HHS Postpones Trump-legacy SUNSET Final Rule in Wake of Lawsuit

March 22, 2021 – The Department of Health and Human Services (HHS) has postponed for one year the effective date of its Securing Updated and Necessary Statutory Evaluations Timely (SUNSET) final rule – put in place in the final days of the Trump administration – pending judicial review of a lawsuit filed March 9.

In a Federal Register notice slated to be published March 23, HHS states that the effective date will be postponed to March 22, 2022, because the allegations of harm made by the plaintiffs in County of Santa Clara et al. v. HHS et al. are credible; a postponement will “permit HHS to review the SUNSET final rule in light of the claims raised in the litigation; and the balance of equities and the public interest warrant postponement of the effective date to preserve the status quo while the Court considers the challenge to the SUNSET final rule.”

Although the SUNSET final rule affects more than 17,000 HHS regulations – which would automatically expire in 2026 without an HHS retrospective review process requiring a pace 20 times faster than HHS has ever conducted – the rule was rushed through in spite of public input on the proposed rule that was critical of the regulation.

Indeed, in publishing the final rule, HHS conceded that roughly a quarter of the comments received on the Nov. 4, 2020, proposed rule during the public comment period requested that HHS withdraw the proposed rule. Further, at a Nov. 23, 2020, public hearing on the proposed rule, all speakers “either expressed concerns about the proposed rule, opposed it, or requested that the Department withdraw it,” according to the final rule.

The final rule’s provisions stipulate that HHS regulations that have a “significant economic impact upon a substantial number of small entities” be reviewed every 10 years. The Department’s review shall consider the following factors, according to the final rule:

  • The continued need for the rulemaking, consideration of which shall include but not be limited to the extent to which the rulemaking defines terms or sets standards used in or otherwise applicable to other federal rules;
  • The nature of complaints or comments received concerning the rulemaking from the public;
  • The complexity of the rulemaking;
  • The extent to which the rulemaking overlaps, duplicates or conflicts with other federal rules, and, to the extent feasible, with State and local governmental rules; and
  • The degree to which technology, economic conditions, or other factors have changed in the area affected by the rulemaking since the rulemaking was promulgated or the last time the rulemaking was reviewed by the Department; and
  • Whether the rulemaking complies with applicable law.

“Although it was styled as a ‘regulatory reform,’ this HHS SUNSET rule is more mischievous than useful,” said Coalition for Healthcare Communication Executive Director Jon Bigelow. “At a time when an FDA chronically short of adequate staff resources is further stretched thin by a pandemic and new responsibilities, the mandated requirement to begin a formal procedure to review each of thousands of regulations or let them automatically expire is a distraction from important work,” he said.

That sentiment is echoed in the lawsuit, which states that the SUNSET final rule creates “incalculable costs and chaos,” creates “immediate uncertainty and instability throughout the healthcare system at the very time that the public most needs clear guidelines due to a global pandemic,” and would “require substantial, and likely, unachievable efforts on the part of HHS to prevent regulations from expiring.”

The plaintiffs, a group of public interest organizations, claim that the final rule violates the Administrative Procedure Act, the Regulatory Flexibility Act, and statutory authority underlying HHS’ original regulations. They ask the court to declare that the SUNSET rule is “arbitrary, capricious, contrary to law, adopted without observance of required procedure or consultation, and issued in excess of HHS authority,” and request that the court vacate it and set it aside.

Whether the U.S. District Court for the Northern District of California will grant the plaintiffs the relief they are seeking is still unknown, but AgencyIQ predicted in a March 19 FDA Today update that “even if the rule survives its court challenge, it would likely be withdrawn by HHS.”