Repealing the Sunset Rule would burden small businesses and violate the law.
Entering its second year in office, the Biden Administration continues to undermine statutory constraints on the administrative state. Most recently, it proposed repealing the Securing Updated and Necessary Statutory Evaluations Timely rule, or Sunset Rule, that had previously been adopted by the U.S. Department of Health and Human Services (HHS)—arguably one of the most critical regulatory reforms made during the Trump Administration. In proposing to repeal the Sunset Rule, the Biden Administration fundamentally misunderstands the rule’s purpose and ignores its statutory duty to keep the Sunset Rule or a similar rule in place.
The purpose of the Sunset Rule is to restore accountability to HHS. It does so by implementing and ensuring agency compliance with a little-known but important statute: the Regulatory Flexibility Act (RFA).
The intent of the RFA is simple—to minimize the administrative state’s unnecessary and often disproportionate impacts on small businesses. The RFA requires that each federal agency publish and implement a plan to review existing regulations and that such review must occur at least once every 10 years. This requirement prevents outdated agency rules from imposing excessive burdens on small businesses. If the agency determines that a rule is not achieving its purpose or is unduly burdensome, it must amend or repeal the rule.
This retrospective review requires agencies to analyze the real-world impacts of their rules. Coupled with the RFA’s mechanism for repeal, retrospective review helps agencies to avoid leaving poorly tailored rules in place indefinitely due to agency inaction.
Since the RFA’s passage in 1980, many agencies have openly flouted its requirement to publish a plan for and conduct retrospective reviews. And as HHS acknowledges in the Sunset Rule’s preamble, its constituent agencies have been some of the worst offenders. Indeed, before implementing the Sunset Rule, HHS spent 40 years with no formal plan for retrospective review.
The Sunset Rule recognizes this problem and provides an effective solution. As an incentive for agencies to comply with the RFA, the Sunset Rule provides that regulations will automatically expire after 10 years unless the agency performs the required retrospective review.
Since taking office, the Biden Administration has sought to undo the Sunset Rule. In March 2021, the Biden Administration froze the rule, delaying its effective date for one year. In November 2021, HHS announced that it would formally repeal the rule. There are at least two serious flaws in the Biden Administration’s proposal.
First, by pursuing a policy of outright repeal, the Biden Administration will thrust HHS into immediate noncompliance with its statutory duties. The Sunset Rule discharges HHS’s duty to ensure it has a plan for retrospective review. It took HHS 40 years to comply with this duty. By repealing the Sunset Rule without a replacement, HHS signals its intent to proceed unlawfully again without having such a plan in place.
Second, the proposed repeal fundamentally misunderstands the purpose and approach of the Sunset Rule. The Biden Administration’s primary rationale for repealing the rule is to avoid the potentially disruptive consequences of the widespread expiration of HHS regulations. This concern is overstated. The Sunset Rule’s purpose is not to repeal any regulation. All it does is set forth HHS’s plan for periodic retrospective review, as required by the RFA. The default repeal that would occur if the review does not take place is a significant incentive to encourage the retrospective review mandated by the RFA. But the Sunset Rule assumes that HHS will comply with the RFA, so automatic expiration of regulations will be rare events, if they ever even occur.
The Biden Administration’s concerns about widespread expiration, on the other hand, appear predicated on the flawed assumption that HHS will continue to fail in its statutory duties, resulting in the expiration of unreviewed rules. The Administration’s assumption that HHS will persist in failing to perform required retrospective reviews is concerning.
The uncertainty caused by presumed agency noncompliance is not adequate to justify the Sunset Rule’s repeal. Perhaps this flawed rationale betrays the Biden Administration’s true motive: it simply disagrees with its predecessor’s policy priorities. HHS does not grapple with the implications of returning to its 40-year policy of noncompliance with the RFA. And it has failed to provide the compelling explanation necessary to justify such a change.
The RFA remains binding on every federal agency, regardless of who is in office. As such, the Biden Administration’s policy disagreements with its predecessor are beside the point. Unless HHS enacts a substantially similar plan for timely retrospective review, it will again find itself in immediate and regular violation of the RFA. And HHS’s potential noncompliance with the RFA is not an abstract problem. As experts at the Pacific Legal Foundation have noted in comments it submitted on the Biden Administration’s ill-conceived proposal, the small businesses that remain subject to outdated, unduly burdensome federal regulations will face the consequences of HHS’s continued inaction.