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New Rule Sunsets Outdated Regulations

The U.S. Department of Health and Human Services (HHS) imposed a rule embracing existing law requiring agencies to review regulations—if HHS doesn’t review a regulation, it will expire.

The mandatory regulatory review, known as the SUNSET rule, requires HHS to review established regulations every ten years and review new rules within two to five years. The rule will apply to only a fraction of the 18,000 sections of code under HHS’s authority: the sections that constitute rule-making, which include about 3,600 rules, and of those, only the ones that affect small businesses.

The rule was proposed by the Trump Administration in November and became final on January 8.

HHS Chief of Staff Brian Harrison said called the provision “the boldest and most significant regulatory reform effort ever undertaken by the federal government.”

The rule could be the model for future agencies, says James Broughel, a senior research fellow at Mercatus Center at George Mason University and author of an academic paper on the subject, “The Benefits of HHS’s Sunset Regulation.”

“There is already a law on the books – the 1980 Regulatory Flexibility Act,” Broughel told Health Care News. “The problem is the agencies just ignore it.  They don’t comply because there is no penalty. The SUNSET rule changes that because a rule will expire.”

The Rule Under Biden

Administrations typically propose innovative reforms like this one at the beginning of their terms, not the end as what happened in this case.

“My guess is if there was a second Trump term, this would have been the priority,” said Broughel.

The obligation to implement the rule is now with President Joe Biden, and it’s not clear where his administration stands. Xavier Becerra, Biden’s nominee for HHS Secretary, lead a coalition in December 2020 that called the provision a “dangerous attempt by the Trump Administration to impede the incoming Biden Administration” and stated that “regulations could abruptly end if not reviewed in the short time frame allotted.”

The American Hospital Association raised concerns about the SUNSET rule during the comment period.

The Biden Administration could promulgate a new law to repeal or amend the SUNSET provision but such an act would not be wise, says Broughel.

“The pandemic exposed all kinds of problems with the regulatory process. The U.S. Food and Drug Administration had to waive regulations left and right,” said Broughel. “The SUNSET date doesn’t kick in until five years, one year after Biden’s first term is over. They could conduct a review of the regulations on the books and amend them to address some of their own priorities, which they have every right to do.  I would hope the changes they make would provide benefits that would exceed the costs.”

 

How SUNSET Saves Money

The cost of implementing the review each year is estimated to fall in the range of $8 million to $25 million. But much of that work will be done upfront and does not include the cost savings the provisions could have on the economy.

“We don’t know what we are losing by having a lot of regulations on the books,” said Broughel. “One of the sad things about our regulatory system is that a lot of its costs are invisible.”

Small businesses are at more of a disadvantage than large corporations because compliance can be costly. Congress could take action, but that is unlikely in the current political climate, says Broughel.

Agencies could also self-regulate, but that too may be a fantasy,” says Broughel.

“There is the potential for agencies to issue regulations that are binding on themselves, that imposes a legal obligation which in this case forces a review,” said Broughel. “The track record of regulators in doing this is abysmal and all the focus is on writing new ones and the federal code explodes in growth.”

AnneMarie Schieber (amschieber@heartland.org) is the managing editor of Health Care News.

Internet info:

James Broughel, “The Benefits of HHS’s Sunset Regulation,” Mercatus Center, George Washington University,” January 2021:  https://www.mercatus.org/system/files/broughel_-_policy_brief_-_the_benefits_of_hhss_timely_sunset_regulation_-_v1.pdf

 

 

 

AnneMarie Schieber
AnneMarie Schieber
AnneMarie Schieber is a research fellow at The Heartland Institute and managing editor of Health Care News, Heartland's monthly newspaper for health care reform.

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