement). Although
the commenter asserts that the burdens the Civil Enforcement rule
imposes on the Department, identified in the Repeal NPRM, are either
speculative or justified by the rule's benefits, the Department
disagrees. See Section IV.E. Moreover, the proposed revision to Sec.
1.7(a) does not address the Department's position that the Civil
Enforcement rule, including the portion of Sec. 1.7(a) that would
remain under the commenter's proposal (i.e., a prohibition on standards
or practices that ``cause unfair surprise''), is superfluous because
the procedural regulations already established within HHS comply with
principles of due notice, fairness, and transparency. Contrary to the
commenter's suggestion that rescission of the rule will ``allow[ ] [the
Department] to proceed with enforcement actions that cause unfair
surprise'' and impose ``burdens . . . on regulated entities who are on
the receiving end of such enforcement actions,'' the Department's
current procedures already ensure that that the procedural rights of
stakeholders are adequately protected.
In sum, to the extent that the Department must consider potential
[[Page 44024]]
modifications to the Guidance and Civil Enforcement rules as
alternatives to their rescission, the Department has satisfied any
obligation to do so by addressing the modifications proposed in the
comments and providing adequate reasons for their rejection. See State
Farm, 463 U.S. at 51.
i. Reliance Interests
One commenter asserted that HHS's consideration of reliance
interests in the Repeal NPRM rule was inadequate. The commenter stated
that HHS assumed there were no reliance interests due to the revocation
of Executive Orders 13891 and 13892 and that ``a change in
administration cannot extinguish reliance interests.'' Another
commenter asserted that ``reliance interests are serious and ongoing.''
The commenter questioned HHS's belief that no serious reliance
interests have accrued because, in the commenter's view, that belief
was contradicted by HHS's assertion that the guidance processes were
overly burdensome and resource intensive for the Department.
HHS disagrees that its analysis of reliance interests in the
proposed rule was inadequate, and we have reiterated and built on that
analysis in this final repeal rule. Consistent with DHS v. Regents of
the Univ. of Cal., HHS has considered whether there are significant
reliance interests and has weighed those reliance interests against
competing policy concerns. 140 S Ct. 1891 (2020). For example, in the
preamble to the proposed rule, HHS gave reasons why it did not believe
significant reliance interests have accrued but also communicated the
view that, to the extent that any serious reliance interests are at
stake, they are outweighed by the public interest in efficient issuance
of guidance and adequate civil administrative enforcement actions.
Thus, HHS stated that it was unlikely that reliance interests had
accrued, but also acknowledged the possibility of reliance interests
and weighed them against relevant policy considerations.
HHS has not changed its analysis of reliance interests. Although
one comment stated that reliance interests are ``serious and ongoing,''
the commenter based that view on the Department's statement that the
Final Rules are burdensome and resource intensive. While it is true
that the Final Rules are resource-intensive in part because the public
has used the processes (for example, the guidance petition process),
that fact does not mean that the public has developed reliance
interests. Reliance interests generally accrue through decisions made
in reliance on the prior policy, such as decisions to have ``enrolled
in degree programs, embarked on careers, started businesses, purchased
homes, and even married and had children,'' Dep't of Homeland Sec. v.
Regents of the Univ. of Cal., 140 S. Ct. at 1914, or business
``investment[s] incurred,'' Solenex LLC v. Bernhardt, 962 F.3d 520, 529
(D.C. Cir. 2020) (internal quotations omitted).
HHS does not believe that the public has made these types of
decisions based on the Final Rules. As noted in the proposed rule and
throughout this preamble, these rules govern agency procedures, so they
do not on their own change the substantive requirements governing
regulated entities or related property interests. Thus, it is difficult
to see how the procedures or principles set forth in these rules would
translate to a stakeholder making concrete changes in public or
business decisions or practices that would implicate serious reliance
interests.
In considering reliance, HHS also has not taken the position that a
change in Administration extinguishes reliance interests. Under the
facts here, the timing of the change in Administration is relevant
because the Final Rules were issued at the tail end of the last
Administration, and the Biden-Harris Administration immediately revoked
the Executive orders that formed a key basis for the rules (EOs 13891
and 13892). Accordingly, the Final Rules were effective for only a few
days or weeks before the public was put on notice that there was a
change in the underlying policy. At that point, even if we were to
assume for argument's sake that reliance interests accrued, the public
was less likely to invest significant resources in reliance on the
rules. Given that the public had little time to develop reliance
interests before the change in Administration and had little reason to
develop those interests after the change, in combination with the
points made above, HHS does not believe that serious reliance interests
have accrued.
To test its view, HHS invited the public to provide information
about reliance interests adversely affected by the repeal. Other than
the commenters discussed above, we did not receive any responses on
this topic. No commenters provided specific examples of affected
reliance interests. Instead, HHS received multiple comments discussing
reliance on government programs involving guidance and stating that the
Guidance rule itself undermines those interests. These facts
corroborate and reinforce our analysis of reliance interests. In sum,
HHS has considered whether significant reliance interests exist and has
weighed those against its policy goals, and therefore has met its
burden under the APA.
V. Required Regulatory Analyses
A. Executive Orders 12866 and 13563
We have examined the impacts of the final repeal rule under
Executive Order 12866, Executive Order 13563, the Regulatory
Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform
Act of 1995 (Pub. L. 104-4). Executive Orders 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 final repeal rule is a significant
regulatory action as defined by Executive Order 12866. This is
consistent with the Repeal NPRM, which OMB found to be a significant
regulatory action.
In both the Guidance proposed and final rules, OMB determined that
the rulemaking was not an economically significant regulatory action
under these EOs. 85 FR 51399; 85 FR 78784. OMB made a similar finding
with respect to the Civil Enforcement rule. 86 FR 3013. The preambles
to these rules maintained that the rules primarily described procedural
changes that would require Department expenditures to implement.
Although the preambles theorized that stakeholders might eventually
benefit from greater transparencies and efficiencies from these
procedural changes, the Final Rules did not identify any benefits that
were likely to be immediately realized. See 85 FR 78784; 86 FR 3013.
In the current rulemaking, the Department is repealing the Final
Rules, which were effective on January 6, 2021, and January 12, 2021.
When effective, this repeal rule will restore the status quo that
existed just prior to the January 2021 effective dates for the Final
Rules. The Department may then take further action as needed to undo
any minimal actions taken since those effective dates to implement the
rules' procedural directives.
Compared to the baseline scenario under the rules on guidance,
enforcement, and adjudication procedures, we identify several impacts
of the final repeal rule. We anticipate that the final repeal rule will
result in: reduced costs to the Department to administer the
Department's programs; reduced costs associated with litigating
internal procedures; and reduced costs
[[Page 44025]]
associated with responding to citizen petitions purported to be
submitted under the Guidance rule. The sum of these cost savings
attributable to the final repeal rule are very unlikely to exceed the
$100 million threshold in any year. As an additional impact, we
anticipate that the final repeal rule will result in benefits from
reduced regulatory confusion, such as confusion from two sets of
regulations governing FDA guidance practices, citizen petitions related
to FDA guidance, and CMP proceedings.
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 issuing ``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 $165
million, using the most current (2021) Implicit Price Deflator for the
Gross Domestic Product. This final repeal rule would not result in an
unfunded mandate in any year that meets or exceeds this amount.
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
OIRA has determined that this final repeal rule is not a ``major rule''
as defined by 5 U.S.C. 804(2).
B. Regulatory Flexibility Act
The Department has examined the economic implications of this final
repeal rule as required by the Regulatory Flexibility Act (RFA), 5
U.S.C. 601 et seq. The RFA and the Small Business Regulatory
Enforcement and Fairness Act of 1996 (Pub. L. 104-121), which amended
the RFA, require HHS to analyze options for regulatory relief of small
businesses. If a rule has a significant economic effect on a
substantial number of small entities, the Secretary must specifically
consider the economic effect of the rule on small entities and analyze
regulatory options that could lessen the impact of the rule. The
Department considers a rule to have a significant economic impact on a
substantial number of small entities if it has at least a three percent
impact on revenue of at least five percent of small entities.
When finalized, this repeal rule will restore the status quo just
prior to the respective January 6, 2021, and January 12, 2021,
effective dates of the Guidance rule and the Civil Enforcement rule,
and undo changes, if any, to procedures followed by the Department
during the interim period. This rule repeals two rules that the
Department concluded, and the Secretary certified, would not result in
a significant impact on a substantial number of small entities.
Further, the Department believes that any effects associated with
future regulatory actions, including any positive or negative impacts
to small entities, should be attributable to those regulatory actions
rather than to this repeal rule. As a result, the Department has
determined, and the Secretary certifies, that this final repeal rule
does not have a significant economic impact on the operations of a
substantial number of small entities.
C. Executive Order 13132 (Federalism)
We have analyzed this final repeal rule in accordance with the
principles set forth in E.O. 13132, ``Federalism.'' The Department has
determined that this final repeal rule 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.
D. Executive Order 13175 (Consultation and Coordination With Indian
Tribal Governments)
HHS has analyzed this final repeal rule under Executive Order
13175, dated November 6, 2000, and has determined that this action does
not have tribal implications as specified therein. This final repeal
rule would not impose any direct compliance requirements on Indian
tribal governments and will not have any economic or other impacts on
the viability of Indian tribes. Therefore, a tribal summary impact
statement is not required.
E. National Environmental Policy Act
HHS had determined that this final repeal rule will not have a
significant impact on the environment. Because the Final Rules that are
being repealed established only procedures related to issuing guidance
and initiating civil enforcement, this repeal is not a major Federal
action significantly affecting the quality of the human environment
within the meaning of NEPA.
F. Paperwork Reduction Act of 1995
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 final repeal rule and
has determined that it does not create new collections of information.
List of Subjects in 45 CFR Part 1
Government employees, Guidance, Reporting and recordkeeping
requirements.
PART 1--[REMOVED AND RESERVED]
0
For the reasons set forth in the preamble, the Department of Health and
Human Services amends 45 CFR, subtitle A, subchapter A, by removing and
reserving part 1.
Dated: July 18, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2022-15567 Filed 7-22-22; 8:45 am]
BILLING CODE 4150-26-P
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