News

HHS Publishes Final SUNSET Rule With New Exemptions and Timelines

26 January 2021

On 19 January 2021, the U.S. Department of Health and Human Services (the Department or HHS) published in the Federal Register Final Rule entitled “Securing Updated and Necessary Statutory Evaluations Timely (SUNSET).” The SUNSET Final Rule imposes new regulatory review and potential sunset (expiration) requirements for all regulations (subject to certain exceptions) issued by the Department and its various agencies, including the U.S. Food and Drug Administration (FDA). The Final Rule largely mirrors the Proposed Rule with two key changes: (a) the time period each agency has to review existing rules before they automatically sunset has been extended from two years to five years, and (b) additional regulations have been exempted from the rule, including FDA food standards of identify. The five-year period to review existing regulations would begin 60 days after the effective date of the Final Rule. The new Administration could seek to reverse this action, or the Final Rule could be subject to legislative review under the Congressional Review Act.

On 19 January 2021 the SUNSET Final Rule was published in the Federal Register.¹ The Final Rule comes just 78 days after the Proposed Rule was published.² The Final Rule amends HHS regulations to set expiration dates for the Department’s regulations (subject to certain exceptions), unless the Department periodically assesses the regulations to determine if they are subject to the Regulatory Flexibility Act (RFA), and if they are, performs a review that satisfies the criteria in the RFA. Key changes that appear in the Final Rule include an extended timeline for the reviews, new exemptions, and a new requirement that the Department publish in the Federal Register each month which new assessments and reviews it has begun and allow for public comment via Regulations.gov.

Extended review timeline

Both the Proposed Rule and Final Rule include an initial review period for regulations that are over 10 years old at the time the Final Rule is published. The Proposed Rule sought to require those reviews be conducted within two years of the Final Rule’s publication. The Final Rule extends this initial review period to five years, due in large part to the number of commenters that raised concerns that HHS would be unable to assess or review all 12,400 regulations that the Department estimates would fall into the initial review category within the proposed two year time period.

Additionally, the Final Rule provides that the Secretary can extend the review deadline one time per regulation by up to one year through a written determination that public interest requires it.

Exemptions

The Proposed Rule identifies seven categories of exempted regulations. Those exemptions are:

Regulations that are statutorily required “such that the Department exercises no discretion as to whether to promulgate and as to what is prescribed” by the regulation, and thus cannot be rescinded;
Regulations whose expiration would violate any other Federal law;
Regulations that “involve a military or foreign affairs function of the United States;”
Regulations “addressed solely to internal agency management or personnel matters;”
Regulations related solely to Federal Government procurement;
Regulations that HHS issues jointly with other agencies; and
The SUNSET rule itself.

Based in part on comments, the Final Rule also exempts two specific categories of regulations:

Certain FDA food, device, and over-the-counter drug regulations; and
Medicare’s annual payment update rules.

The FDA food exemptions are limited to food standards of identity appearing at 21 CFR Parts 131-169. The Department notes in the Final Rule that “the FDA is already undergoing a process to establish a set of general principles for food standards for FDA to use when considering whether to establish, revise, or eliminate a food standard.” According to HHS, because these regulations are already under review there is less need to include them in the SUNSET provisions, and the HHS also notes that these regulations “simply create product identities.”

Announcement of reviews and availability for public comment

The Final Rule imposes a new requirement that HHS publish in the Federal Register each month which new assessments and reviews it has begun and allow public comment on the open assessments and reviews via Regulations.gov. The HHS will create dockets on Regulations.gov for each regulation being assessed or reviewed. The public can comment on those dockets, or comment on a general docket if it wants to remind the agency to begin a review. Under the Proposed Rule, the HHS would have tracked its progress and allowed public input through a Department managed website instead of federal dockets. The HHS intends to keep the Department managed website for tracking certain regulatory review information including a list of the regulations, when they were first enacted, the last year the rulemaking was amended, and the Federal Register citation from the time the rulemaking was amended. However, this list is intended to be a comprehensive list of all HHS regulations which would be updated annually with newly issued regulations and include those exempt from the Final Rule.

Potential action under new administration

The far reaching nature of this final rule makes it likely it will be subject to reconsideration under the new Administration. The Final Rule falls under President Biden’s Executive Order “Regulatory Freeze Pending Review,” which instructs agencies to consider extending the effective date of recently published rules by an additional 60 days starting 20 January 2021. The Executive Order also encourages agencies to consider opening a 30-day comment period to allow interested parties to comment on issues of fact, law, and policy raised by a rule. The Final Rule could also be considered legislatively, under the Congressional Review Act.³

Hogan Lovells will be closely monitoring the progress of any SUNSET reviews posted in the Federal Register. If you are interested in submitting comments on an assessment or review, please do not hesitate to contact us.

References

1 86 Fed. Reg. 5694 (19 Jan. 2020). The HHS released an unpublished version of the rule via press release 10 days prior to its publication in the Federal Register. See, Press Release, HHS Finalizes Unprecedented Regulatory Reform through Retrospective Review (8 Jan. 2021), https://www.hhs.gov/about/news/2021/01/08/hhs-finalizes-unprecedented-regulatory-reform.html.

2 See, Hogan Lovells Memorandum, “HHS Proposes to Sunset Regulations Issued by FDA, CMS, and Other Regulatory Agencies” (18 Nov. 2020), available here https://www.engage.hoganlovells.com/knowledgeservices/insights/presidential-transition-process-and-the-effects-on-the-food-and-agriculture-industries.

3 See, Hogan Lovells Memorandum, “Presidential Transition Process and the Effects on the Food and Agriculture Industries” (14 Jan. 2021), available here https://www.engage.hoganlovells.com/knowledgeservices/news/hhs-proposes-to-sunset-regulations-issued-by-fda-cms-and-other-regulatory-agencies.

Authored by Joseph A. Levitt, Elizabeth Barr Fawell, and Mary B. Lancaster.