HHS Finalizes Regulatory Reform through Retrospective Review

US Department of Health and Human Services (HHS)

WASHINGTON, D.C. — The Department of Health and Human Services issued a final rule attempting to further values of accountability and transparency. Specifically, the Securing Updated and Necessary Statutory Evaluations Timely (SUNSET) rule requires the Department to assess its regulations every ten years to determine whether they are subject to review under the Regulatory Flexibility Act (RFA), which requires regular review of significant regulations. If a given regulation is subject to the RFA, the Department must review the regulation every ten years to determine whether the regulation is still needed and whether it is having appropriate impacts. Regulations will expire if the Department does not assess and, if required, review them in a timely manner.

“For decades, Presidents have said agencies should retrospectively review their regulations. With the SUNSET rule, HHS is actually doing it,” said HHS Secretary Alex Azar. “Finalizing our SUNSET rule will deliver for the American people better, smarter, less burdensome regulations in the years to come.”

“By terminating burdensome regulations unless their necessity is publicly demonstrated to the American people, our SUNSET rule will prove the boldest and most significant regulatory reform effort ever undertaken by the federal government,” said HHS Chief of Staff Brian Harrison.

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Under the final rule, any regulation issued by HHS, with certain exceptions, will cease to be effective ten years after it is issued, unless HHS performs a plenary assessment of the regulation and a more detailed review of those regulations that have a significant economic impact upon a substantial number of small entities.

That is, all HHS regulations, with certain exceptions (detailed below) will be subject to a two-step review: 1) assessing whether they have a significant economic impact on a substantial number of small entities, the standard set out under the RFA; and, if it qualifies for review under the RFA, 2) a more detailed review that will consider, as prescribed in the RFA, (i) the continued need for the rule, (ii) complaints about it, (iii) the rule’s complexity, (iv) the extent to which it duplicates or conflicts with other rules, and (v) whether technological, economic, and legal changes favor amending or rescinding the rule.

Rules issued by an HHS component that are more than ten years old need to be reviewed within five calendar years of the effective date of this final rule, making the effective date of considerable substantive significance because it starts the clock for reviews.  By providing five calendar years from the effective date, rather than two as proposed, private entities have over five years to become accustomed to, and participate in, the review process.

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Retrospective review of the costs and benefits of federal regulations has long been a goal of Presidents and regulatory experts across the political spectrum.

When agencies impose regulations, they make projections about the regulation’s impact on the public. Once a rule has been in place, agencies should test those projections and see what real-world impact the regulation is having, and amend or rescind if appropriate. This proposed rule would incentivize HHS to conduct these performance reviews of its regulations to ensure that rules are delivering the benefits projected in view of the best available science, data, and evidence. An artificial-intelligence-driven data analysis of HHS regulations found that 85 percent of Department regulations created before 1990 have not been edited.

Certain regulations are exempt: certain Food and Drug Administration (FDA) device-specific, food standard, and over-the-counter drug specific regulations; regulations that are jointly issued with other agencies, regulations that legally cannot be rescinded, and regulations issued with respect to a military or foreign affairs function or addressed solely to internal management or personnel matters (two categories exempt from standard rulemaking requirements under the Administrative Procedure Act). Regulations that affect the regulations of other agencies will be reviewed in conjunction with those agencies.

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This rule seeks to increase transparency, public participation, and democratic accountability. As part of the review process, the public can submit comments on the impacts of regulations.

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