Notice & Comment Commentary: HHS Proposes to Rescind the SUNSET Rule

Bill Funk

March 30, 2022

On the day before President Biden’s inauguration, the Department of Health and Human Services (HHS) adopted the Securing Updated and Necessary Statutory Evaluations Timely rule, colloquially known as the SUNSET Rule, because it would sunset any regulation that had not been assessed and, where required, reviewed within a specific timetable.

Specifically, it provided that all HHS regulations would expire at the end of: (i) five calendar years after the year that the regulation first becomes effective; (ii) ten calendar years after the year of the regulation’s promulgation; or (iii) ten calendar years after the last year in which HHS assessed and (if review of the regulation was required) reviewed the regulation, whichever is latest.

The purpose of the rule, according to HHS, was to incentivize the agency to undertake the reviews required under the Regulatory Flexibility Act (RFA). That Act requires agencies to have a plan for reviewing every ten years those regulations that have a significant effect on a substantial number of small entities, and each year to publish a list of those regulations that the agency will review that year. As interpreted by HHS, the RFA required it to “assess” all of its existing regulations to determine whether they had a significant effect on a substantial number of small entities, and then to review those determined to have such an effect. HHS admitted that it had failed over the years to make all the required reviews required by its plan. Under the SUNSET Rule such failures would result in the automatic termination of the unassessed or unreviewed regulation.

The rule was almost immediately challenged in court on substantive and procedural grounds. In response, the new administration’s HHS delayed the effective date of the rule until March 22, 2022, pending judicial review. Because HHS said that it was reconsidering the SUNSET Rule in light of the claims made in the lawsuit, the parties sought a stay of the litigation, which the court granted. Then, in October 2021, HHS issued a notice of proposed rulemaking to rescind the SUNSET Rule, and in early March 2022, HHS further extended the effective date to September 22, 2022, in order to give it adequate time to consider the comments on the proposed repeal of the rule.

Everyone is expecting HHS to rescind the SUNSET Rule in the near future, and HHS should indeed take this action. Unlike the SUNSET Rule itself, which was neither lawful nor good policy, its rescission would be both lawful and good policy. But before we go any further, let us be clear that what is really at issue here is not HHS’s SUNSET Rule, but the concept of having sunset rules for regulations at all. There is nothing special about HHS or its regulations, or its failure to fulfill the requirements of the Regulatory Flexibility Act. HHS’s situation is faced by all federal agencies.

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