[Federal Register Volume 87, Number 141 (Monday, July 25, 2022)]
[Rules and Regulations]
[Pages 44002-44025]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-15567]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 1

[HHS-OS-2020-0008; HHS-OS-2021-0001]

RIN 0991-AC29


Department of Health and Human Services Repeal of HHS Rules on 
Guidance, Enforcement, and Adjudication Procedures

AGENCY: Office of the Secretary, Department of Health and Human 
Services.

ACTION: Final rule.

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SUMMARY: The Department of Health and Human Services (HHS or the 
Department) is issuing a final rule that repeals the regulations issued 
under two final rules: ``Department of Health and Human Services Good 
Guidance Practices,'' published in the Federal Register of December 7, 
2020; and ``Department of Health and Human Services Transparency and 
Fairness in Civil Administrative Enforcement Actions,'' published in 
the Federal Register of January 14, 2021. This action removes HHS 
regulations regarding guidance, enforcement, and adjudication 
procedures.

DATES: This rule is effective August 24, 2022.

ADDRESSES: For access to the docket to read background documents or 
comments received, go to https://www.regulations.gov and insert the 
docket number found in brackets in the heading of this final rule into 
the ``Search'' box and follow the prompts.

FOR FURTHER INFORMATION CONTACT: Daniel J. Barry, Deputy General 
Counsel, 200 Independence Avenue SW, Washington, DC 20201. Email: 
[email protected]. Telephone: 877-696-6775.

SUPPLEMENTARY INFORMATION:

I. Overview

    HHS is repealing two procedural rules that were issued in December 
2020 and January 2021 to implement Executive orders (EOs) issued on 
October 9, 2019. One rule relates to guidance document procedures and 
the other relates to civil administrative enforcement and adjudication 
procedures (collectively, the Final Rules). The Department codified the 
Final Rules in 45 CFR part 1.
    On January 20, 2021, President Biden, under a new Administration, 
revoked both EOs that served as the basis for the Final Rules and 
directed agencies to promptly take steps to rescind any rules and 
policies implementing or enforcing the revoked EOs, as appropriate and 
consistent with applicable law. Accordingly, the Department has 
reconsidered the Final Rules. We now conclude that they create 
unnecessary hurdles that hinder the Department's ability to issue 
guidance, bring enforcement actions, and take other appropriate actions 
that advance the Department's mission. The Department continues to 
abide by its longstanding commitment to follow applicable principles of 
due process and administrative law; however, upon further reflection, 
we now conclude that the Final Rules establish procedures well beyond 
anything required by applicable law. Moreover, in significantly 
burdening the Department, these procedures are inconsistent with the 
policies and goals of the current Administration to ensure that HHS can 
appropriately leverage administrative tools to protect and advance the 
public health and welfare. In addition, the Final Rules created a 
single set of procedures for guidance documents and civil enforcement 
for the entire Department, which we believe is contrary to the 
efficient and effective administration of the wide array of programs 
carried out by the Department, given the diversity of those programs.
    For these reasons, we issued a notice of proposed rulemaking on 
October 19, 2021, to repeal the Final Rules. 86 FR 58042 (Oct. 20, 
2021) (Repeal NPRM). As discussed in greater detail in the Repeal NPRM 
and in this document, and consistent with the President's January 20, 
2021, directive, we are now repealing the Final Rules in their 
entirety.

II. History of the Rulemaking

    On October 9, 2019, the White House issued two EOs: Executive Order 
13891, ``Promoting the Rule of Law Through Improved Agency Guidance 
Documents,'' 84 FR 55235 (Oct. 15, 2019) (E.O. 13891), and Executive 
Order 13892, ``Promoting the Rule of Law Through Transparency and 
Fairness in Civil Administrative Enforcement and Adjudication,'' 84 FR 
55239 (Oct. 15, 2019) (E.O. 13892). These EOs served as the basis for 
the Final Rules, which were promulgated by the Department in December 
2020 and January 2021: ``Department of Health and Human Services Good 
Guidance Practices,'' 85 FR 78770 (Dec. 7, 2020) (the Guidance rule, 
effective January 6, 2021), and ``Department of Health and Human 
Services Transparency and Fairness in Civil Administrative Enforcement 
Actions,'' 86 FR 3010 (Jan. 14, 2021) (the Civil Enforcement rule, 
effective January 12, 2021). The Department codified the Final Rules 
collectively in 45 CFR part 1. Shortly after the rules became 
effective, on January 20, 2021, President Biden, under a new 
Administration, issued Executive Order 13992, which revoked both EOs 
that served as the basis for these rules and instructed agencies to 
rescind, ``as appropriate and consistent with applicable law,'' any 
rules that were based on the revoked EOs. 86 FR 7049 (Jan. 25, 2021). 
Consistent with that instruction, the Department carefully reconsidered 
the Final Rules and then published the Repeal NPRM explaining why it 
proposed to repeal the Final Rules. 86 FR 58042 (Oct. 20, 2021).

[[Page 44003]]

A. Revoked Executive Orders

    E.O. 13891, ``Promoting the Rule of Law Through Improved Agency 
Guidance Documents,'' required agencies, among other things, to: treat 
guidance documents as non-binding both in law and in practice, except 
as incorporated into a contract; take public input on certain guidance 
documents into account; and make all guidance documents available on a 
single website. 84 FR 55235. E.O. 13892, ``Promoting the Rule of Law 
Through Transparency and Fairness in Civil Administrative Enforcement 
and Adjudication,'' imposed a number of procedural hurdles on agencies 
engaged in civil administrative enforcement or adjudication. 84 FR 
55239. As noted, both EOs have since been revoked. 86 FR 7049.
    However, prior to the revocation of these EOs, and consistent with 
the directive in E.O. 13891, the Department published the Guidance 
rule. Although E.O. 13892 did not require rulemaking, the Department 
also published a final rule to implement E.O. 13892, the Civil 
Enforcement rule.

B. Guidance Rule

    On August 20, 2020, consistent with the requirements of E.O. 13891, 
HHS published a notice of proposed rulemaking entitled ``Department of 
Health and Human Services Good Guidance Practices,'' the stated purpose 
of which was to ``promote the appropriate issuance and use of guidance 
documents . . . .'' 85 FR 51396. The rule's stated intent was to 
increase accountability, improve the fairness of guidance issued by the 
Department, guard against unlawful regulation through guidance, and 
safeguard the important principles underlying the United States 
administrative law system. Id.
    The major provisions of the proposed Guidance rule were: (1) a 
requirement that each guidance document issued by the Department 
generally include certain information, including a statement that the 
guidance does not have the force and effect of law and is not binding 
unless specifically incorporated into a contract; (2) heightened 
procedures for ``significant guidance documents,'' including a period 
of notice and comment, a requirement for HHS Secretary (Secretary) 
approval on a non-delegable basis, and a requirement for submission to 
the Office of Information and Regulatory Affairs (OIRA) in the Office 
of Management and Budget (OMB) for review under Executive Order 12866; 
(3) creation of a repository for all guidance documents along with a 
provision stating that guidance documents not in the repository are not 
effective and will be considered rescinded; and (4) procedures for the 
public to petition the Department to withdraw or modify any particular 
guidance document.
    HHS proposed that its new requirements for guidance would apply to 
all components of the Department except for the Food and Drug 
Administration (FDA). 85 FR 51396. The preamble to the proposed 
Guidance rule explained that FDA already operates under a set of Good 
Guidance Practice (GGP) regulations, see 21 CFR 10.115, as required by 
the Federal Food, Drug, and Cosmetic Act (FD&C Act), 21 U.S.C. 371(h); 
no other agency within HHS functions under a similar set of regulations 
or statutory provisions. 85 FR 51396. FDA's GGP regulations have been 
in effect for more than two decades. See 21 CFR 10.115. The preamble 
also explained that FDA would be proposing amendments to its GGP 
regulations to address E.O. 13891 separately. 85 FR 51396.
    During the comment period for the notice of proposed rulemaking, 
the Department received nearly 90 comments on the proposed rule. 85 FR 
78771. The comments are available at https://www.regulations.gov/document/HHS-OS-2020-0008-0001/comment.
    The Department issued the Guidance rule on December 7, 2020. 85 FR 
78770. In response to public comment and the Department's further 
consideration of the policies addressed in the rule, the Guidance rule 
made several changes to the proposed rule. First, in addition to the 
requirement in the proposed rule that the Secretary approve, on a non-
delegable basis, all significant guidance documents, the final rule 
added the requirement that the Secretary approve, on a non-delegable 
basis, all non-significant guidance documents that the Secretary 
determines would implicate a policy matter of priority to the 
Secretary, potentially create a serious inconsistency, or otherwise 
interfere with an action taken or planned by another HHS agency or the 
Office of the Secretary. Id. at 78786.
    Second, the Guidance rule added more detail on what information the 
Department needs to provide when responding to a petition to amend or 
withdraw guidance, including a statement on whether the Department 
agrees or disagrees with the petition and its rationale. 85 FR 78787.
    Third, although FDA had been excluded from the scope of the HHS 
proposed Guidance rule, the final Guidance rule included FDA within its 
scope. 85 FR 78785. The preamble to the final Guidance rule explained 
that one commenter had urged HHS to amend FDA's GGP regulations to be 
consistent with the requirements in the HHS Guidance rule. 85 FR 78771. 
HHS agreed with this comment, and then explained that, because the FDA 
regulations had not yet been amended to address E.O. 13891, FDA would 
be included in the Guidance rule until the Secretary issued a final 
rule amending FDA's separate GGP regulations. Id.\1\ The Department did 
not reopen the comment period to invite comments on the inclusion of 
FDA within its scope.
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    \1\ In fact, the Department did not issue a proposed or final 
rule to amend FDA's GGP regulations to address E.O. 13891 before 
January 20, 2021, when E.O. 13891 was revoked.
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    The Department codified the Guidance rule in 45 CFR 1.1 through 
1.5.

C. Civil Enforcement Rule

    On January 14, 2021, HHS issued a final rule entitled ``Department 
of Health and Human Services Transparency and Fairness in Civil 
Administrative Enforcement Actions.'' 86 FR 3010 (Jan. 14, 2021). The 
Civil Enforcement rule, which was issued as a procedural rule without 
notice-and-comment rulemaking, stated that it was intended to provide 
regulated parties with greater transparency and fairness in 
administrative actions and to be consistent with the requirements of 
E.O. 13892. 86 FR 3010. The Department stated that ``[t]he rule is 
designed to ensure accountability, fairness of how the Department uses 
guidance, proper use of guidance documents, and opportunities for third 
parties to be heard, and to safeguard the important principles 
underlying the United States administrative law system.'' 86 FR 3011.
    The rule contains a number of provisions, including the following: 
(1) a requirement that the agency avoid unfair surprise by only 
applying standards and practices in a civil enforcement action that 
have been publicly stated; (2) a requirement that, if the agency relies 
on a decision to assert new or expanded claims of jurisdiction, it must 
publish the initial decision in the Federal Register or the 
Department's guidance repository before the conduct over which the 
jurisdiction is sought occurs; and (3) a requirement that the 
Department give parties--before the agency takes a civil enforcement 
action--written notice of its initial legal and factual determinations, 
an opportunity to respond in writing and in certain cases orally, and a 
written response to the affected entity (when timely requested).

[[Page 44004]]

    The Department codified the Civil Enforcement rule in 45 CFR part 
1, by revising Sec. Sec.  1.1 and 1.2, and adding Sec. Sec.  1.6 
through 1.9.

D. Repeal NPRM

    On October 19, 2021, HHS issued the Repeal NPRM proposing to repeal 
the Final Rules in their entirety. 86 FR 58042. The preamble explained 
that, after the Biden-Harris Administration revoked the EOs that served 
as the basis for these rules and directed agencies to promptly take 
steps to rescind any rules and policies implementing or enforcing the 
revoked EOs, as appropriate and consistent with applicable law, the 
Department reconsidered the Final Rules. That review led the Department 
to conclude that the Final Rules create unnecessary hurdles that hinder 
the Department's ability to issue guidance, bring enforcement actions, 
and take other appropriate actions that advance the Department's 
mission. The preamble further explained that these rules significantly 
burden the Department and are inconsistent with the policies and goals 
of the current Administration. We received approximately thirty comment 
submissions on the Repeal NPRM, which we have reviewed and considered. 
Our responses to the comments are discussed in Section IV.

III. Legal Authority

    The legal authority for this final repeal rule is 5 U.S.C. 301. 
That provision states in relevant part that ``[t]he head of an 
Executive department or military department may prescribe regulations 
for the government of his department, the conduct of its employees, the 
distribution and performance of its business, and the custody, use, and 
preservation of its records, papers, and property.'' The Guidance rule, 
the Civil Enforcement rule, and the Repeal NPRM relied on the same 
authority.
    In addition, Congress's grant of broad, discretionary rulemaking 
authority necessarily includes the authority not to promulgate--and 
therefore also to repeal--a proposed or final rule. See Natural Res. 
Def. Council, Inc. v. Securities and Exchange Commission (SEC), 606 
F.2d 1031, 1045 (D.C. Cir. 1979); see also 5 U.S.C. 551(5) (defining 
``rule making'' to include formulating, amending, and repealing a 
rule). In addition, ``[t]he power to reconsider is inherent in the 
power to decide,'' Albertson v. Federal Communications Commission 
(FCC), 182 F.2d 397, 399 (1950), and, thus, ``[a]dministrative agencies 
have an inherent authority to reconsider their own decisions.'' 
Trujillo v. Gen. Elec. Co., 621 F.2d 1084, 1086 (10th Cir. 1980).

IV. Discussion of Final Repeal Rule

    This rule repeals the Final Rules, which had been codified in 45 
CFR part 1. HHS will reserve 45 CFR part 1.
    The thirty comments we received on the Repeal NPRM were mixed, but 
a substantial majority favored repeal. Commenters in favor of repeal 
consisted of non-profit policy and advocacy groups; a law school 
clinic; trade organizations; and an insurance company. Commenters in 
favor of retaining the Final Rules consisted of non-profit policy and 
advocacy groups; a law school clinic; trade associations; a state 
government agency; and individuals. This section summarizes and 
responds to the comments received and discusses the Department's 
overall conclusions regarding issues related to repealing the Final 
Rules. In a few instances, the public comments offered were outside the 
scope of the proposed rule and will not be addressed in this preamble.

A. Comments on the Policy Basis for Repeal

1. The Final Rules Run Counter to the Administration's Goals of 
Advancing Public Health and Welfare
    As discussed in the Repeal NPRM, the Biden-Harris Administration is 
committed to using available tools of Federal administrative agencies 
to, among other things: confront the urgent challenges facing the 
nation; equip executive departments with flexibility to use robust 
regulatory action to address national priorities; pursue a 
comprehensive approach to advancing equity for all, including people of 
color and others who have been historically underserved, marginalized, 
and adversely affected by persistent poverty and inequality; and 
protect and strengthen Medicaid and the Affordable Care Act (ACA) and 
make high-quality healthcare accessible and affordable for every 
American.\2\
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    \2\ See ``Revocation of Certain Executive Orders Concerning 
Federal Regulation,'' 86 FR 7049 (Jan. 25, 2021) (E.O. 13992); 
``Advancing Racial Equity and Support for Underserved Communities 
Through the Federal Government,'' 86 FR 7009 (Jan. 25, 2021) (E.O. 
13985); ``Strengthening Medicaid and the Affordable Care Act,'' 86 
FR 7793 (Feb. 2, 2021) (E.O. 14009); ``Continuing to Strengthen 
Americans' Access to Affordable, Quality Health Coverage,'' 87 FR 
20689 (April 8, 2022) (E.O. 14070).
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    Many of the procedures in the Final Rules run counter to those 
goals. As the Repeal NPRM explained, the Final Rules were issued by the 
previous Administration to advance its policy goals, as reflected in 
Executive orders (EOs 13891 and 13892) issued under that 
Administration. The current Administration revoked both EOs 13891 and 
13892 and directed agencies to take all necessary steps to halt 
implementation and enforcement of those EOs as appropriate and 
consistent with applicable law. See E.O. 13992. Accordingly, many 
procedural rules--like the Final Rules--that were issued by other 
departments and agencies under the previous Administration, have 
already been repealed.\3\
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    \3\ See
     Architectural and Transportation Barriers Compliance 
Board, ``Procedures for Issuing Guidance Documents; Recission'' 87 
FR 5692 (Feb. 2, 2022) (rescinding rule creating internal procedural 
requirements on the issuance, public availability, and modification 
or withdrawal of guidance documents);
     Environmental Protection Agency, ``On-Site Civil 
Inspection Procedures; Rescission,'' 86 FR 74371 (Dec. 30, 2021) 
(rescinding rule on civil inspection procedures);
     National Endowment for the Arts final rule, 
``Procedures for Guidance Documents,'' 86 FR 58809 (Oct. 25, 2021) 
(rescinding rule on issuing guidance);
     Department of Education final rule, ``Rulemaking and 
Guidance Procedures,'' 86 FR 53863 (Sept. 29, 2021) (rescinding rule 
on rulemaking and guidance procedures);
     Department of Justice interim final rule, ``Processes 
and Procedures for Issuance and Use of Guidance Documents,'' 86 FR 
37674 (July 16, 2021) (revoking regulations regarding the issuance 
and use of guidance documents);
     Department of Housing and Urban Development final rule, 
``Implementing Executive Order 13992, Revocation of Certain 
Executive Orders Concerning Federal Regulation,'' 86 FR 35391 (July 
6, 2021) (removing regulations on guidance procedures);
     Department of Energy final rule, ``Procedures for the 
Issuance of Guidance Documents,'' 86 FR 29932 (June 4, 2021) 
(withdrawing final rule on issuing guidance);
     Federal Mediation and Conciliation Service final rule, 
``Recission of Federal Mediation and Conciliation Rule on 
Administrative Guidance,'' 86 FR 29196 (June 1, 2021) (rescinding 
rule on guidance);
     Tennessee Valley Authority final rule, ```Promoting the 
Rule of Law Through Improved Agency Guidance' Regulations; 
Rescission,'' 86 FR 28488 (May 27, 2021) (rescinding rule on 
guidance);
     Environmental Protection Agency final rule, ``EPA 
Guidance; Administrative Procedures for Issuance and Public 
Petitions; Rescission,'' 86 FR 26842 (May 18, 2021) (rescinding rule 
on guidance);
     National Endowment for the Humanities and National 
Foundation on the Arts and the Humanities final rule, ``Processes 
and Procedures for Issuing Guidance Documents,'' 86 FR 26184 (May 
13, 2021) (rescinding rule on guidance);
     U.S. Office of Government Ethics final rule, ``Removal 
of U.S. Office of Government Ethics Guidance Documents 
Regulations''86 FR 25801 (May 11, 2021) (rescinding rule on 
guidance);
     Railroad Retirement Board final rule, ``Guidance 
Documents,'' 86 FR 22866 (Apr. 30, 2021) (rescinding rule on 
guidance);
     Social Security Administration final rule, ``Rescission 
of Rules on Improved Agency Guidance Documents'' 86 FR 20631 (Apr. 
21, 2021) (rescinding regulations on guidance);
     Department of Interior final rule, ``Procedures for 
Issuing Guidance Documents,'' 86 FR 19786 (Apr. 15, 2021) 
(rescinding regulations on issuing guidance);
     Council on Environmental Quality final rule, ``Guidance 
Document Procedures Rescission,'' 86 FR 19149 (Apr. 13, 2021) 
(rescinding regulations on issuing guidance);
     U.S. Agency for International Development final rule, 
``Procedures for the Review and Clearance of USAID's Guidance 
Documents; Rescission'' 86 FR 18444 (Apr. 9, 2021) (rescinding 
regulations on issuing guidance);
     Department of Transportation final rule, 
``Administrative Rulemaking, Guidance, and Enforcement Procedures,'' 
86 FR 17292 (Apr. 2, 2021) (removing regulations regarding issuing 
guidance and conducting enforcement actions, among other things);
     Pension Benefit Guaranty Corporation final rule, 
``Rescission of Pension Benefit Guaranty Corporation Rule on 
Guidance,'' 86 FR 17066 (Apr. 1, 2021) (rescinding rule on issuing 
guidance);
     Department of Labor final rule, ``Rescission of 
Department of Labor Rule on Guidance,'' 86 FR 7237 (Jan. 27, 2021) 
(rescinding rule on issuing guidance).
    We note that most of these rules were issued and repealed 
without engaging in notice-and-comment proceedings.

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[[Page 44005]]

    At least one commenter objected to the repeal of the recently 
promulgated rules because the process of promulgating and repealing 
rules in a short time period unnecessarily creates inconsistency and 
confusion and muddies the waters of the administrative world. We 
generally agree that the scenario of issuing rules that are then 
quickly repealed is regrettable. However, we disagree that the Final 
Rules should be retained merely for the sake of consistency, 
considering the substantial adverse impacts from these rules, as 
discussed in the Repeal NPRM, the comments, and this preamble. Given 
that both Final Rules involve matters relating to agency procedure and 
practice, the decision of one Administration to quickly issue 
procedural rules in the final weeks of its term to govern the 
operations of the next Administration can be seen as questionable and 
ill-timed. In sum, the Department now believes that the prior 
Administration's decision to issue these rulemakings was ill-advised, 
and it is necessary to repeal the resulting regulations, consistent 
with the revocation of similar rules by other departments and agencies.
2. The Final Rules Impose Burdensome Standards and Procedures
    As described in the Repeal NPRM, the Final Rules impose burdensome 
standards and procedures that interfere with HHS's ability to respond 
efficiently to public health matters. Contrary to the policy of the 
current Administration that agencies must be equipped with flexible and 
robust tools to address national priorities, including the COVID-19 
pandemic, economic recovery, racial justice, and climate change, see 
E.O. 13992, these rules inappropriately constrict and impede the 
Department's ability to: (1) efficiently direct and operate in the 
interest of public health; (2) quickly communicate its regulatory 
interpretations, policies, and recommendations, such as by unduly 
extending the time needed to promulgate significant guidance, and by 
limiting the use of tools such as circulars, bulletins, advisories, and 
other guidance documents; and (3) take swift enforcement action when 
appropriate.
    Several commenters agreed with the Department's position on this 
issue as explained in the Repeal NPRM and reaffirmed that the Final 
Rules impose burdensome standards and procedures that interfere with 
HHS's ability to respond quickly and efficiently to public health 
matters. Commenters noted, for example, that the Guidance rule's 
notice-and-comment requirements at 45 CFR 1.3 were especially onerous 
and time-consuming and needlessly hinder HHS's ability to timely issue 
critical information on public health and HHS programs. This additional 
burden harms not only HHS programs, but also the people who rely on 
those programs. The commenters explained, for example, that robust, 
swift, efficient, and effective guidance can be a critical tool for 
conveying health and safety information to the public on accessing 
medical and preventive care services and communicating allocation of 
funding decisions to state health administrators. Commenters also noted 
that guidance is essential for Medicaid, Medicare, and ACA program 
enrollees, who often look to such guidance to explain complicated 
program rules and requirements. We discuss other comments regarding 
burdensome procedures in Sections IV.D. and E.
    Although no commenter disputed that the Final Rules' requirements 
increase the burdens on the Department, several argued that these 
requirements were nonetheless necessary to increase transparency, 
accountability, and public participation in the regulatory process, and 
provide for a more robust and efficient administration. We disagree 
that the Final Rules are necessary to accomplish these ends. In the 
several months that these rules have been in effect, we have seen no 
evidence of benefit such as those suggested in comments from their 
operations. Further, the comments supporting the original rules do not 
cite any evidence to support their opinions. As one commenter in favor 
of repeal explained, although the Final Rules stated that they were 
intended to enhance transparency, fairness, and stakeholder engagement, 
the Final Rules accomplish none of these goals. Instead, the Final 
Rules hinder the Department and frustrate its mission by creating new, 
confusing, and unnecessary bureaucratic inefficiencies that slow down 
or halt Department initiatives.
    One commenter expressed concern that a repeal of the Guidance 
rule's notice-and-comment provisions would deprive stakeholders \4\ of 
a framework for providing input on future Departmental guidance defined 
as significant under the rule. While the Department recognizes that 
repealing the Guidance rule will eliminate a Department-wide formal 
process for providing public input on such draft guidance, HHS agencies 
have adequate processes in place to obtain meaningful input from 
stakeholders on significant guidance without the Guidance rule's 
cumbersome requirements. Moreover, we now conclude that any benefit 
derived from the ability to formally comment on guidance and providing 
the Department's responses to comments--which, by operation of law, is 
non-binding and does not have the force and effect of an agency rule--
is outweighed by the Department's interest in quickly and responsively 
communicating current thinking on its rules and policies. Further, 
because compliance with these provisions diverts HHS labor to time-
consuming comment analysis and response, eliminating these provisions 
would expedite the publication of guidance, enhance agency efficiency, 
and reduce administrative burden.\5\
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    \4\ In the context of this document, ``stakeholder'' means 
anyone who may be affected or interested in a guidance document or 
civil enforcement action, including regulated entities, states, 
tribes, and local governments, groups working with beneficiaries, 
and individual members of the public.
    \5\ As noted, FDA already operates under its own set of GGP 
regulations, see 21 CFR 10.115, as required by the FD&C Act, 21 
U.S.C. 371(h), and these authorities require that certain categories 
of FDA guidance documents be implemented only after an opportunity 
for public comment is provided. This rulemaking does not intend to 
question or limit those authorities as applied specifically to FDA. 
As we discuss in Section IV.A.4.b. below, we do not believe it is 
efficient or effective for a Department as large and diverse as HHS 
to mandate a single set of procedures for guidance documents and 
civil enforcement for the entire Department.
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3. The Final Rules Harm Historically Underserved Constituencies
    As discussed in the Repeal NPRM and above, see Section IV.A.1., the 
Federal Government under the Biden-Harris Administration is pursuing a 
comprehensive approach to advancing equity for all, including people of 
color and others who have been historically

[[Page 44006]]

underserved, marginalized, and adversely affected by persistent poverty 
and inequality. See E.O. 13985. Accordingly, the current Administration 
directed Federal agencies to recognize and work to redress inequities 
in their policies and programs that serve as barriers to equal 
opportunity. Id. The current Administration also aims to protect and 
strengthen Medicaid and the ACA and to make high-quality healthcare 
accessible and affordable for every American. E.O. 14009; E.O. 14070. 
To accomplish that policy goal, the current Administration directed 
HHS, among others, to examine its regulations and policies to better 
ensure that they help provide high quality and accessible health care 
for all, and do not undermine protections for people with pre-existing 
conditions under the ACA, reduce coverage under or otherwise undermine 
Medicaid or the ACA, or undermine the Health Insurance Exchanges or the 
individual, small group, or large group markets for health insurance in 
the United States.
    As the Repeal NPRM further explained, both Final Rules 
disproportionately impact marginalized and historically underserved 
communities, because they make it harder for HHS agencies to take 
action to protect public health or remove bad actors from the market, 
which, in turn, harms those who need HHS services the most. In 
addition, because HHS frequently issues guidance to clarify policies 
and beneficiary protections under Medicaid, the additional regulatory 
hurdles and confusion created by the Guidance rule would delay the 
issuance of Medicaid guidance and thereby undermine HHS' goals of 
supporting program beneficiaries.
    Several commenters agreed that the Guidance rule harms underserved 
groups by imposing burdensome requirements that impede HHS' ability to 
timely communicate important guidance on health programs. Commenters 
explained that Medicaid and other HHS programs that serve marginalized 
communities frequently rely on guidance to provide current information 
on program rules and requirements to program participants. Timely 
issuance of guidance is therefore essential to ensure that participants 
receive the most up-to-date information and can access needed services. 
The Guidance rule, however, introduces unnecessary bureaucratic 
inefficiencies for guidance that slow down or prevent the publication 
of this information, to the potential detriment of program 
beneficiaries. Commenters noted that, during the COVID-19 pandemic, the 
Department has issued and continues to issue and update guidance on a 
range of topics affecting underserved communities, including vaccine 
coverage, healthcare safety net programs, and non-discrimination in the 
provision of health care among other topics. Subjecting these guidance 
documents to the Guidance rule's burdensome publication requirements 
has the potential to impede their release and harm individuals who rely 
on Medicaid and other HHS programs. Further, commenters noted that the 
automatic rescission provision of the guidance document repository, 
discussed in greater detail in Section IV.D.5 below, creates confusion 
for individuals seeking information about Medicaid, Medicare, and other 
HHS programs.
    We agree with these comments. We believe that interested groups and 
individuals--in particular, beneficiaries of Medicaid, ACA, and other 
HHS programs relied upon by underserved communities and individuals--
would be better served with a more nimble, less cumbersome, and clearer 
process that ensures the expeditious release of program information 
needed to access services. The Guidance rule frustrates this goal by 
imposing unnecessary, burdensome, and ambiguous requirements that slow 
down the guidance process and in turn delay dissemination of 
information needed to access Medicaid, ACA, and other HHS programs.
4. The Final Rules Impede Department Flexibility
a. Codified, Binding Rules Are Too Rigid for Department-Wide 
Implementation, and the Final Rules Open the Door to Opportunistic 
Litigation
    In addition to HHS's concerns about the substance of the Final 
Rules, HHS also has concerns about the procedural choice to implement 
them through binding, Department-wide regulations. Binding regulations 
have drawbacks that, in HHS's view, make them ill-suited for the 
Department-wide procedures at issue here.
    First, binding regulations can be inflexible. This inflexibility 
raises several concerns regarding the ability to adapt to different 
circumstances. For example, the Final Rules impact a wide range of 
agency actions that come under the umbrella of guidance and civil 
enforcement proceedings, and the range and diversity of these types of 
actions are shaped by the various missions and underlying authorities 
of each of HHS's individual agencies. When HHS hastily issued these 
rules, it did not--and could not--fully consider all of these actions 
and how the rules would affect them. For example, HHS did not consider 
how the Guidance rule's procedures could slow down the work of other 
agencies, such as when HHS seeks to issue joint guidance, as it has 
with the Department of Labor and the Department of the Treasury. 
Similarly, the Civil Enforcement rule imposed a formalized system of 
written communication regarding a potential issue of non-compliance, 
without adequately considering that HHS agencies already have 
procedures and practices in place that allow for other options, such as 
in-person discussions, depending on the context. Since issuing these 
binding regulations, the Department has been tethered to specific 
procedures and cannot adjust its procedures as appropriate in specific 
circumstances.
    Codified requirements also make it more difficult for the 
Department to adapt its procedures over time. The Department recognizes 
that a variety of factors--such as changing circumstances, new 
priorities, public health emergencies, input from interested parties, 
new technology, changes in applicable legal precedent, and agency 
experience--may require HHS to modify its procedures. It is unrealistic 
to expect any set of procedures to fully account for the range of 
circumstances that may confront HHS now or in the future. Codification 
of regulations, however, makes the modification process more 
burdensome. The issue is particularly pronounced considering the 
decision to issue the Guidance rule through notice-and-comment 
rulemaking, which may make revisions and updates more cumbersome. 
Indeed, most of the other Federal departments and agencies, in issuing 
(and repealing) similar regulations under the prior Administration, did 
not use notice-and-comment rulemaking procedures. See Section IV.A.1. n 
3.
    This inflexibility is especially problematic when the Department 
does not necessarily know, at least without more experience, which 
procedures would most effectively achieve its goals. For example, the 
Guidance rule mandates the use of a centralized HHS guidance 
repository, but many commenters were critical of its current 
functionality. Commenters explained that the search function often 
failed to find the most relevant documents and instead retrieved 
irrelevant ones. Some commenters suggested that the search function may 
be improved by separating the database by HHS agency to help ensure 
more focused responses to queries. HHS explained in the Repeal

[[Page 44007]]

NPRM that, while it proposed to repeal the regulation governing the 
guidance document repository, HHS intended to retain the repository 
itself (absent the automatic rescission provision) with changes to 
improve its functionality. Repealing the regulation will facilitate 
making improvements to the functionality of the centralized repository 
to address the problems related to its initial set-up, and to adapt to 
technological changes going forward--without considering whether those 
changes require amending the regulation.
    Second, HHS no longer believes it is appropriate to create an 
opportunity for lawsuits on these procedural rules, in which a litigant 
may cite to binding regulations to allege a cause of action against the 
Department. As noted elsewhere in this preamble, the procedural 
requirements in the Guidance and Civil Enforcement rules are self-
imposed and go beyond the requirements in preexisting law, such as the 
Administrative Procedure Act (APA). Both because these rules establish 
new procedural requirements and because many provisions in the rules 
are opaque and susceptible to multiple interpretations, HHS is 
concerned about the risk of opportunistic litigation here, which can 
consume time and resources even when the litigation lacks merit. In 
addition, other Federal departments and agencies under the previous 
Administration, in issuing similar procedural rules, expressly provided 
that the regulations were ``not intended to, and do[] not, create any 
right or benefit, substantive or procedural, enforceable at law or in 
equity by any party against the United States, its agencies or other 
entities, its officers or employees, or any other person.'' See, e.g., 
84 FR 71729 (Dec. 27, 2019). HHS, however, did not include such a 
provision in the Final Rules. Thus, it is possible that, if the Final 
Rules are not repealed, litigants will attempt to sue HHS based on non-
compliance with these procedural regulations.
    Expending resources on this type of litigation is wasteful: even if 
the Department had no concerns with the substance of the procedures 
(which it does, as explained elsewhere), HHS believes that its 
resources are far better spent on public health initiatives that can 
improve the health and safety of Americans than on defending challenges 
concerning compliance with self-imposed procedures.
b. The Final Rules Are Not Tailored to the Various HHS Agencies
    Another concerning aspect of the Final Rules is their establishment 
of a single set of procedures for guidance documents and civil 
enforcement for the entire Department, which is incompatible with the 
efficient and effective administration of a Department as large and 
diverse as HHS. The Department's mission is to enhance the health and 
well-being of all Americans, and it accomplishes that mission through 
the work of many individual agencies, including the Administration for 
Children and Families (ACF), the Administration for Community Living 
(ACL), the Centers for Disease Control and Prevention (CDC), the 
Centers for Medicare & Medicaid Services (CMS), FDA, the Health 
Resources and Services Administration (HRSA), the Indian Health Service 
(IHS), the National Institutes of Health (NIH), and the Office for 
Civil Rights (OCR). Each of HHS's agencies plays a critical role in 
protecting and advancing public health by, for example, confronting the 
COVID-19 pandemic; administering and overseeing the Medicaid and 
Medicare programs and ACA Exchanges; providing Federal health services 
to more than two million American Indians and Alaska Natives; taking 
action to protect consumers from unapproved, misbranded, or adulterated 
human or animal medical products or tobacco products; investigating, 
detaining, and recalling contaminated foods; addressing medical product 
shortages; enforcing age-restrictions or other controls around access 
to certain regulated products; and quickly distributing grant funds 
that help marginalized populations, low-income families, elderly 
Americans, Indian tribes, and persons with disabilities to receive key 
resources, especially during the COVID-19 pandemic. Each agency within 
HHS serves the overall mission but does so in unique ways, often 
addressing different stakeholders and using specialized regulatory 
tools.
    Several commenters confirmed that they share these concerns 
regarding the imposition of inflexible requirements on all HHS 
agencies. Regarding the Guidance rule, one commenter explained that the 
uniform requirements imposed by the rule primarily serve to make the 
issuance of guidance more cumbersome and less responsive to the needs 
of the communities who benefit from HHS programs. Another comment 
explained that burdensome, one-size fits-all procedural requirements 
that the Guidance rule imposes on CMS are the epitome of practices that 
present unnecessary barriers to individuals and families seeking 
Medicaid coverage. Regarding the Civil Enforcement rule, a commenter 
explained that application of the new enforcement requirements to all 
HHS agencies may cause confusion as various agencies under the HHS 
umbrella each already have procedural regulations, some of which have 
been specifically designed to govern a particular type of proceeding. 
We agree with these comments and find that they raise valid concerns 
supporting repeal.
    In contrast, one commenter asserted that the Final Rules did not 
establish a single set of procedures for the Department; instead, the 
Final Rules merely expressed broad principles--consistent with the APA 
and due process--that allow HHS agencies to retain discretion to devise 
procedures for carrying out their statutory mandates that are 
consistent with those broad principles. Another commenter similarly 
claimed that the Repeal NPRM erred in asserting that the notice 
requirements in the Civil Enforcement rule conflict with or undermine 
preexisting procedures. We disagree with both comments because the 
Final Rules created actual conflicts and inconsistencies with 
preexisting agency procedures. For example, with respect to procedures 
for issuing guidance, the FD&C Act and the Guidance rule provide for 
different circumstances when guidance will be subject to prior notice 
and comment and different criteria for a guidance to be exempt from 
prior notice and comment. Compare 21 U.S.C. 371(h)(1)(C)(1) and 45 CFR 
1.3(b). While the FD&C Act provides for an appeals mechanism when FDA 
employees are not using guidance in accordance with the FD&C Act, the 
Guidance rule provided that this should be addressed in a petition. 
Compare 21 U.S.C. 371(h)(4) and 45 CFR 1.5(a)(2). For petitions, the 
Guidance rule specifies one set of requirements regarding their 
submission, response time, and substantive review and response, 45 CFR 
1.5, while FDA regulations provide different governing requirements in 
each of those areas for its citizen petitions, 21 CFR 10.20 and 
10.30(b) (submission), (e)(2) & (4) (response time), and (e)(1) & (3) 
and (h) (substantive review and response).
    FDA also has regulations governing various types of adjudicatory 
hearings, see 21 CFR parts 12, 16, and 17, which conflict with the 
Civil Enforcement rule. For example, the Civil Enforcement rule 
provides for a series of limitations on the grounds for civil 
enforcement actions, 45 CFR 1.6 through 1.8, which are not consistent 
with FDA's governing regulations for civil money penalty

[[Page 44008]]

(CMP) proceedings. 21 CFR 17.1, 17.5. FDA's CMP regulations establish 
an adjudicatory process that is similar to the Federal process for 
civil adjudication, with a complaint, answer, motions, and hearing. 
See, e.g., 21 CFR 17.5, 17.9. In contrast, the Civil Enforcement rule 
requires that, after the affected entity responds to the initial 
notice, HHS must respond to the affected entity in writing, 
articulating the ``basis for its final decision.'' 45 CFR 1.9. That 
requirement makes no sense in the context of 21 CFR part 17. Having two 
sets of regulations governing FDA guidance practices, citizen petitions 
related to FDA guidance documents, and CMP proceedings creates 
practical difficulties and confusion.
    Other provisions that do not directly conflict with existing 
processes create additional layers of process. For example, while the 
FD&C Act only requires uniform internal procedures for the approval of 
guidance and provides discretion to the FDA to develop appropriate 
processes, the Guidance rule required Secretarial approval of 
significant guidance documents. Compare 21 U.S.C. 371(h)(1)(D)(2) and 
45 CFR 1.3(b)(1). The FD&C Act requires FDA to make its guidance 
documents available to the public, but the HHS Guidance rule required 
all guidance documents to be included in the repository and deemed 
guidance documents not included in the repository withdrawn. Compare 21 
U.S.C. 371(h)(1)(A) and 45 CFR 1.4(a)(2).
    Accordingly, the Department no longer believes that a one-size-
fits-all approach to Department guidance or civil administrative 
enforcement is appropriate. The imposition of one set of requirements 
for HHS' vastly different agencies hinders the agencies' abilities to 
efficiently address public health issues, including but not limited to 
public health emergencies, and creates confusion.
5. The Final Rules Divert Limited Department Resources
    In the Repeal NPRM, the Department expressed the concern that the 
Final Rules divert agency resources without providing adequate 
compensating benefit, and that they are unnecessary. 86 FR 58049, 
58051. Several commenters confirmed that, in their view, the Final 
Rules divert finite Department resources to unnecessary and unhelpful 
ends. The commenters were concerned that this diversion would delay 
Department activities that protect and advance the public health and 
welfare. For example, one comment asserted that the Final Rules make it 
harder for the Department to timely respond to emergencies, to address 
the glaring disparities in provision of services that have been 
highlighted during the COVID-19 pandemic, and to respond to and help 
shape the rapid changes in the healthcare delivery system. One comment 
disagreed and asserted that the Department's statement in the Repeal 
NPRM--that ``[h]aving a robust, efficient guidance system has been 
especially critical during the COVID-19 emergency''--``proves that the 
Rule does not impede the Department's effective use of guidance.''
    We agree with the comments expressing concern about the diversion 
of resources. Our experience with the Final Rules thus far is that they 
create unhelpful impediments to achieving Department goals, and 
addressing those impediments diverts resources from other Department 
priorities. The fact that the Department has devoted substantial 
resources to the COVID-19 crisis both before and after the Final Rules 
became effective does not undermine the Department's position that the 
Final Rules impose unnecessary and burdensome requirements. For 
example, one comment explained that CMS guidance has played a critical 
role in addressing the COVID-19 pandemic and the Afghan mission. 
Although many of these important CMS guidance documents predate the 
Final Rules, those that followed the rules were required to adhere to 
the more onerous procedures of the Final Rules without any apparent 
benefits. We discuss below some examples in connection with 
consideration of specific provisions of the Final Rules. See Section 
IV.F.2.e.
    In another example of resource diversion caused by the new 
procedures, the Department recently issued a response to a petition 
that purported to be submitted under the Guidance rule and that was 
addressed to HHS, CDC, and FDA. Attorneys from HHS, CDC, and FDA, as 
well as CDC and FDA subject matter experts, reviewed and deliberated on 
the petition. Ultimately, the Department concluded that petitioner had 
not properly invoked the Guidance rule procedures or appropriately 
included FDA in its request. Given the short timeline for responding to 
petitions under the Guidance rule, Departmental staff were forced to 
prioritize those deliberations over other, more significant matters.
    In addition, as discussed above, because the Final Rules impose 
rigid requirements and do not disclaim any right of action based on 
them, it is possible that litigants will sue HHS based on non-
compliance with these procedures. The Department has concluded that 
expending resources on litigating internal procedural rules is 
wasteful, and that its resources are far better spent on public health 
initiatives that can improve the health and safety of Americans than on 
defending challenges concerning compliance with self-imposed 
procedures.

B. Comments on Consideration of Purported Benefits of Final Rules

    Some commenters urged the Department to retain the Final Rules and 
identified several purported benefits. A few commenters asserted that 
the Final Rules helpfully clarify that guidance are simply non-binding, 
interpretive statements, consistent with the APA. One commenter 
asserted that Federal agencies have relied on guidance to reinterpret 
or expand the law. Another commenter asserted that CMS had taken 
enforcement actions against it for violating policies based only on 
guidance, and therefore the Final Rules were appropriate to reaffirm 
basic principles of administrative law. Relatedly, another commenter 
urged the Department to provide greater clarity to the public on its 
rulemaking obligations related to Medicare pursuant to the Supreme 
Court's opinion in Azar v. Allina Health Servs., 139 S. Ct. 1804 
(2019). Another commenter asserted that the Final Rules provide notice 
and clarity by aggregating guidance documents in one central location. 
The same commenter suggested that the additional requirements for 
issuing significant guidance would help the Department screen for 
whether the guidance content would be more appropriately issued through 
rulemaking.
    As discussed in more detail throughout this preamble, the 
Department has considered all comments on the purported benefits of the 
Final Rules and does not find that there are any significant benefits 
to retaining the Final Rules that outweigh the many detriments 
identified in the comments and summarized in the Repeal NPRM and in 
this preamble.
    We disagree with the commenters who asserted that the Final Rules 
are necessary or appropriate to reaffirm the APA's principles of 
administrative law. As explained in the Repeal NPRM, ``the APA governs 
agency conduct concerning guidance without the need for agency 
regulations.'' 86 FR 58049. Appropriate parameters and procedures for 
guidance issued by HHS agencies will remain in place after the 
Department repeals the Final Rules; and, repealing the Final Rules does 
not give an agency license to use guidance

[[Page 44009]]

to establish or change policies where rulemaking is otherwise required, 
or to require outside parties to take or refrain from taking certain 
actions that are not addressed by statute or regulation. See generally 
Azar v. Allina Health Servs., 139 S. Ct. 1804 (2019) (finding, with 
respect to the Medicare program, that statements of policy that 
establish or change a substantive legal standard governing the scope of 
benefits, the payment for services, or the eligibility of individuals, 
entities, or organizations to furnish or receive services or benefits 
must be promulgated through the notice-and-comment rulemaking process). 
Accordingly, repealing the Final Rule will not transform guidance into 
binding rules with the force and effect of law.
    The commenter who expressed disappointment that the Department has 
yet to apprise stakeholders of the agency's rulemaking obligations 
under section 1871 of the Social Security Act (SSA), as outlined in 
Allina, 139 S. Ct. at 1804, also requested that the Department provide 
greater clarity to the public on these rulemaking obligations, given 
the central role of the Medicare program in the Department's rulemaking 
and guidance procedures. We agree that the Medicare program is central 
to certain parts of the Department's rulemaking and guidance 
procedures. However, this specific request is outside of the scope of 
the Repeal NPRM, and therefore, the Department will take this request 
under advisement. In the interim, we invite those seeking information 
on CMS' rulemaking obligations under the Medicare Act to review the 
already-existing guidance available at https://www.cms.gov/regulations-and-guidance/regulations-and-policies/cms-rulemaking.
    We disagree with another commenter's assertion that the process 
outlined for significant guidance in the Guidance rule is needed or 
helpful to screen for content that should be issued as a legislative 
rule. In particular, the comment opined that the Guidance rule's 
criteria for significant guidance documents will identify procedural 
defects in proposed guidance documents and thus effectively screen for 
guidance documents that are more likely to require notice and comment. 
The Guidance rule itself, however, made clear that its criteria for 
significant guidance documents does not necessarily correspond to the 
criteria for legislative rules. 85 FR 78776 (noting that to qualify as 
guidance, as opposed to a legislative rule, a document must reflect, 
implement, interpret, or describe a legal obligation imposed by a pre-
existing, external source or advise the public prospectively of the way 
the agency intends to exercise a discretionary power).
    With respect to the comment that repealing the Guidance rule erases 
the benefit of enhanced notice resulting from the aggregation of 
guidance documents in one central location, the Department plans to 
maintain a central guidance repository even after the Guidance rule is 
repealed, without the problematic rescission requirement for documents 
not in the repository. This topic is discussed in more detail in 
Section IV.D.5. below.

C. Comments on HHS Repealing the Final Rules in Their Entirety

    As the Department explained in the Repeal NPRM, the Final Rules: 
frustrate the Department's ability to efficiently direct and operate in 
the interest of public health; are inconsistent with the policies and 
goals of the current Administration; make Department operations more 
cumbersome and burdensome; impede the Department's ability to quickly 
communicate its regulatory interpretations, policies, and 
recommendations; and prevent the Department from using robust tools to 
protect and advance the public health and to promote the Department's 
mission. For those reasons, HHS proposed to repeal the Final Rules in 
their entirety and remove 45 CFR part 1.
    The Repeal NPRM further explained that HHS had rejected the 
alternative approach of addressing these problems by revising the Final 
Rules. For the reason described in Section IV.A.4.b. above, it would be 
difficult to establish definitions, standard descriptors, policies, and 
procedures that are clear and workable across the Department's many 
components. Rather than codified, Department-wide procedures, the 
Department prefers a more flexible approach. With the repeal of the 
Final Rules, HHS agencies would be able to continue to follow or 
develop their own procedural policies, practices, and rules, consistent 
with applicable law and as appropriate to their context, and they would 
be able to update these over time and to address specific circumstances 
as warranted. See Section IV.A.4.b. This more decentralized approach is 
also consistent with the revocation of E.O. 13891, under which the 
previous Administration had taken a relatively centralized and 
standardized approach.
    A few commenters objected to this aspect of our proposal, asserting 
that our concerns can be better addressed by fine-tuning the Final 
Rules rather than scrapping them entirely. One commenter, for example, 
asserted that the concerns noted by HHS in the Repeal NPRM (and raised 
by other comments submitted in earlier stages of the rulemaking) could 
be addressed by targeted revisions to the Final Rules such as creating 
new exemptions for particular matters of concern.
    We have considered these suggestions and reject the approach 
proposed by these commenters. We address these proposals in greater 
detail in Section IV.F.2.h. below, including the reasons for rejecting 
specific proposals for modifying the Final Rules. Here we explain, as a 
matter of policy, why we have chosen repeal over modification.
    Although it may be possible, as the commenter asserts, to address 
some of the concerns noted by HHS in the Repeal NPRM though revisions 
and exemptions, HHS sees no value in doing so. Codifying procedural 
policies and practices as rules makes them more rigid. Updates and 
changes would become resource-intensive. None of this is desirable or 
necessary for these types of procedural policies and practices.
    For example, the Guidance rule required Secretarial approval for 
guidance documents under certain circumstances. The Repeal NPRM 
expressed concern that this requirement could delay the issuance of 
these guidance documents by drawing on the Secretary's finite time and 
resources. A commenter asserted that the Secretarial approval 
requirement should be maintained to avoid a greater drain on the 
Secretary's time to fix guidance issued in error. We disagree with this 
comment and its underlying assumption. It is entirely speculative to 
assert that guidance will be issued in error if not done under the 
Secretary's signature. In any event, the Secretary is best positioned 
to determine how to appropriately allocate their time and resources, 
without having to publish a Federal Register document to codify a new 
set of procedures.
    We are not convinced by the comments that there are benefits to 
mandating the procedures required by the Final Rules through codified 
regulations. As discussed elsewhere in this preamble, codification 
impedes the Department's flexibility to adapt its rules to different 
contexts across the broad spectrum of matters regulated by HHS 
agencies, opens the door to opportunistic litigation, and increases the 
burden and difficulty of adjusting and modernizing procedures. 
Improving processes less formally allows for efficient updates to 
respond to a variety of factors, including changed circumstances, new 
priorities, public

[[Page 44010]]

health emergencies, stakeholder input, and new technology.

D. Comments on Specific Issues Related to the Guidance Rule

1. The Guidance Rule Created Administrative Hurdles That May Delay or 
Prevent Issuing Guidance
    In the Repeal NPRM, the Department expressed the concern that both 
Final Rules delay or prevent the issuance of guidance documents. 86 FR 
58046, 58047. In particular, we noted that the Guidance rule 
established substantial, time-consuming, and resource intensive 
requirements for the issuance of ``significant guidance documents,'' 
such as requirements to submit such documents to OIRA for review prior 
to publication; provide a public notice-and-comment process; generate 
an agency response to major concerns raised during the comment period; 
comply with applicable requirements for significant regulatory actions 
as set forth in Executive orders; and obtain approval by the Secretary 
on a non-delegable basis. See 45 CFR 1.3(b). Under the Guidance rule, 
all of these steps are required in combination before a significant 
guidance can be finalized. The Guidance rule also adds steps to the 
process of issuing nonsignificant guidance, such as requiring 
Secretarial approval of guidance that they determine will (1) 
implicate, including potentially impede, any policy matter of priority 
to the Secretary, or (2) potentially create a serious inconsistency, or 
otherwise interfere, with an action taken or planned by another 
operating division or the Office of the Secretary. 85 FR 78780.
    Several commenters confirmed that, in their view, the rules create 
bureaucratic inefficiencies that slow down or halt the important 
guidance that stakeholders require to adequately understand and comply 
with agency rules. These commenters explained that agency guidance 
documents provide necessary, valuable information to stakeholders. For 
example, one commenter asserted that healthcare service providers rely 
heavily on timely guidance, including policy clarification notices, for 
program operations to ensure timely delivery of care and treatment to 
their patients. Some commenters asserted that the COVID-19 pandemic has 
shown the need for HHS to be able to move quickly, especially when 
public health and human life are on the line, to keep abreast with the 
rapid-fire pace of new laws and evolving public health needs, and to 
respond to the high volume of important stakeholder questions. In 
contrast, one commenter who supported retention of most of the Guidance 
rule stated that the Department's concern with potential delays from 
the new procedures for significant guidance documents was misplaced 
because there would be relatively few guidance documents that qualify 
as significant.
    We agree with the commenters that explained that the Guidance rule 
established unnecessary and burdensome inefficiencies, and we disagree 
with the commenter who suggested that our concerns should be mitigated 
by the commenter's assertion that relatively few guidance documents 
would qualify as significant. The definition of ``significant 
guidance'' is susceptible to broad interpretation, as noted in the 
Repeal NPRM. 86 FR 58046. Indeed, although HHS stated in the preamble 
to the final Guidance rule that it believed there would be relatively 
few significant guidance documents, 85 FR 78775, we no longer consider 
that statement to accurately represent past practice. Moreover, the 
Guidance rule makes it harder for the Department to timely issue 
guidance to respond to emergencies, rapid changes in the healthcare 
delivery system, and other critical needs. The additional 
administrative processes require significant additional time and could 
serve as a disincentive or obstacle to issuing guidance, particularly 
for matters requiring expediency. Even the clearance of non-significant 
guidance takes significant time, because the Department would need to 
affirmatively decide whether a guidance implicates or potentially 
impedes any policy matter of priority to the Secretary, or will 
potentially create a serious inconsistency, or otherwise interfere, 
with an action taken or planned by another operating division or the 
Office of the Secretary. These hurdles in turn could make it harder for 
the Department to expediently respond to stakeholder needs, especially 
in the cases of public health emergencies or where other critical needs 
are at issue. Thus, the Department has determined that the delay or 
non-issuance of guidance could have substantial negative consequences 
for the public, including for regulated entities.
    At least one commenter indicated that these concerns are 
speculative, overstated, and can be better addressed by fine-tuning the 
Guidance rule rather than scrapping it entirely. One commenter asserted 
that our concerns regarding burdens were based on a misreading of the 
regulations, in that, while the Guidance rule requires that the 
Secretary must approve certain guidance, the decision on whether a 
guidance requires Secretarial approval can be delegated. We disagree 
with the comments and find the delegation point unconvincing because 
the distinction being drawn by the commenter is not material. Based on 
our experience, we know that each step in the drafting of a document 
and any associated analysis, review, and clearance process takes time. 
In the case of significant guidance documents, the Department would 
have to draft: (1) an initial version of the guidance for public 
comment; (2) a second version of the guidance taking comments into 
account; (3) responses to major concerns raised during the comment 
period; and (4) the analyses required for significant regulatory 
actions as set forth in Executive orders. Further, we know that adding 
more steps in the clearance process that include the Department and 
other Departments throughout the Administration will undoubtedly take 
even more time. Because this assessment is based on our experience, we 
disagree with the commenter's assertion that our concern is 
``speculative.'' We address the proposals to modify the Guidance rule 
in greater detail in Section IV.F.2.h., but we note here that we can 
think of no fine-tuning that would provide adequate time savings, 
beyond rescinding the rule.
    In the case of public health emergencies, some commenters suggested 
that the exceptions processes for significant guidance documents were 
sufficient to allow the Department to rapidly respond. Under Sec.  
1.3(b)(2)(ii) of the Guidance rule, HHS could elect not to conduct a 
comment period on significant guidance if it were to find that notice 
and public comment are impracticable, unnecessary, or contrary to the 
public interest. Additionally, under Sec.  1.3(b)(4), the Guidance rule 
permits significant guidance documents to be exempted from applicable 
requirements ``if the Secretary [of HHS] and the Administrator of OIRA 
agree that exigency, safety, health, or other compelling cause warrants 
the exemption.''
    The Department disagrees that the exceptions processes for 
significant guidance documents provide sufficient flexibility for the 
Department to respond to public health emergencies quickly and 
effectively. To rely on the exception under Sec.  1.3(b)(2)(ii), the 
Department would still need to make findings that public comment would 
be impracticable, unnecessary, or contrary to the public interest and 
incorporate the findings and a statement of the reasons into the 
guidance document. And, to rely on Sec.  1.3(b)(4), the Secretary and 
OIRA Administrator must come to

[[Page 44011]]

the described agreement, the Secretary ``must make this finding,'' and 
``the significant guidance document must incorporate the finding and a 
brief statement of reasons in support.'' See 45 CFR 1.3(b)(4). Even if 
the exceptions could be met during a public health emergency, these 
additional processes would still need to be followed and would still 
consume time and resources in a situation where time is of the essence 
and limited human resources are better allocated to directly responding 
to the emergency rather that addressing the procedural requirements of 
the Guidance rule.
2. The Guidance Rule's Notice and Comment Process Is Not Necessary for 
Guidance
    In the Repeal NPRM, the Department expressed the concern that the 
additional procedures provide little value, because the Department 
already has all the tools it needs to ensure adequate public notice and 
participation in the guidance process. The Repeal NPRM indicated that 
the Department has reconsidered the relative merits of an efficient, 
flexible guidance process and weighed them against the processes 
finalized in the Guidance rule, and that the Department favors an 
approach that is consistent with the APA, which exempts non-binding 
documents like interpretive rules and general statements of policy from 
notice-and-comment rulemaking requirements.
    Some commenters expressed concerns that the Guidance rule 
selectively applied portions of the APA to guidance documents, 
requiring heightened procedural requirements to apply to significant 
guidance documents in ways not contemplated or authorized by the APA, 
and that HHS failed to explain the statutory basis authorizing it to 
apply notice-and-comment requirements to significant guidance. Another 
commenter stated that the Guidance rule imposes burdensome requirements 
akin to rulemaking for significant guidance, despite the Department's 
history and practice of providing adequate public notice and 
stakeholder participation in the guidance process.
    We agree with these commenters' concerns that the Guidance rule's 
notice and comment is not necessary for most Department guidance 
because it is not required by law (except for certain FDA guidance) \6\ 
and because the Department already has a history and practice of 
providing adequate public notice and stakeholder participation in the 
guidance process. Moreover, the Department continues to believe that 
the relative merits of an efficient, flexible guidance process outweigh 
the alleged benefits of the processes finalized in the Guidance rule.
---------------------------------------------------------------------------

    \6\ See Section IV.A.2. n. 4.
---------------------------------------------------------------------------

    Guidance holds an important--and legally distinct--place in the 
Department's regulatory toolbox: it provides an approach to 
communicating the Department's policies and interpretations that can be 
more immediate and clearer than case-by-case adjudication, as well as 
being faster and more flexible than legislative rulemaking. Through 
guidance, traditionally, the Department has been able to communicate 
quickly and responsively its agencies' non-binding current thinking 
regarding legal interpretations, recommendations, and policies. Timely 
issuance of guidance is particularly important to parties that are 
subject to Department regulation because guidance can assist regulated 
industries by helping guard against unequal treatment, unnecessary 
costs, and unnecessary risk. Having a robust, efficient guidance system 
has been especially critical during the COVID-19 emergency. Retaining 
the Guidance rule, with its relative lack of flexibility and procedural 
burdens that go far beyond what is required both by law and practice 
for a transparent and inclusive guidance process, unduly hampers the 
Department's mission, particularly at this critical time.
3. The Guidance Rule's Vague Standards Are Confusing
    In the Repeal NPRM, the Department expressed concern that the 
Guidance rule contains vague standards that are likely to cause 
confusion. For example, the Repeal NPRM noted that the definition of 
``guidance'' in 45 CFR 1.2 is vague and overly broad and could lead to 
confusion over the type of documents subject to the rule's 
requirements. ``Guidance'' is defined, in part, as a ``Department 
statement of general applicability, intended to have future effect on 
the behavior of regulated parties and which sets forth a policy on a 
statutory, regulatory, or technical or scientific issue, or an 
interpretation of a statute or regulation.'' See 45 CFR 1.2(a). In 
addition, the preamble to the proposed Guidance rule provided that 
``guidance may come in a variety of forms, including, but not limited 
to, letters, memoranda, circulars, bulletins, advisories, and preambles 
and may include video, audio, and Web-based formats.'' 85 FR 51396. The 
Repeal NPRM stated that this broad definition and understanding could 
be read to encompass an entire range of documents not intended to serve 
as guidance, such as resolution documents, agreements, case closure 
letters, and memoranda published on Department agency websites to 
inform and educate the general public and regulated entities about 
agency enforcement activities. 85 FR 78772.
    Several commenters agreed with our concern that the definition of 
``guidance'' is too vague. Some commenters remarked that the Department 
further muddles its definition of guidance documents by stating that 
material contained within non-guidance could be guidance: ``[M]aterial 
embedded within an advisory opinion or similar letter that otherwise 
satisfies the definition of `guidance document' would still be guidance 
for purposes of this rule. If a document addressed to specific 
individuals nonetheless contains a statement of general applicability 
setting forth a relevant policy or interpretation that is intended to 
have future effect by guiding the conduct of other regulated parties, 
then the document would be a guidance document.'' 85 FR 78772.
    We agree with these concerns. The broad spectrum of documents 
encompassed by the definition, as well as the nested feature of 
guidance-within-non-guidance, could make it difficult for stakeholders 
to ascertain which documents are ``intended'' to be guidance documents. 
We believe it is reasonable to anticipate that this could lead to 
confusion over the types of documents subject to the rule's 
requirements.
    The Repeal NPRM also raised concerns with generalized statements in 
the Guidance rule on the role and effect of guidance that are not 
necessary and could cause confusion. For example, Sec.  1.3(a)(1) 
states, ``[u]nder the [APA], the Department may not issue any guidance 
document that establishes a legal obligation that is not reflected in a 
duly enacted statute or in a regulation lawfully promulgated under a 
statute.'' The Department continues to see little benefit in this 
provision if it is intended to capture a current understanding of 
principles established by the APA. The APA itself governs agency 
conduct concerning guidance without the need for agency regulations to 
do so.
4. Uniform Requirements for the Disclaimer Are Confusing
    The Repeal NPRM expressed concern that the Guidance rule imposed 
identical requirements on agencies with different legal authorities and 
mechanisms for achieving their mission. In particular, Sec.  
1.3(a)(3)(i) of the Guidance rule requires every guidance document, 
regardless of the authoring agency or program, to bear the following

[[Page 44012]]

statement: ``The contents of this document do not have the force and 
effect of law and are not meant to bind the public in any way, unless 
specifically incorporated into a contract. This document is intended 
only to provide clarity to the public regarding existing requirements 
under the law.'' The Repeal NPRM indicated that this universal 
statement is not appropriate for and cannot cover the range of HHS 
documents that fall within the definition of ``guidance document'' 
under Sec.  1.2(a).
    Several commenters expressed concern that the required disclaimer 
is both confusing and unnecessary. Some commenters remarked that the 
Department failed to address the confusion created with a guidance 
document that simultaneously clarifies obligations and declares it has 
no legal effect. Additionally, some commenters remarked that the 
Guidance rule fails to explain why a disclaimer is needed, or what 
problem a disclaimer is attempting to solve; and that ultimately, 
courts decide the degree of deference to afford agency action, 
including guidance. We agree with these concerns. For example, if a 
guidance clarifies underlying legal obligations, but then states that 
the guidance has no force and effect of law, it is reasonable to 
anticipate that many regulated entities may be confused about how the 
disclaimer applies to the obligations described in the guidance. Or, if 
the guidance describes how an HHS agency views certain scientific 
questions, or how it intends to exercise enforcement discretion, it may 
be confusing or even nonsensical for the cover to state that the 
guidance ``only'' clarifies ``existing requirements under the law.''
    That said, we acknowledge there may be some circumstances where 
some form of a disclaimer about the nature of a guidance may be helpful 
and would not cause confusion. To the extent a disclaimer could be 
useful for some guidance, the Department does not believe that the 
solution is to impose a one-size-fits all disclaimer on all guidance. 
This attempt to fit vastly different documents into one rubric is 
unnecessary, counterproductive, and likely to confuse the public about 
the role of different documents. The Department maintains its position 
described in the Repeal NPRM that a better approach would be for each 
agency to provide information that is appropriate to the agency's 
stakeholders and the expected uses of the document.
    Another concern raised in the Repeal NPRM is that the public may be 
confused by the required statement that incorporation of provisions of 
a guidance document into a contract would render the guidance binding. 
One commenter disagreed that this statement would cause confusion 
because the commenter stated it is common that contracts may 
incorporate specifically enumerated guidance documents as binding on 
the contracting party, and it is well understood that compliance with 
the guidance document becomes mandatory through the party's affirmative 
acceptance of the contract. This statement may not be confusing to some 
stakeholders in some situations, but it may not always be so clear-cut, 
including for guidance that are unrelated to contracts. In addition, 
the Department continues to be concerned with the ambiguity of the term 
``contract,'' especially as it relates to assistance agreements, such 
as grants and cooperative agreements. While it is understood that 
assistance agreements have contractual aspects, in several other 
contexts the Department draws a clear legal and programmatic 
distinction between contracts and assistance agreements. Nevertheless, 
both contracts and grants require entering into an agreement that binds 
both parties to its terms, including in some instances terms found in 
guidance. Thus, it is reasonable to anticipate that the undefined 
nature of such a key term in a required disclaimer term could create 
uncertainty and confusion with some stakeholders, as well as within the 
Department itself.
5. The Provisions Governing the Guidance Repository Are Problematic
    The Guidance rule provides for a repository that includes all 
Department guidance documents, and the rule deems any guidance document 
not in the repository to be automatically rescinded. 45 CFR 1.4. The 
Repeal NPRM stated that the Department considers the provisions of the 
Guidance rule governing the repository to be inappropriate and 
unnecessary, particularly with respect to the rescission requirement 
for documents not in the repository. The Department expressed concern 
that the rescission requirement creates additional burdens among 
stakeholders by causing confusion about which guidance documents have 
been rescinded, superseded, or otherwise become obsolete. Under the 
Guidance rule, rescission can occur simply because a guidance is not 
uploaded to or is removed from the repository due to human error or 
technical failures, even if it is publicly available elsewhere. 
Moreover, the Department questioned whether this rescission approach is 
consistent with the APA, which requires an agency to consider relevant 
factors and make policy choices based on those factors.
    Several commenters agreed with this assessment, noting the 
troubling implications of the repository provision. In particular, some 
commenters expressed concern with 45 CFR 1.4(a)(3)(ii), which rescinds 
guidance documents previously issued by HHS that are not included in 
the repository. One commenter noted that since the repository was 
created, it has been unclear whether omissions in the repository were 
purposeful or accidental, and that this has been particularly 
concerning given that the rule intended for the absence of a guidance 
document from the repository to in effect rescind that document. The 
commenter indicated that members of the public--particularly 
individuals seeking information about Medicaid, Medicare, and other HHS 
programs--will likely be confused if a guidance document appears on an 
HHS website, but it is not included in the repository. Commenters 
further noted that, even if stakeholders petition to reinstate guidance 
omitted from the repository, such a process would be time consuming, 
burdensome, and cause uncertainty among the public and regulated 
entities. Commenters also noted potential confusion regarding joint 
guidance HHS has issued with other Federal agencies. In particular, 
they mention a joint guidance regarding the ACA, which appears on HHS 
and Department of Labor websites, but does not appear in the HHS 
guidance repository.
    We agree with these concerns. Although the Department intends to 
maintain a centralized location for guidance, which may offer 
convenience to some users, these comments illustrate how the Guidance 
rule's recission provision is counterproductive and creates confusion. 
For example, certain users may find it easier to access guidance on an 
HHS agency or program website rather than in the repository. Once they 
locate a guidance on the HHS program website, users should not have to 
take the additional step of searching the repository to determine 
whether a guidance is in effect. Moreover, if a guidance document is 
deemed ``rescinded'' under the Guidance rule because it does not appear 
in the repository, it is reasonable to anticipate that regulated 
entities would face a high degree of uncertainty as to the Department's 
current thinking, particularly considering the possibility that the 
guidance may have been unintentionally rescinded because of human error 
or technical failure. The

[[Page 44013]]

rescission requirement creates additional burdens among stakeholders by 
causing confusion about which guidance documents have been rescinded, 
superseded, or otherwise become obsolete. Additionally, if a guidance 
document is listed in the repository, but a regulated entity cannot 
access or view it (for example, as the result of a ``broken link'' to 
the guidance document), the regulated entity may act based on a 
misunderstanding of the Department's current interpretations and 
policies. Alternatively, they might choose to engage with the HHS 
agency about the status of the guidance, which would consume time and 
resources for both the requestor and the Department.
    These concerns are not speculative. One commenter described 
difficulties when performing searches of exact guidance names in the 
``keyword search'' function of the repository. Those guidance documents 
would not always appear in the search results. In addition, filtering 
guidance documents by topics, HHS division or offices, or language did 
not always guarantee a guidance document would be retrieved in the 
search results. The commenter remarked that it has not been uncommon to 
perform the same search on different days and obtain different search 
results, many times which did not contain the guidance document an 
individual is looking for. The commenter stated that the guidance 
repository appeared to not be working at all on some days, with an 
error page showing up after a search was performed. Accordingly, this 
difficulty in finding documents has led to confusion over whether a 
guidance had been rescinded.
    Many commenters supported the existence of a central repository, 
stating that having a centralized location to search for and identify 
relevant guidance improves regulated entities' compliance with agency 
policies and applicable law. We agree. Consistent with the discussion 
in the Repeal NPRM, we continue to believe that having a central 
repository for guidance is a helpful tool, both for stakeholders and 
the Department, and the Department still plans to maintain a guidance 
repository. However, the Guidance rule is not needed for the Department 
to maintain a central repository, and the automatic rescission 
provision is likewise unnecessary.
    The Department continues to believe that the better approach would 
be to engage with its individual agencies to develop the most efficient 
and user-friendly repository system that has the flexibility to change 
with improving technology and experience, and not to be constrained by 
regulatory requirements. The Department intends for the repository at 
www.hhs.gov/guidance to remain active, but the additional requirements 
imposed by the Guidance rule (for example, that removal from the 
repository would affect rescission of a guidance) would be removed. 
Guidance will remain validly issued regardless of whether they were 
ever inadvertently not included in the repository.
    In the Repeal NPRM, the Department invited stakeholders to comment 
on their experience with the repository and to comment on how the 
Department can improve its usability and utility. In response to this 
request, the Department received several helpful comments on how to 
improve the usability of the repository. We appreciate the comments, 
and we will continue to consider them as we work to ensure the 
repository is as complete, user-friendly, and current as possible.
6. The Guidance Petition Process Is Unnecessary and Burdensome
    Section 1.5 of the Guidance rule established a petition process 
under which an interested party may petition the Department to withdraw 
or modify any particular guidance document. The provision requires the 
Department to issue a substantive response within 90 days regardless of 
the petition's subject matter or merits or competing public health 
priorities. The Department has decided to repeal this new guidance 
petition process because it is unnecessary, burdensome, and not legally 
required.
    One commenter noted that it had commented earlier on the proposed 
Guidance rule that it was unclear how this provision impacted the 
status of guidance or any right to challenge guidance under the APA, 
and the final Guidance rule did not address its concerns. However, 
because the Department has decided to repeal the regulation 
establishing the new petition process, it is unnecessary for us to 
clarify what the effects of this provision would have been on the 
status of guidance or any right to challenge guidance under the APA.
    Another comment opined that eliminating the petition process 
entirely would effectively leave interested parties with no formal 
methods other than litigation to seek the withdrawal or modification of 
improper or unwise guidance. We disagree. As discussed in the Repeal 
NPRM, the new guidance petition process created by the Guidance rule is 
unnecessarily duplicative of other already existing methods through 
which stakeholders can challenge agency decisions relating to guidance 
applicability or request changes in or the rescission of existing 
guidance. These methods include (but are not limited to): FDA's citizen 
petitions process related to ``any . . . form of administrative 
action,'' 21 CFR 10.25(a); FDA's GGP regulation providing that affected 
parties may suggest at any time that FDA withdraw an already existing 
guidance document and may elevate concerns that an FDA employee has not 
followed the procedures in the GGP regulation or has treated a guidance 
document as binding, 21 CFR 10.115(f)(4) & (o); the appeals process for 
facilities that disagree with decisions involving application of 
guidance governing Medicare eligibility and participation, 42 CFR part 
498; and already-existing relationships between regulated entities and 
HHS agencies that allow stakeholders to express comments, suggestions, 
or concerns with guidance in their formal and informal discussions with 
agency employees. Furthermore, we note that, while stakeholders have a 
right to petition government agencies under the First Amendment, the 
Petition Clause does not require ``government policymakers to listen or 
respond to individuals' communications on public issues.'' Minn. State 
Bd. for Cmty. Colleges v. Knight, 465 U.S. 271, 285 (1984); see also We 
the People Found., Inc. v. United States, 485 F.3d 140, 143 (D.C. Cir. 
2007); Small Bus. in Transp. Coal. v. U.S. Dep't of Transp., 2021 WL 
4399581, at *14 (D.D.C. Sept. 27, 2021).
    The same commenter further stated that, in the Repeal NPRM, the 
Department's ``real concern'' with the new guidance petition process 
was that the current deadline is too short, rather than its stated 
concern that process itself is unworkable in practice. The comment 
further asserted that HHS had offered insufficient evidence that this 
90-day deadline for responding to petitions had proven unworkable in 
practice.
    We agree with the comment to the extent that it acknowledges our 
concern with the 90-day deadline, but that represents only part of the 
problem. In practice, since the inception of the good guidance petition 
process, most submissions that have come to the Department through this 
process have not been petitions ``to withdraw or modify any particular 
guidance document.'' 45 CFR 1.5. The Department has expended 
substantial resources to respond to submissions asserted to be 
petitions under Sec.  1.5 that: ask about where to find information in 
the guidance repository; complain about vaccination policies; query for

[[Page 44014]]

information for how to file personal medical claims; and request the 
agency to take action to withdraw policies with which the petitioners 
disagree. Even though these submissions do not qualify as good guidance 
petitions under the Guidance rule, they require significant time and 
effort to determine whether the submission meets the Guidance rule's 
requirements and draft a substantive response. For petitions that do 
qualify under the Guidance rule, even more effort is necessary to 
review the scope and nature of the request, draft and revise responses 
to the petitions, and complete any necessary clearance.
    For example, one petition ostensibly submitted under Sec.  1.5, 
requested that HHS, CDC, FDA, and ``all other component agencies of 
HHS'' revise each guidance document, order, and regulation that related 
to mask-wearing or vaccine administration for children in the context 
of COVID-19. As noted above, although the Department ultimately 
concluded that petitioner had not properly invoked Sec.  1.5, 
deliberating over and responding to the petition consumed a substantial 
amount of time from attorneys and subject matter experts in the Office 
of the Secretary, CDC, and FDA, and, because of the deadline, those 
deliberations were prioritized over other matters that had more 
potential to advance public health.
    It is not necessary or appropriate to establish a special guidance 
petition pathway. In operation, it has led HHS agencies to sort through 
submissions that were not submitted properly under the Guidance rule. 
Moreover, we no longer see any utility in retaining a process that 
forces the agency to expend its valuable resources when stakeholders 
already have other methods to bring guidance-related concerns to the 
agency. As explained in the Repeal NPRM and borne out in actuality, the 
guidance petition process is structured in a way that leads to wasting 
Government resources on potentially meritless petitions. For example, 
the process allows a petitioner to petition for hundreds of guidance 
documents to be rescinded at once, and/or allows one or many 
petitioners to re-petition regarding a single guidance document 
multiple times.
    Finally, one comment expressed concern that rescinding the Final 
Rule would result in only some agency components with petition 
processes in place, and that this would be less effective than keeping 
one petition process for the whole Department. As we discuss in Section 
IV.A.4.b. above, a single set of procedures for guidance documents and 
civil enforcement for the entire Department is incompatible with the 
efficient and effective administration of a Department as large and 
diverse as HHS. We therefore disagree that it is overall less effective 
to have different petition processes depending on the agency component.
7. Comments Raising Issues Specific to CMS Do Not Support Retention of 
the Guidance Rule
    One commenter, who did not believe HHS should pursue a wholesale 
repeal of the Guidance rule, instead recommended that the agency take 
steps to systematically re-evaluate its guidance practices. In 
particular, the commenter believed CMS should consider the timing of 
rulemaking and guidance for the Medicare Part D prescription drug 
program and recommended that regulations be issued earlier to allow 
time for development of guidance and for stakeholders to prepare for 
and implement new regulatory requirements before the start of the 
applicable plan year. This commenter also believed HHS should address 
the limits of guidance and when it is inappropriate to use. As an 
example, the commenter noted that the requirements included in 
contracts with Part D plan sponsors should be subject to full notice-
and-comment rulemaking.
    We appreciate these suggestions and will take these recommendations 
into consideration when planning future rulemaking, including for the 
Part D program. However, for the reasons discussed in the Repeal NPRM, 
we continue to believe it is necessary to repeal the Guidance rule to 
enable efficient and effective administration of all HHS programs.
    Another commenter opined that the Medicare program would 
significantly benefit from the Guidance rule and urged HHS to retain 
it. Unregulated guidance documents, this commenter stated, have a 
significant impact on healthcare organizations, particularly in the 
case of accrediting organizations (AOs), due to the unique nature of 
the deeming partnership with CMS. The commenter further stated that 
certain Department communications can go beyond the informational 
purposes mentioned in the proposed rule and may contain meaningful 
policy changes that can be unnecessarily disruptive and costly, and 
therefore should undergo public review. For example, the commenter 
stated that CMS often issues guidance to states and agency regional 
offices that impact healthcare organizations and accredited bodies. 
These documents may contain new requirements that can impact AOs and 
accredited organizations, despite not having undergone a notice-and-
comment period. The commenter further stated that healthcare 
organizations and the public are often unaware of certain policy 
memoranda and frequently do not know where to find them for review. For 
example, the commenter said certain memoranda are kept in a portal for 
state and regional offices and thus stakeholders may not know when new 
ones are published.
    We disagree with the characterization that, without the Guidance 
rule, Department guidance in general, and CMS guidance in particular, 
is unregulated. We note that, although we are repealing the Guidance 
rule, we are still bound by the APA and--when administering the 
Medicare program--the Allina holding (interpreting section 1871 of the 
Social Security Act), both of which require rulemaking whenever we 
``establish[] or change[] a substantive legal standard governing the 
scope of benefits, the payment for services, or the eligibility of 
individuals, entities, or organizations to furnish or receive services 
or benefits under [Title XVIII of the Social Security Act].'' In the 
particular context of Medicare, we expect the same level rulemaking 
activity after the repeal as previously, including while the Guidance 
rule has been in effect. The APA requires all enforceable standards to 
go through notice-and-comment rulemaking; to the extent that CMS 
continues to issue sub-regulatory guidance, they are intended to 
provide additional information, not establish or change substantive 
legal standards. Finally, we note that section 1865 of the Social 
Security Act only requires accrediting organizations to demonstrate to 
CMS that their accreditation programs indicate that our ``applicable 
conditions or requirements . . . are met or exceeded.'' The statute 
does not require accrediting organizations to adopt any CMS guidance or 
other sub-regulatory policies or methodologies.
    In contrast, other CMS stakeholders supported repeal of the Final 
Rules. For example, one commenter supported repeal of the Guidance rule 
because it promotes confusion among beneficiaries, state agencies, and 
other Medicaid and Children's Health Insurance Program (CHIP) 
stakeholders. The commenter further stated that the Guidance rule 
created a central guidance repository that duplicates and undermines 
the guidance compilation maintained by the Center for Medicaid and CHIP 
Services. We thank the commenter for its input and agree that the 
Guidance rule should be repealed.

[[Page 44015]]

8. The Guidance Rule Conflicts With Preexisting FDA Regulations
    The Guidance rule has presented unique implementation problems for 
FDA. As explained in the preamble to the Repeal NPRM and above, FDA, 
unlike the other divisions of HHS, has long operated under a statutory 
provision concerning guidance and has its own GGP regulations, which 
address FDA's practices related to guidance documents, including 
practices and procedures for issuing, revising, and implementing 
guidance documents. See 21 U.S.C. 371(h); 21 CFR 10.115. FDA also 
operates under longstanding regulations regarding citizen petitions, 
see 21 CFR 10.30, 10.31, which interested persons have used to request 
that FDA take certain actions with regard to FDA guidance documents.
    The Repeal NPRM discussed several problems with applying the 
Guidance rule to FDA. First, it noted that the Guidance rule 
establishes standards and processes that overlap with but are distinct 
from FDA's existing requirements, which creates practical difficulties 
and confusion. For example, 21 U.S.C. 371(h) and 45 CFR 1.3(b)(4) 
contain different standards for dispensing with prior public 
participation for certain guidance documents. Second, the application 
of the Guidance rule to FDA guidance presents complex unaddressed 
challenges. For example, if a guidance document is erroneously 
rescinded under Sec.  1.4(a)(2) of the Guidance rule, FDA would need to 
consider how to repromulgate its guidance in a manner consistent not 
only with the Guidance rule, but also with its own statute and 
regulations. Third, it is inefficient and confusing for regulated 
entities as well as FDA staff to toggle back-and-forth between HHS and 
FDA Guidance rules to try to figure out what the requirements are and, 
in some instances, to meet the requirements of the HHS Guidance rule, 
the FD&C Act, and FDA's GGP regulation.
    One commenter discussed whether the Guidance rule should apply to 
FDA, particularly considering the agency's preexisting regulations. 
Although the commenter did not support repeal of the Final Rules 
overall, it did recommend that FDA be exempted from the Guidance rule 
because ``the superimposition of the HHS rule has led to some 
confusion.'' HHS agrees that this superimposition has led to problems, 
including confusion, and that the rule should not apply to FDA. Prior 
to the Guidance rule, stakeholders were familiar with FDA practices and 
processes, which had been in effect for twenty years. The Guidance rule 
has called those processes into question and introduced new, burdensome 
procedures that will make it more difficult for regulated entities to 
receive important non-binding information. HHS continues to believe 
that repealing the Guidance rule is important to stabilize and clarify 
the regulatory regime for FDA guidance documents.

E. Comments on Specific Issues Related to the Civil Enforcement Rule

1. The Civil Enforcement Rule Established an Unnecessary and Confusing 
Overlay of New Procedural Requirements
    In the Repeal NPRM, the Department explained that the requirements 
in Sec. Sec.  1.6 through 1.9 create conflicts with existing agency 
processes and regulations. The various agencies under the HHS umbrella 
each have procedural regulations, some of which have been specifically 
designed to govern a particular type of proceeding. See, e.g., 21 CFR 
part 17 (procedures governing hearings concerning the imposition of 
civil money penalties by FDA); 42 CFR part 488 (CMS and State Agency 
survey, certification, and enforcement procedures for Medicare 
providers and suppliers); 42 CFR part 498 (appeals procedures for 
determinations that affect participation in the Medicare Program); 45 
CFR part 160, subpart E (procedures governing hearings challenging the 
imposition of civil monetary penalties in Health Insurance Portability 
and Accountability Act (HIPAA) cases). The procedures required under 
the Civil Enforcement rule do not adequately account for these pre-
existing, agency-specific procedures, nor do they account for the 
differences between agencies within the Department. Instead, the Civil 
Enforcement rule dictates an overlay of new, and in some cases 
redundant, requirements.
    Commenters confirmed these concerns. For example, one comment 
explained that the Civil Enforcement rule undermines the well-developed 
procedures and plans that are tailored by each agency to govern 
specific types of proceedings.
    The Department agrees with this comment. HHS agencies have designed 
their procedural regulations to comply with principles of due notice, 
fairness, and transparency. Parties that are subject to civil 
administrative enforcement actions and adjudications under the existing 
procedures established prior to the Civil Enforcement rule are 
routinely provided with sufficient notice of the action, adequately 
informed of laws and regulations to which they are subject to, fully 
instructed on contesting or appealing agency determinations prior to 
actions of legal consequence, and protected from unfair surprise. To 
the extent the requirements of the Civil Enforcement rule diverge from 
the existing procedures, the conflict creates confusion for both HHS 
agencies and regulated parties and could delay or prevent civil 
enforcement.
2. Hurdles Will Leave Bad Actors in the Market for Longer
    In the Repeal NPRM, the Department explained that the processes and 
procedures set forth in the Civil Enforcement rule create unnecessary 
hurdles and roadblocks for agency actions, to the detriment of the 
public health and other national priorities. 86 FR 58050. Comments 
confirmed that the Civil Enforcement rule creates unnecessary hurdles 
for the Department. One comment further explained that the lengthy 
procedures established by the rule hamper enforcement which results in 
leaving bad actors (such as those committing billing fraud) in the 
market for a lengthier period of time. The comment further noted that, 
although the Civil Enforcement rule contains an exception for ``health, 
safety, or a similar emergency,'' this exception was inadequate to 
address the concern that the rule institutes rigid requirements that 
could create roadblocks to agency enforcement actions.
    The Department agrees with these comments. For example, Sec.  1.9 
requires the Department to follow certain steps before taking civil 
enforcement actions, including providing parties with an initial notice 
of the agency's legal and factual determinations, an opportunity to 
object or respond, and the Department's ``written response'' to the 
affected party's objections. In issuing the Civil Enforcement rule, the 
Department stated that it anticipated that existing HHS procedures 
already satisfied the requirements established in Sec.  1.9. 86 FR 
3012. Upon reconsideration, the Department now finds that the Civil 
Enforcement rule creates a rigid, burdensome, and resource-intensive 
path for Department staff, which is unnecessary when other tools in 
use, such as informal negotiation, could be more efficient and 
effective. See, e.g., FDA's Regulatory Procedures Manual section 10-3 
(describing FDA's use of ``regulatory meetings'' as an option in 
seeking industry compliance) (available at https://www.fda.gov/media/71765/download).
    Section 1.7(a) prohibits the Department from applying ``standards 
or

[[Page 44016]]

practices'' in a civil enforcement action that have not been ``publicly 
stated.'' That new restriction on the Department's authority is not 
required under settled case law,\7\ and it could interfere with the 
Department's ability to enforce new laws and address emerging threats, 
particularly through the use of adjudicatory proceedings.
---------------------------------------------------------------------------

    \7\ See SEC v. Chenery Corp., 332 U.S. 194, 203 (1947) 
(``[P]roblems may arise in a case which the administrative agency 
could not reasonably foresee . . . . Hence, we refuse to say that 
the Commission, which had not previously been confronted with the 
problem of management trading during reorganization, was forbidden 
from utilizing this [adjudicatory] proceeding for announcing and 
applying a new standard of conduct''); Martin v. Occupational Safety 
& Health Rev. Comm'n, 499 U.S. 144, 154 (1991) (``Within traditional 
agencies . . . adjudication operates as an appropriate mechanism not 
only for factfinding, but also for the exercise of delegated 
lawmaking powers, including lawmaking by interpretation.'').
---------------------------------------------------------------------------

    We also agree with the commenters that the exception in Sec.  1.9 
involving ``a serious threat to health, safety, or similar emergency,'' 
86 FR 3013, does not adequately address the concerns with that 
regulation. For example, the exception does not address fraudulent 
actors who drain the Department's resources when allowed to remain in 
Departmental programs. It is not in the public interest for an HHS 
agency such as CMS to take fewer enforcement actions against providers 
and suppliers who fraudulently bill patients and harm the Medicare 
trust funds. Delayed action against fraudulent billing would allow 
further diversion of taxpayer dollars and loss of program funding, 
forcing divisions to reprioritize program resources. Additionally, the 
exception does not alleviate the burden on the Department, because the 
process, including the Department's written response to the party's 
objections, must still be followed ``as soon as practicable.'' 86 FR 
3013. Finally, analyzing whether a particular action falls into the 
exceptions set forth in Sec.  1.9(c) would itself require an 
expenditure of time and resources that could delay actions needed to be 
taken on a time-sensitive basis.
3. ``Fairness and Notice'' Provisions Exceed Existing Legal 
Requirements and Are Burdensome
    The Civil Enforcement rule imposed a series of limitations on 
enforcement actions by requiring prior notice of various positions in a 
variety of contexts. For example, the rule imposes a requirement that, 
if the agency intends to rely on a decision to assert new or expanded 
claims of jurisdiction, it must have published the initial decision in 
the Federal Register or the HHS guidance repository before the conduct 
subject to enforcement occurs. 45 CFR 1.8. Similarly, the Civil 
Enforcement rule prohibits an agency in taking civil enforcement action 
from applying standards and practices that have not been publicly 
stated or citing guidance that does not appear in the HHS guidance 
repository. 45 CFR 1.6 &1.7. Although the preamble to the Civil 
Enforcement rule and some commenters attached a ``fairness and notice'' 
label to provisions, that preamble conceded that the requirements in 
the regulations ``exceed the requirements imposed by the Due Process 
clause'' and ``may impose a burden by delaying the time until HHS can 
take actions with legal consequence.'' See 86 FR 3013.
    Several commenters supported the ``fairness and notice'' 
requirements and thus opposed their repeal. The comments noted that, in 
the Civil Enforcement rule preamble, HHS had explained that these 
regulations would give regulated parties a method to challenge certain 
types of unfair enforcement. The commenters maintain that the Repeal 
NPRM provided an inadequate explanation as to why the Department had 
changed its mind. One comment suggested that the ``fairness and 
notice'' requirements could be revised to narrow their scope and reduce 
their burden.
    We disagree with the positions advocated by these commenters. As 
the Civil Enforcement rule acknowledged and we agree, these ``fairness 
and notice'' provisions exceed the requirements of existing law. We 
also find that neither the Civil Enforcement rule nor the commenters 
provided a persuasive explanation as to why these additional regulatory 
hurdles are necessary to advance the interests of justice. As we 
explained in the Repeal NPRM and above, the Department continues to 
abide by its longstanding commitment to follow applicable principles of 
due process and administrative law, and these well-established 
requirements guarantee that fair notice is provided to the subjects of 
civil enforcement actions. Accordingly, we conclude that these 
additional regulatory hurdles are unnecessary to ensure fairness.
    The preamble to the Civil Enforcement rule also acknowledged that 
these ``fairness and notice'' procedures would burden and delay HHS 
enforcement actions. See 86 FR 3013. Again, we agree with that 
assessment. The preamble to the Repeal NPRM also raised the additional 
concern that ambiguities in the new procedural requirement could lead 
to spurious challenges to valid enforcement actions and adjudications, 
which would significantly impede the Department's ability to take 
enforcement actions and would divert resources from mission-critical 
activities. Although the Civil Enforcement rule concluded that these 
provisions would benefit regulated industry, or at least those who are 
the subject of enforcement actions, there was no explanation of how 
these provisions protect or advance public health and welfare. Indeed, 
by impeding legitimate enforcement actions against bad actors, the 
Department now concludes that these provisions adversely impact the 
public health and welfare.
    As described in this preamble, the Department has changed its 
position on the value of the entirety of the Final Rules, in that they 
impose a rigid layer of bureaucracy that impedes the effective 
operations of the Department and will deflect resources from mission 
critical endeavors. The ``fairness and notice'' requirements are no 
exception. They would require extra steps as prerequisites to 
enforcement action, which slow the initiation of such actions, create 
new grounds for challenging Department actions, and absorb resources 
that would otherwise be dedicated to other Department objectives. As 
such, they are contrary to the policies and goals of the Biden-Harris 
Administration to ensure that HHS can appropriately leverage 
administrative tools to protect and advance the public health and 
welfare and to efficiently and effectively administer its wide array of 
programs.

F. Comments on Legal Issues

1. Take Care Clause and Separation of Powers Doctrine
    Several commenters noted that the Final Rules create procedural 
requirements beyond those in existing law. One commenter disagreed with 
that view, stating that the rules strike no new legal ground and only 
capture existing law under the Fifth Amendment, the Appointments 
Clause, the separation-of-powers doctrine, the APA, and the Freedom of 
Information Act (FOIA). The commenter stated that repeal of the rules 
would amount to HHS actively ignoring or overruling relevant law and 
would constitute a violation of the Take Care Clause, U.S. Const. art. 
II, sec. 3, and the separation-of-powers doctrine. The commenter 
further stated that E.O. 13992 was unlawful and could not provide an 
adequate basis for the repeal because the President cannot make a 
policy choice to derogate portions of the Nation's laws.
    HHS agrees with the commenters who stated that the Final Rules go 
beyond

[[Page 44017]]

existing legal requirements and disagrees with the arguments that the 
repeal is unlawful. For example, for significant guidance, as defined 
in 45 CFR 1.2(a), the Department is required to submit such documents 
to OIRA for review prior to publication, provide public notice-and-
comment process, generate an agency response to major concerns raised 
during the comment period, comply with applicable requirements for 
significant regulatory actions as set forth in Executive orders, and 
obtain approval by the Secretary on a non-delegable basis. 45 CFR 
1.3(b). The rules also create a special process for the submissions and 
review of petitions related to guidance, which includes a 90-day 
deadline for the Department's response. 45 CFR 1.5. The Department is 
not aware of any prior existing law that mandates these procedures. 
Indeed, when HHS promulgated the Final Rules, it acknowledged that the 
rules went beyond existing law. See, e.g., 85 FR 78777 (relying on 
agencies' authority to ``grant additional procedural rights in the 
exercise of their discretion'' as a basis for the rule); 86 FR 3013 
(``[Sec.  1.9] may exceed the requirements imposed by the Due Process 
clause of the Constitution'').
    Because the Final Rules go beyond existing legal requirements and 
constitute an exercise of HHS discretion, HHS has discretion to 
eliminate these self-imposed procedural requirements. The President's 
EOs referenced in this comment, including E.O. 13992, did not direct 
agencies to derogate portions of the nation's laws; rather, they 
provided policy direction in the application of the Department's 
discretion.
    Furthermore, even assuming that some portions of the regulations 
only codify existing legal principles, HHS does not agree that it is 
required as a matter of law to retain these portions of the 
regulations. The commenter cited the Take Care Clause and the 
separation-of-powers doctrine, which require the President and 
executive officials to adhere to existing law. See, e.g., Youngstown 
Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952). But the Department can 
adhere to the law, and fully intends to do so, without maintaining 
regulations that attempt to codify that law. The requirements of 
existing law from applicable statutes, case law, and the Constitution 
already bind HHS, and there is no legal requirement that HHS duplicate 
them in regulation. Nor does HHS agree that such a requirement takes 
hold only once the regulations have already been promulgated. We are 
not aware of any legal principle that requires agencies to maintain 
regulations seeking to codify existing law after they have been issued.
    The Department's choice to repeal the Final Rules in no way 
reflects disagreement with or a rejection of its legal duties. On the 
contrary, given the evolving nature of the law and the complexity of 
current precedent, as discussed in Section IV.F.2.c. below, HHS 
believes it will be better positioned to comply with the law and to 
``take Care that the Laws be faithfully executed'' by repealing these 
regulations. U.S. Const. art. II, sec. 3.
2. Administrative Procedure Act
a. Adequate Justification for Repeal
    Several commenters asserted that, as a general matter, HHS had not 
adequately justified the repeal under the APA and the Supreme Court's 
precedents in Motor Vehicle Mfrs. Ass'n of the U.S., Inc. v. State Farm 
Mut. Auto. Ins. Co., 463 U.S. 29 (1983) and Dep't of Homeland Sec. 
(DHS) v. Regents of the Univ. of Cal., 140 S. Ct. 1891 (2020).
    HHS disagrees with the commenter's assertion that the repeal does 
not comply with the APA. In State Farm and Regents, the Supreme Court 
considered the rescission of two different substantive policies and 
laid out certain standards for agencies to meet in justifying their 
rescission decisions. E.g., 463 U.S. at 42 (requiring ``reasoned 
analysis'' and ``consideration of relevant factors''). However, as an 
initial matter, it is not clear that these standards apply equally to 
rules governing agency procedures. The Supreme Court has recognized a 
``very basic tenet of administrative law that agencies should be free 
to fashion their own rules of procedure.'' Vt. Yankee Nuclear Power 
Corp. v. Natural Res. Def. Council, 435 U.S. 519, 544 (1978); see also 
Ass'n of Bus. Advoc. Tariff Eq. v. Hanzlik, 779 F.2d 697, 701 (D.C. 
Cir. 1985) (``It is too well-established to be seriously questioned 
that agencies are empowered to order their own proceedings and control 
their own dockets.''). This principle is an ```outgrowth of the 
congressional determination that administrative agencies and 
administrators will be familiar with the industries which they regulate 
and will be in a better position than federal courts or Congress itself 
to design procedural rules adapted to the peculiarities of the industry 
and the tasks of the agency involved.''' Id. at 525 (quoting FCC v. 
Schreiber, 381 U.S. 279 (1965)). When rules are procedural in nature, 
it makes sense for courts to give agencies greater leeway to organize 
their operations and deploy resources as they see fit. HHS and its 
agencies are uniquely suited to understand which procedures will best 
facilitate the execution of its duties. The Final Rules constitute 
self-imposed procedural requirements governing agency, not private, 
conduct. Now that HHS has determined that these procedures will not 
best enable the Department to serve its mission, these discretionary 
revisions of its procedural rules are not subject to the APA standards 
for changing substantive policy under State Farm and Regents.
    Indeed, it is not clear that there can be any judicial review of 
these discretionary procedural rules, let alone under the standards 
applied to the review of substantive rules. The statutory authority 
cited as the bases for the Final Rules provides in relevant part that 
``[t]he head of an Executive department or military department may 
prescribe regulations for the government of his department, the conduct 
of its employees, the distribution and performance of its business, and 
the custody, use, and preservation of its records, papers, and 
property.'' 5 U.S.C. 301. As the Supreme Court has explained, the APA 
at 5 U.S.C. 701(a)(2) ``makes it clear that `review is not to be had' 
in those rare circumstances where the relevant statute `is drawn so 
that a court would have no meaningful standard against which to judge 
the agency's exercise of discretion.''' Lincoln v. Vigil, 508 U.S. 182, 
191 (1993) (quoting Heckler v. Chaney, 470 U.S. 821, 830 (1985)). 
Because 5 U.S.C. 301 contains no judicially manageable standard, the 
repeal of the Final Rules should not be subject to judicial review.
    Even assuming the APA standards for changing substantive policies 
apply, HHS's decision is adequately justified under State Farm and its 
progeny. As discussed in more detail elsewhere in this preamble, HHS's 
reasons for repealing the Final Rules include that the Final Rules: (1) 
run counter to the Administration's goals of advancing public health 
and welfare; (2) impose burdensome standards and procedures; (3) harm 
marginalized constituencies; (4) impede Department flexibility; and (5) 
divert limited Department resources. The Supreme Court has explained 
that, when changing course, an agency ``need not demonstrate to a 
court's satisfaction that the reasons for the new policy are better 
than the reasons for the old one; it suffices that the new policy is 
permissible under the statute, that there are good reasons for it, and 
that the agency believes it to be better, which the conscious change of 
course adequately indicates.'' FCC v. Fox TV Stations, Inc.,

[[Page 44018]]

556 U.S. 502, 515-16 (2009). HHS's new policies, as articulated in this 
preamble and in the Repeal NPRM, are permissible under the statute and 
are supported by good reasons; therefore, this repeal action complies 
with the APA.
    HHS recognizes that, in some cases, an agency is required to 
provide a more detailed justification for rescinding a policy than what 
would suffice for a new policy. This may be true ``when, for example, 
[the] new policy rests upon factual findings that contradict those 
which underlay its prior policy.'' Id. at 515. HHS believes its 
justification for this repeal is far more detailed and comprehensive 
than what was provided for the Final Rules' promulgation. For example, 
HHS has described its current experience with the rule (see Section 
IV.F.2.e.) and has explained in detail the specific reasons why this 
repeal is appropriate.
    Regardless, because the Final Rules were grounded mainly in policy 
and political justifications rather than factual findings, the 
Department does not believe the ``more detailed justification'' 
standard applies. For example, the preambles to the Final Rules cited: 
the previous Administration's regulatory reform initiative; generalized 
policy views that the additional procedures were favorable because they 
would increase accountability, transparency, and fairness; and two 
Executive orders that have since been revoked. For the most part, the 
preambles to the proposed Guidance rule and both Final Rules did not 
identify specific factual concerns that the Department sought to 
address through the rulemakings.\8\ Indeed, one commenter in this 
rulemaking criticized the Guidance rule for ``fail[ing] to provide any 
evidence-based discussion to support its contention that the [Guidance 
r]ule would benefit `the public, and, in particular, regulated 
parties.' '' Overall, both rules were justified mainly on policy 
grounds, which, in HHS's current view, overlooked serious drawbacks of 
the requirements. Given those high-level and cursory justifications, we 
believe that the justifications provided in this repeal rulemaking are 
more than adequate.
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    \8\ One exception is a statement in the preamble to the Guidance 
rule that regulated entities have difficulty locating and 
identifying operative guidance documents, which HHS intended to 
address through the guidance repository. 85 FR 78781. However, as 
discussed in Section IV.D.5 above, HHS plans to maintain the 
guidance repository and to work towards improving it functionality, 
but without the automatic rescission provision and without a 
governing regulation.
---------------------------------------------------------------------------

    As noted above, State Farm requires agencies to consider ``relevant 
factors.'' Some commenters identified factors that they believed HHS 
should have considered in its decision-making, such as asserted 
benefits of these rules. Although HHS is not convinced the State Farm 
standard applies, those factors are addressed individually in Section 
IV.F.2.e and f below.
b. Clear Error of Judgment
    One commenter asserted that State Farm requires HHS to demonstrate 
how the adoption of the guidance and civil enforcement rules was ``a 
clear error of judgment'' in order to justify the repeal.
    HHS does not agree that State Farm requires an agency to show that 
the prior policy choice was ``clear error,'' even assuming the State 
Farm standard applies here. In State Farm, the Supreme Court stated 
that in reviewing an agency's explanation for a repeal, it ``must 
consider whether the decision was based on a consideration of the 
relevant factors and whether there has been a clear error of 
judgment.'' 463 U.S. at 43 (internal quotations omitted). This language 
requires courts to evaluate whether the repeal decision was ``clear 
error''; it does not require an agency to show that the prior policy 
was clear error. E.g., State Farm Mut. Auto. Ins. Co. v. Dole, 802 F.2d 
474, 486 (D.C. Cir. 1986) (``clear error'' standard applies for a court 
to ``overturn agency action''). As noted elsewhere in this preamble, to 
justify a repeal, an agency needs to adequately explain why the new 
policy is permissible under the statute and that there are good reasons 
for its new position. FCC v. Fox TV Stations, Inc., 556 U.S. 502, 515-
16 (2009). An agency ``need not demonstrate to a court's satisfaction 
that the reasons for the new policy are better than the reasons for the 
old one.'' Id. HHS has met that standard, as discussed in the previous 
comment response.
    Nevertheless, the Department now believes the Final Rules represent 
a misjudgment. The Final Rules were based on policies announced in 
Executive orders that this President revoked because those policies 
were counter to the objectives of the Biden-Harris Administration. As 
explained, these current objectives include using available tools of 
Federal administrative agencies to, among other things: confront the 
urgent challenges facing the Nation; equip executive departments with 
flexibility to use robust regulatory action to address national 
priorities; pursue a comprehensive approach to advancing equity for 
all, including people of color and others who have been historically 
underserved, marginalized, and adversely affected by persistent poverty 
and inequality; and protect and strengthen the ACA and make high-
quality healthcare accessible and affordable for every American. 
Because the Final Rules place obstacles to achieving these objectives, 
their issuance was contrary to the best interests of the public health 
and welfare, and therefore represents a clear error in judgment. 
Moreover, these procedural regulations were issued at the tail end of 
one Administration to govern the procedures to be followed by the next 
Administration, which in itself is a regrettable misjudgment.
c. Reflection of Existing Law
    Some commenters asserted that portions of the Final Rules track 
existing judicial precedent and questioned HHS's rationale under the 
APA for repealing the rules where they reflect existing law. For 
example, one commenter stated that HHS should maintain the definition 
of guidance because it matches existing law. Another commenter objected 
to HHS's grounds for repealing Sec.  1.7 because, in the commenter's 
view, Sec.  1.7 codifies existing law under Christopher v. SmithKline 
Beecham Corp., 567 U.S. 142 (2012). One commenter stated that HHS 
lacked a ``satisfactory explanation'' for the rescinding the Final 
Rules because the rules are based on binding Federal-court precedent.
    This argument is similar to the argument discussed in Section 
IV.F.1. above in the context of the Take Care Clause and separation-of-
powers doctrine, only here the comments are relying on the APA. As 
explained in that comment response, HHS does not agree that the Final 
Rules only capture existing legal precedent. The Final Rules go beyond 
existing law, such as by imposing new procedures on the issuance of 
guidance.
    For example, with respect to Sec.  1.7, HHS continues to believe 
that provision is not required under settled case law. In Christopher 
v. SmithKline Beecham Corp., the Supreme Court declined to give 
controlling deference to an agency interpretation of an ambiguous 
regulation that was advanced in an amicus brief, based in part on 
concerns about unfair surprise. Instead, the Court analyzed the 
interpretation under the ``Skidmore deference'' framework and accorded 
the agency's interpretation ``a measure of deference proportional to 
the `thoroughness evident in its consideration, the validity of its 
reasoning, its consistency with earlier and later pronouncements, and 
all those factors which give it power to persuade.' '' 567 U.S. at 159 
(quoting

[[Page 44019]]

United States v. Mead Corp., 533 U.S. 218, 228 (2001)). Under this 
framework, the Court determined that the agency's interpretation was 
unpersuasive. The Court did not invalidate the interpretation on 
procedural grounds or state, as a matter of law, that agencies cannot 
announce and apply new legal standards in enforcement proceedings. Yet 
that is what Sec.  1.7 provides: it bars HHS from applying standards or 
practices in civil enforcement proceedings that have not been 
``publicly stated.'' That position is inconsistent with SEC v. Chenery 
Corp., in which the Supreme Court held that agencies can use 
adjudicatory proceedings to announce and apply new standards of 
conduct. 332 U.S. 194, 203 (1947). Although the commenter suggests that 
Christopher overruled Chenery, the Christopher decision does not take 
on the same question or even mention Chenery.\9\
---------------------------------------------------------------------------

    \9\ The commenter cites ExxonMobil Pipeline Co. v. U.S. 
Department of Transportation, 867 F.3d 564 (5th Cir. 2017), for the 
proposition that Christopher establishes that regulatory agencies 
cannot announce and apply new legal standards in enforcement 
proceedings. However, like Christopher, ExxonMobil Pipeline 
addressed unfair surprise in the context of applying deference to an 
agency's interpretation. See 867 F.3d at 573. Moreover, also like 
Christopher, ExxonMobil Pipeline does not mention Chenery and does 
not suggest that that Christopher overruled that case.
---------------------------------------------------------------------------

    Insofar as there are portions of the regulations that only codify 
existing legal principles, this rulemaking is not intended to reflect 
objection to or disagreement with these principles. HHS is fully 
committed to complying with applicable law. Nevertheless, HHS is opting 
not to retain regulations seeking to codify existing precedent for 
several reasons. First, many of the legal principles at issue here are 
nuanced. HHS recognizes that there is risk in attempting to reduce 
these principles to regulatory language and believes that it will be 
difficult for the Department to ensure that its regulations fully 
capture the context and meaning of relevant court decisions, even with 
great thought and care. Second, amending rules codified in the CFR is 
generally time-consuming and resource-intensive. Thus, as legal 
precedent evolves, the regulations could become outdated and could 
create administrative challenges, confusion, and potential conflicts 
for the Department. Third, as noted in the Repeal NPRM, we see little 
benefit in these provisions because the APA already governs agency 
conduct without the need for agency regulations. 86 FR 58049. In light 
of these considerations, we have decided that the practical and 
procedural risks outweigh any benefits of attempting to codify existing 
legal principles, and so we have determined not to retain such 
regulations.
d. Reliance on Executive Orders
    One commenter stated that the current Administration's Executive 
orders, including E.O. 13992, do not provide adequate justification for 
rescinding regulations, citing California v. Bernhardt, 472 F. Supp. 3d 
573, 605 (N.D. Cal. 2020). In that case, the court explained that 
Executive orders cannot eliminate statutory mandates. Id.
    We do not find the comment persuasive for several reasons. First, 
E.O. 13992 does not eliminate any statutory mandates; rather, it 
revokes Executive orders issued by the previous Administration and 
provides policy direction in the application of the Department's 
discretion, as noted in Section IV.F.1 above. Second, given that HHS 
has discretion in this area, it is entirely appropriate for the 
Department to cite to the policy direction set forth in the current 
Administration's Executive orders as part of its rationale for 
repealing the Final Rules. Indeed, we note that the Final Rules 
themselves were based on policy direction in Executive orders issued by 
the previous Administration. Third, as explained in this preamble and 
in the Repeal NPRM, HHS has reasons beyond the inconsistency with the 
Executive orders for repealing the Final Rules. Other reasons include 
that the Department no longer believes that the Final Rules will best 
equip it to serve its mission, no longer agrees with codifying these 
types of Department-wide procedures in regulation, and no longer 
supports a one-size-fits-all approach to guidance and civil enforcement 
procedures for HHS. These reasons are sufficient under relevant case 
law. This is particularly true where the Final Rules govern only agency 
processes and were based almost entirely on policy justifications, 
including (now-revoked) Executive orders.
e. Specific Examples
    One commenter objected to HHS's harm-based rationale for repealing 
the Final Rules because the Repeal NPRM lacked sufficient specific 
examples. The commenter asserted that HHS had only ``speculate[d]'' 
that harms could ensue and offered ``purely hypothetical concerns.'' 
The commenter indicated that a ``satisfactory explanation'' under State 
Farm requires HHS to produce specific examples of harm caused by the 
Final Rules over the past nine months, such as examples of how the 
guidance processes have caused delay or details about the resources 
expended on guidance petitions.
    HHS's concerns about the harms of these rules are not speculative 
or hypothetical. In the relatively short time that the Final Rules have 
been in effect, they have required HHS agencies to prioritize and 
divert resources to, for example: clearing a Medicaid guidance under 
the more cumbersome new processes, which took weeks longer than 
anticipated and delayed the timely communication of needed information 
to program beneficiaries; responding to petitions submitted under 45 
CFR 1.5 that were ultimately found not to even satisfy the requirements 
for a guidance petition but nevertheless demanded significant time and 
effort; quickly uploading guidance documents into the guidance 
repository to avoid automatic rescission; preparing the analysis of the 
economic impact of certain significant guidance documents, which is 
especially challenging given the non-binding nature of guidance; 
responding to questions from stakeholders who are confused by the new 
guidance disclaimer language; and modifying certain civil 
administrative procedures even though they generally would have 
included notice and opportunities for engagement, because those 
procedures did not include the scripted process in the Civil 
Enforcement rule. These and other experiences have informed HHS's 
decision-making for this repeal.
    The Department also notes that the procedures for significant 
guidance are modeled on procedures for issuing legislative rules, and 
HHS and the public are aware of the difference in time required to 
issue a guidance (at least prior to the Guidance rule) as compared with 
a legislative rule. Considering this well-established differential, we 
are puzzled that anyone would dispute that these significant guidance 
procedures will cause delay in the issuance of significant guidance.
    Beyond these harms, the Repeal NPRM cited various other examples of 
harm, including CMS's difficulties with the guidance repository, the 
inconsistency between the HHS and FDA guidance requirements, and the 
confusion created by a new overlay of civil administrative enforcement 
procedures on existing procedures. 86 FR 58048, 58050, 58051. HHS also 
previously discussed how the Guidance rule causes confusion when it 
described commenters' concerns about the definition of guidance, the 
definition of significant guidance, and the disclaimer requirement. 85 
FR 78772, 78774, 78778. Comments in this rulemaking have reiterated 
that confusion and the uncertainties created by the rules, among other 
problems.

[[Page 44020]]

    HHS's decision to repeal these rules is also based on a risk of 
significant future harm. That risk exists because the rules are 
susceptible to broad interpretation and multiple meanings. The Repeal 
NPRM gave some examples of these concerns, such as the potential for 
the definition of significant guidance to be construed broadly, the 
opaque language in the civil enforcement rule that could result in 
opportunistic litigation, and the possibility of overwhelming guidance 
petition obligations. 86 FR 58046, 58049, 58051. Indeed, although HHS 
stated in the preamble to the final Guidance rule that it believed 
there would be relatively few significant guidance documents, 85 FR 
78775, we no longer think that accurately represents past practice. The 
risks of these harms--some of which may not yet have materialized--
supply additional ``good reasons'' to eliminate these self-imposed 
procedural requirements.
    Finally, we note that HHS does not need to demonstrate any specific 
harms, or even risk of harm, in order to justify the repeal of these 
rules. These rules govern agency procedures, and agencies are generally 
free to fashion their own rules of procedure in a manner that will 
maximize the execution of their duties. At most, HHS must show that the 
decision is permissible under the statute and that there are good 
reasons for it. FCC v. Fox TV Stations, Inc., 556 U.S. at 515-16. HHS 
has cited a range of good reasons for this final repeal rule, as noted 
throughout this preamble. Given that the record for promulgation of 
these rules contained mainly policy justifications, without citing 
concrete issues that needed to be solved, HHS does not now believe that 
it is required to meet a higher burden, cataloging specific facts and 
examples, in order to justify reversal.
f. Specificity and Consistency
    One commenter opined that the Repeal NPRM should have identified 
which existing procedural regulations comply with principles of due 
notice, fairness, and transparency in order to support HHS's position 
that the Civil Enforcement rule is not required. The commenter also 
asserted that HHS's position in the Repeal NPRM was contradictory 
because the Department both stated that its preexisting regulations 
provide sufficient fairness and transparency and stated that the Civil 
Enforcement rule may conflict with the preexisting regulations; the 
comment stated that the Civil Enforcement rule ``cannot simultaneously 
be coextensive with and in conflict with preexisting enforcement 
regulations.''
    HHS believes that all of its preexisting procedural regulations 
comply with principles of due process, fairness, and transparency, and 
it is not aware of any information to the contrary. When the Civil 
Enforcement rule was issued, HHS did not identify any specific 
deficient processes. In fact, HHS indicated the opposite; for example, 
it conveyed that existing HHS procedures generally already satisfy the 
standards in Sec.  1.9. 86 FR 3012. Furthermore, the comments on the 
Repeal NPRM, including this comment, did not identify specific 
procedural defects that would be solved through the Civil Enforcement 
rule. Based on this record, HHS is not aware that any of its 
preexisting procedures are problematic, and it does not agree that it 
now has a burden to cite and explain how each of its procedures comport 
with fairness and due process.
    The commenter also misunderstands HHS's position in the Repeal 
NPRM. HHS does not consider the Civil Enforcement rule and its 
preexisting regulations ``coextensive,'' but does consider its 
preexisting regulations to comply with principles of due notice, 
fairness, and transparency. The preexisting regulations can comply with 
these principles without, for example, meeting the specific process 
laid out in in 45 CFR 1.9 of (1) written notice of the initial legal 
and factual determinations, (2) an opportunity to respond in writing, 
and (3) a written response from the Department upon request, each of 
which, under the regulation, must occur ``prior'' to the Department 
taking a civil enforcement action.\10\ The Civil Enforcement rule 
itself contemplated that Sec.  1.9 was not mandated by principles of 
due process; it stated that the process ``may exceed the requirements 
imposed by the Due Process clause of the Constitution and may impose a 
burden by delaying the time until HHS can take actions with legal 
consequence.'' \11\ 86 FR 3013. HHS's processes can vindicate the goals 
of due notice and fairness through methods other than the prescriptive 
steps and documentation required under Sec.  1.9, such as engagement 
through regulatory meetings.
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    \10\ The preamble to the Civil Enforcement rule states that the 
final ``written response may be issued contemporaneous to the 
Department taking the action with legal consequence.'' 86 FR 3012. 
However, HHS is concerned that a court may not find that statement 
accurate or persuasive in light of the regulatory language itself, 
which provides that the Department ``shall provide'' the response 
``prior'' to the civil enforcement action. See, e.g., Wyo. Outdoor 
Council v. U.S. Forest Serv., 165 F.3d 43, 53 (D.C. Cir. 1999) 
(``[L]anguage in the preamble of a regulation is not controlling 
over the language of the regulation itself.'').
    \11\ The Civil Enforcement rule referred to Sec.  1.6, rather 
than Sec.  1.9, in this sentence. We now believe this was an error, 
and was intended to refer to Sec.  1.9, because the rule describes 
the relevant provision as providing a ``process'' with ``an 
opportunity to respond in writing before the Department takes an 
action that has (potentially costly) legal consequence.'' 86 FR 
3013. Section 1.6 relates to Department reliance on guidance 
documents and does not establish a process with an opportunity to 
respond in writing.
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g. Benefit-Cost Analysis
    One commenter stated that HHS failed to fully consider the benefits 
of the Final Rules and argued that, under the APA, HHS must weigh the 
costs of the repeal against its benefits. Another commenter stated that 
the costs of the Guidance rule outweigh its benefits but recommended 
that HHS summarize those costs and benefits in a designated Regulatory 
Impact Analysis (RIA) section.
    HHS disagrees that the APA requires a benefit-cost analysis such as 
an RIA for rulemaking in general and more particularly for the 
procedural rules that are the subject of this rulemaking. We also note 
that nothing in 5 U.S.C. 301, which provided the statutory authority 
for the Final Rules as well as this repeal, requires a benefit-cost 
analysis. Nevertheless, HHS has considered the advantages and 
disadvantages of these rules and has determined that they should be 
repealed. In making this decision, the Department considered the 
benefits of the rules cited by commenters, which are addressed 
throughout this preamble. For example, HHS has considered that the 
Guidance rule requires more process for significant (and other) 
guidance, which may have the benefit of refining guidance to a greater 
extent, but also has the disadvantage of delaying, and possibly 
preventing, the communication of valuable information. With respect to 
the uniform and mandated disclaimer for guidance, HHS recognizes that 
there is benefit in acknowledging a document's non-binding nature but 
has concluded that there is greater harm in requiring one consistent 
disclaimer across the Department. HHS is also aware that some regulated 
entities would prefer for all standards and practices to be publicly 
stated before they are applied in civil enforcement proceedings, but 
has determined there is greater benefit to the public if the Department 
is not constrained in taking appropriate actions and positions as 
circumstances arise. More broadly, overall, HHS believes there is a net 
negative in establishing these Department-wide procedures by 
regulation, regardless of the merits of

[[Page 44021]]

the underlying policies. However, the Department intends to retain some 
of the policies without the regulations, such as the guidance 
repository, so the associated benefits will continue. In these and 
other ways, HHS has balanced the pros and cons, and its determination 
is both reasonable and well supported.
    HHS agrees with the commenter who stated that the harms of the 
Guidance rule outweigh its benefits. The comment noted that the 
Guidance rule creates costs in terms forgone health benefits, costs to 
regulated entities, and increased monitoring burdens on the public. 
Accordingly, HHS has included an assessment of the impacts of this 
final repeal rule in the ``Required Regulatory Analyses'' section, see 
Section V.A. below.
h. Consideration of Alternatives
    One commenter proposed various modifications to the rules as an 
alternative to repeal and questioned whether HHS had adequately 
justified a repeal of the Final Rules in their entirety in light of 
these proposed alternatives. The commenter's proposed modifications 
include: (1) revising Sec.  1.1 to exempt FDA from the scope of the 
guidance regulation; (2) revising Sec.  1.2(a) to clarify that the 
definitions in that section do not apply to FDA to the extent they 
conflict with FDA's GGP regulations and that ``[d]ifferent definitions 
may be provided in Federal statutes or regulations that apply more 
specifically to particular programs or activities;'' (3) revising Sec.  
1.3(a)(3)(i) to require HHS and each of its components to ``prepare a 
template statement (or multiple template statements,[] . . .) that 
disclaims any binding effect,'' and until they do so, require agency 
components to include the disclaimer provided in the original Sec.  
1.3(a)(3)(i); (4) revising Sec.  1.4(a)(2) to provide that guidance 
documents not included in the guidance repository will not be 
considered automatically rescinded upon the Secretary making certain 
findings, including that the failure to include was inadvertent, or 
alternatively, eliminating the automatic rescission language 
altogether; (5) revising Sec.  1.5(d) to permit the Secretary to extend 
the deadline for the Department's response to petitions for review of 
guidance if they ``present a complex question that cannot reasonably be 
responded to within 90 business days,'' or adding a third basis for 
suspension of the deadline; and (6) revising Sec.  1.7(a) to remove the 
requirement that, in civil enforcement actions, the Department may only 
apply standards or practices ``that have been publicly stated.''
    HHS disagrees with the commenter that the commenter's proposed 
modifications to the Final Rules are better alternatives to address the 
concerns with the rules and that these alternatives would obviate the 
need to repeal the rules in their entirety. As a threshold matter, it 
is not clear that the Department must consider modifications to these 
procedural rules prior to rescinding them. Under State Farm and 
Regents, ``[w]hen an agency rescinds a prior policy its reasoned 
analysis must consider the `alternative[s]' that are `within the ambit 
of the existing [policy].'' DHS v. Regents of the Univ. of Cal., 140 S. 
Ct. 1891, 1913 (2020) (quoting State Farm, 463 U.S. at 51). Under this 
standard, an agency must give ``adequate reasons for its abandonment'' 
of any such alternatives. State Farm, 463 U.S. at 51. However, as 
explained in Section IV.F.2.a. above, it is not clear that the 
standards set forth in this precedent apply equally to rules governing 
agency procedures such as the Final Rules. See Vt. Yankee, 435 U.S. at 
544 (recognizing agency autonomy to develop its own procedural rules as 
a ``very basic tenet of administrative law''). Moreover, the Department 
notes that to the extent State Farm and Regents apply to its decision 
to repeal these procedural rules in their entirety, those precedents 
make clear that an agency is ``not required to . . . `consider all 
policy alternatives in reaching [its] decision' '' and is ``not 
compelled to explore `every alternative device and thought conceivable 
by the mind of man.' '' Regents, 140 S. Ct. at 1914 (first quoting 
State Farm, 463 U.S. at 51; then quoting Vt. Yankee Nuclear Power Corp. 
v. Natural Res. Def. Council, Inc., 425 U.S. 519, 551 (1978)); see 
State Farm, 463 U.S. at 51 (``Nor do we broadly require an agency to 
consider all policy alternatives in reaching decision. It is true that 
a rulemaking cannot be found wanting simply because the agency failed 
to include every alternative device and thought conceivable by the mind 
of man regardless of how uncommon or unknown that alternative may have 
been.'') (internal punctuation omitted).
    Nevertheless, to the extent that HHS is required to consider 
modifications to the existing rules prior to rescinding them, HHS has 
satisfied that requirement. HHS has considered modifications to the 
Final Rules, including the commenter's proposed modifications, and has 
determined that any such modifications are not better than repeal for 
several reasons.
    As explained in previous comment responses and elsewhere throughout 
this preamble, HHS has determined that codifying the practices and 
procedures set forth in the Final Rules, even if modified as the 
commenter suggests, is not necessary or appropriate for several 
reasons. As noted previously in the Repeal NPRM, neither of the Final 
Rules required notice-and-comment rulemaking before promulgation. See 
86 FR 58045-46. Moreover, the Department does not find it appropriate 
to codify these practices and procedures regarding guidance and civil 
enforcement because doing so would inhibit the ability of HHS agencies 
to update and revise these practices and procedures as needed over time 
in response to a variety of factors, including changed circumstances, 
new priorities, public health emergencies, stakeholder input, new 
technology, changes in applicable legal precedent, and agency 
experience. Such revisions would be generally time-consuming and 
resource-intensive if these practices and procedures remained codified 
in a regulation. HHS does not believe that its finite resources are 
best used to undertake such efforts, especially given the limited 
utility of the Final Rules. The Department's desire to retain 
flexibility to modify practices and procedures regarding guidance and 
civil enforcement is consistent with Congress's objective that the APA 
should allow ``agencies . . . latitude in organizing their internal 
operations,'' Mendoza v. Perez, 754 F.3d 1002, 1023 (D.C. Cir. 2014) 
(internal quotation marks omitted) (recognizing this principle as a 
ground for Congress's exemption of agency procedural rules from the 
requirement to conduct notice-and-comment rulemaking); Am. Hosp. Ass'n 
v. Bowen, 834 F.2d 1037, 1045 (D.C. Cir. 1987) (``The reading of the 
[section] 553 exemptions that seems most consonant with Congress' 
purposes in adopting the APA is to construe them as an attempt to 
preserve agency flexibility in dealing with limited situations where 
substantive rights are not at stake.''); see also Vt. Yankee, 435 U.S. 
at 544 (``agencies should be free to fashion their own rules of 
procedure'').
    Additionally, HHS has determined that codifying the Final Rules or 
any modification of them is not appropriate because implementing a one-
size-fits-all approach to the practices and procedures regarding 
guidance and civil enforcement cannot accommodate the needs of the 
diverse range of HHS agencies. As explained in Section IV.A.4.b above, 
each of the HHS agencies serves the Department's overall mission in 
unique ways, often addresses different stakeholders, uses specialized

[[Page 44022]]

regulatory tools and existing processes for guidance and civil 
enforcement, and is subject to unique statutory authorities. To develop 
practices and procedures applicable to and appropriate for all HHS 
agencies, the Department would need to consider and accommodate these 
different stakeholders, tools, existing processes, and statutory 
authorities. The Department now believes that the Final Rules did not 
adequately address this issue. Even assuming it would be possible or 
practical for the Department to do so in the context of a single 
rulemaking, the Department does not find it appropriate to commit its 
limited resources to such a time-consuming and resource-intensive task. 
Although the commenter's proposal to exempt FDA from the Guidance rule 
addresses some of these concerns for one agency and one rule (the 
commenter does not propose to exempt FDA from the civil enforcement 
rule), that approach does not address the unique considerations 
presented by each of the other HHS agencies.
    HHS has determined that the commenter's proposed modifications to 
the Final Rules are not preferable to repeal for other reasons, as 
well, including that they do not address the Department's following 
additional concerns regarding such provisions.
    First, the commenter's proposal to revise Sec.  1.2(a)--to exempt 
FDA from its definition of ``guidance document'' and acknowledge that 
``[d]ifferent definitions may be found in Federal statutes'' but retain 
the rule's original ``guidance document'' definition--does not 
adequately address the Department's concerns that the ``guidance 
document'' definition is vague and overly broad, could lead to 
confusion over the type of documents subject to the rule's 
requirements, and could be read to encompass a range of documents not 
intended to serve as guidance. The commenter asserts that the 
definition is not vague or confusing because it is consistent with the 
APA's definition of a rule as well as ``definitions that have long been 
used by courts and agencies to define the categories of agency 
documents that are properly considered guidance.'' Moreover, the 
commenter suggests that any difficulty in interpreting Sec.  1.2(a)'s 
definition of guidance is not attributable to that section's language 
but ``inheres in the nature of [defining] agency guidance,'' which 
courts have described as `` `fuzzy' and `enshrouded in considerable 
smog,' '' and that ``to the extent the Department believes further 
clarification is needed to explain how the definition of guidance 
applies to specific documents, it should provide clarity through 
further preamble guidance explicating how HHS understands this term.''
    However, as discussed in the Section IV.F.2.c. above, the nuanced 
nature of determining whether an agency document constitutes guidance 
counsels against attempting to reduce the relevant legal principles to 
regulatory language and makes it difficult for the Department to ensure 
that any regulatory definition fully captures the context and meaning 
of relevant court decisions. Furthermore, the Department does not agree 
with the commenter's assertion that Sec.  1.2(a)'s definition 
ameliorates difficulty in identifying agency guidance documents by 
``adding clarifications that discuss specifically how HHS documents are 
likely to fit or not fit within the definition.'' The Department sees 
limited value in the examples provided in the definition, which 
primarily include legislative rules and documents that clearly fall 
outside the definition of guidance, see, e.g., 45 CFR 1.2(a) (providing 
that ``guidance documents'' do not include ``rules promulgated pursuant 
to notice and comment under 5 U.S.C. 553,'' ``decisions of agency 
adjudication under 5 U.S.C. 554,'' ``legal briefs and other court 
filings,'' ``grant solicitations and awards,'' and ``contract 
solicitations and awards''), or essentially reiterate the legal 
principles already incorporated into the general definition, see id. 
(providing ``guidance document'' does not include ``internal guidance 
directed to the Department or other agencies'' but would include such 
documents if they were ``intended to have substantial future effect on 
the behavior of regulated parties''); see also id. (excluding from the 
definition of ``guidance document'' various ``[p]re-enforcement 
rulings'' but acknowledging that ``[i]f, however, . . . the content of 
the document is designed to guide the conduct of other regulated 
parties, such a document would qualify as guidance'').
    Second, the commenter's proposed revisions to Sec.  1.3(a)(3)(i)--
to require HHS and each of its agencies to individually ``prepare a 
template statement (or multiple template statements,[] . . .) that 
disclaims any binding effect,'' but until they do so, require them to 
use the disclaimer provided in the original Sec.  1.3(a)(3)(i)--are not 
a better alternative to rescission of this section in its entirely. 
Although requiring each HHS agency to develop its own templates for 
guidance documents represents an improvement on the rule's original 
requirement that a uniform statement be used for all Department 
documents, it is not clear that this approach would provide each agency 
with enough flexibility to specify the information most appropriate to 
each HHS agency's stakeholders and the expected uses of each particular 
document or type of document. As discussed in Section IV.D.4. above, 
the Department believes that a flexible approach is preferable so that 
each HHS agency can develop an approach to help ensure that the 
statement is as clear and useful as possible, informed by the unique 
considerations applicable to that agency and using the regulatory tools 
it deems best suited to the task. Although FDA's GGP regulation 
contains a requirement cited by the commenter as a model, neither the 
FD&C Act nor FDA's GGP regulation codify the wording of the disclaimer 
statement; rather they broadly require that FDA guidance documents 
indicate the non-binding nature of the document. See 21 U.S.C. 
371(h)(2) and 21 CFR 10.115(i)(1)(iv). The Department does not find it 
necessary or appropriate to promulgate a regulatory requirement that 
all agency components undertake such an effort, given the numerous 
demands on the Department's finite resources, the unique considerations 
presented by the various guidance documents issued by each of the 
Department's components, and existing law establishing the non-binding 
effect of guidance documents regardless of inclusion of a disclaimer of 
legal effect.
    Additionally, the Department rejects the commenter's proposal to 
require HHS agencies, pending their adoption of a template, to include 
in all guidance documents Sec.  1.3(a)(3)(i)'s original disclaimer 
statement, given the Department's determination that the original 
disclaimer statement is not appropriate for inclusion across the 
diverse range of guidance documents issued by agency components. The 
commenter asserts that the rule's original disclaimer statement is an 
appropriate fit for all Department guidance documents because it 
``accurately and clearly restates core principles of administrative 
rulemaking applicable to all agencies,'' namely, that ``guidance may 
not carry `the force and effect of law.' '' However, as explained in 
Section IV.D.4. above, the Department sees little utility in issuing a 
regulation to require a disclaimer that simply seeks to capture a 
current understanding of principles established by the APA, and any 
attempt to do so incurs the risk of confusion to the extent that the 
language does not fully capture

[[Page 44023]]

the context and meaning of relevant court decisions.
    Third, the commenter's proposed revisions to Sec.  1.4(a)(2)--to 
provide that guidance documents not included in the guidance repository 
will not be considered automatically rescinded if the Secretary makes 
certain findings--also does not present an adequate alternative. This 
proposed process for averting or reversing inadvertent rescissions 
would create additional burdens for the Department because it would 
require the Secretary to make specific, narrow and undefined findings 
about each rescission that: ``[t]he guidance document was omitted from 
the guidance repository inadvertently due to a technological or human 
error;'' ``[r]egulated parties had fair notice of the guidance document 
during the period it did not appear in the guidance repository;'' and 
``[t]he guidance document was added to the guidance repository promptly 
after the Department learned of its inadvertent omission.'' Moreover, 
providing the possibility that the Secretary could proactively prevent 
rescission by making certain findings will not prevent automatic 
rescission from happening inadvertently. And, as discussed in Section 
IV.D.5, automatic rescission due to inadvertent exclusion would create 
additional burdens on stakeholders by causing unnecessary confusion 
about which guidance documents have been rescinded, superseded, or 
otherwise become obsolete. Furthermore, this proposed alternative for 
reinstating automatically rescinded guidance would likely exacerbate 
stakeholder confusion because the effectiveness of guidance could flip 
back and forth depending on technical glitches with the website and 
whether the Secretary has been able to address them.
    The commenter proposed, as an alternative revision to Sec.  1.4, to 
retain Sec.  1.4's requirement to establish and maintain a guidance 
document repository but provide that failure to include a guidance 
document in the repository would not be grounds for treating the 
guidance document as rescinded. We agree with the proposal to maintain 
a centralized repository and eliminate the automatic rescission 
provision. However, we conclude that it is unnecessary and unhelpful to 
retain the codified regulation. Removing the automatic rescission 
language in Sec.  1.4 would leave only the requirement that the 
Department maintain the guidance repository along with certain 
specifications for the repository. As discussed in Section IV.D.5, the 
Department intends to retain the guidance repository and to improve the 
utility of the repository based on stakeholders' input and other 
developments, such as new technology. We see no benefit in directing 
the Department's efforts with a codified regulation.
    Fourth, the commenter's proposed revisions to Sec.  1.5(d) are also 
not a preferable alternative to rescission. Although permitting the 
Secretary to extend the deadline for the Department's responses to 
petitions that present a ``complex question that cannot reasonably be 
responded to within 90 business days,'' or adding additional bases for 
tolling the deadline, may in some ways alleviate the Department's 
concerns regarding its ability to respond to such petitions in such a 
short timeframe, these proposed mitigation measures do not sufficiently 
address the unnecessary diversion of resources to this new petition 
pathway. The commenter does not address the Department's concerns 
regarding the other ways in which Sec.  1.5 is likely to strain 
unnecessarily the Department's resources, as discussed in Section 
IV.D.6., by, for example, permitting stakeholders to file, and 
requiring the Department to timely respond to, an indefinite number of 
petitions, each of which could challenge any number of guidance 
documents at a time or challenge the same guidance document multiple 
times. Furthermore, requiring the Secretary to make determinations 
regarding whether individual petitions present a ``complex question'' 
and whether the Department ``cannot reasonably . . . respond[ ] . . . 
within 90 business days,'' or whether a basis for tolling exists, would 
create an additional burden on the Department's finite resources.
    Moreover, the commenter does not explain why such burdens would be 
justified, given the existence of other formal and informal processes 
by which stakeholders can communicate their views on guidance to the 
Department. Although the commenter asserts that these processes are not 
an ``equally effective and comprehensive alternative'' to Sec.  1.5's 
petition process and that FDA's citizen petition process is ``largely 
inadequate,'' it does not provide persuasive support for such 
assertions. Nor does the commenter support the underlying premise that 
petitions regarding guidance documents should be provided a special 
pathway and be prioritized above other petitions as well the 
Department's other work. In any event, HHS need not show that the 
existing processes that it chooses to rely upon in the alternative are 
``equally effective'' or ``comprehensive;'' rather, at most, HHS need 
only show that there are good reasons for abandoning Sec.  1.5's 
petition process and that it believes doing so is the better approach, 
which it has done here. See FCC v. Fox TV Stations, Inc., 556 U.S. at 
515-16 (to justify a repeal, an agency needs to adequately explain why 
the new policy is permissible under the statute and that there are good 
reasons for its new position).
    Finally, the commenter's proposed modification to Sec.  1.7(a)--to 
remove the requirement that in civil enforcement actions the Department 
may only apply standards or practices ``that have been publicly 
stated''--is also inadequate compared to rescission because it 
addresses only one aspect of the Civil Enforcement rule. Although the 
commenter's proposal would remove a restriction on the Department's 
authority that goes beyond settled case law, see Section IV.F.2.c; 86 
FR 58050, that limited change would not address the Department's 
concerns regarding other provisions of the Civil Enforcement rule. See 
Section IV.E (concerns with the Civil Enforcement rule include that the 
newly required procedures do not adequately account for pre-existing, 
agency-specific procedures regarding civil enforcement actions, may 
conflict with or diverge from such existing procedures, may create 
confusion for both HHS agencies and regulated parties, and could create 
unnecessary burdens that delay or prevent civil enforcement). Although 
the commenter asserts that the burdens the Civil Enforcement rule 
imposes on the Department, identified in the Repeal NPRM, are either 
speculative or justified by the rule's benefits, the Department 
disagrees. See Section IV.E. Moreover, the proposed revision to Sec.  
1.7(a) does not address the Department's position that the Civil 
Enforcement rule, including the portion of Sec.  1.7(a) that would 
remain under the commenter's proposal (i.e., a prohibition on standards 
or practices that ``cause unfair surprise''), is superfluous because 
the procedural regulations already established within HHS comply with 
principles of due notice, fairness, and transparency. Contrary to the 
commenter's suggestion that rescission of the rule will ``allow[ ] [the 
Department] to proceed with enforcement actions that cause unfair 
surprise'' and impose ``burdens . . . on regulated entities who are on 
the receiving end of such enforcement actions,'' the Department's 
current procedures already ensure that that the procedural rights of 
stakeholders are adequately protected.
    In sum, to the extent that the Department must consider potential

[[Page 44024]]

modifications to the Guidance and Civil Enforcement rules as 
alternatives to their rescission, the Department has satisfied any 
obligation to do so by addressing the modifications proposed in the 
comments and providing adequate reasons for their rejection. See State 
Farm, 463 U.S. at 51.
i. Reliance Interests
    One commenter asserted that HHS's consideration of reliance 
interests in the Repeal NPRM rule was inadequate. The commenter stated 
that HHS assumed there were no reliance interests due to the revocation 
of Executive Orders 13891 and 13892 and that ``a change in 
administration cannot extinguish reliance interests.'' Another 
commenter asserted that ``reliance interests are serious and ongoing.'' 
The commenter questioned HHS's belief that no serious reliance 
interests have accrued because, in the commenter's view, that belief 
was contradicted by HHS's assertion that the guidance processes were 
overly burdensome and resource intensive for the Department.
    HHS disagrees that its analysis of reliance interests in the 
proposed rule was inadequate, and we have reiterated and built on that 
analysis in this final repeal rule. Consistent with DHS v. Regents of 
the Univ. of Cal., HHS has considered whether there are significant 
reliance interests and has weighed those reliance interests against 
competing policy concerns. 140 S Ct. 1891 (2020). For example, in the 
preamble to the proposed rule, HHS gave reasons why it did not believe 
significant reliance interests have accrued but also communicated the 
view that, to the extent that any serious reliance interests are at 
stake, they are outweighed by the public interest in efficient issuance 
of guidance and adequate civil administrative enforcement actions. 
Thus, HHS stated that it was unlikely that reliance interests had 
accrued, but also acknowledged the possibility of reliance interests 
and weighed them against relevant policy considerations.
    HHS has not changed its analysis of reliance interests. Although 
one comment stated that reliance interests are ``serious and ongoing,'' 
the commenter based that view on the Department's statement that the 
Final Rules are burdensome and resource intensive. While it is true 
that the Final Rules are resource-intensive in part because the public 
has used the processes (for example, the guidance petition process), 
that fact does not mean that the public has developed reliance 
interests. Reliance interests generally accrue through decisions made 
in reliance on the prior policy, such as decisions to have ``enrolled 
in degree programs, embarked on careers, started businesses, purchased 
homes, and even married and had children,'' Dep't of Homeland Sec. v. 
Regents of the Univ. of Cal., 140 S. Ct. at 1914, or business 
``investment[s] incurred,'' Solenex LLC v. Bernhardt, 962 F.3d 520, 529 
(D.C. Cir. 2020) (internal quotations omitted).
    HHS does not believe that the public has made these types of 
decisions based on the Final Rules. As noted in the proposed rule and 
throughout this preamble, these rules govern agency procedures, so they 
do not on their own change the substantive requirements governing 
regulated entities or related property interests. Thus, it is difficult 
to see how the procedures or principles set forth in these rules would 
translate to a stakeholder making concrete changes in public or 
business decisions or practices that would implicate serious reliance 
interests.
    In considering reliance, HHS also has not taken the position that a 
change in Administration extinguishes reliance interests. Under the 
facts here, the timing of the change in Administration is relevant 
because the Final Rules were issued at the tail end of the last 
Administration, and the Biden-Harris Administration immediately revoked 
the Executive orders that formed a key basis for the rules (EOs 13891 
and 13892). Accordingly, the Final Rules were effective for only a few 
days or weeks before the public was put on notice that there was a 
change in the underlying policy. At that point, even if we were to 
assume for argument's sake that reliance interests accrued, the public 
was less likely to invest significant resources in reliance on the 
rules. Given that the public had little time to develop reliance 
interests before the change in Administration and had little reason to 
develop those interests after the change, in combination with the 
points made above, HHS does not believe that serious reliance interests 
have accrued.
    To test its view, HHS invited the public to provide information 
about reliance interests adversely affected by the repeal. Other than 
the commenters discussed above, we did not receive any responses on 
this topic. No commenters provided specific examples of affected 
reliance interests. Instead, HHS received multiple comments discussing 
reliance on government programs involving guidance and stating that the 
Guidance rule itself undermines those interests. These facts 
corroborate and reinforce our analysis of reliance interests. In sum, 
HHS has considered whether significant reliance interests exist and has 
weighed those against its policy goals, and therefore has met its 
burden under the APA.

V. Required Regulatory Analyses

A. Executive Orders 12866 and 13563

    We have examined the impacts of the final repeal rule under 
Executive Order 12866, Executive Order 13563, the Regulatory 
Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform 
Act of 1995 (Pub. L. 104-4). Executive Orders 12866 and 13563 direct us 
to assess all costs and benefits of available regulatory alternatives 
and, when regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety, and other advantages; distributive impacts; 
and equity). We believe that this final repeal rule is a significant 
regulatory action as defined by Executive Order 12866. This is 
consistent with the Repeal NPRM, which OMB found to be a significant 
regulatory action.
    In both the Guidance proposed and final rules, OMB determined that 
the rulemaking was not an economically significant regulatory action 
under these EOs. 85 FR 51399; 85 FR 78784. OMB made a similar finding 
with respect to the Civil Enforcement rule. 86 FR 3013. The preambles 
to these rules maintained that the rules primarily described procedural 
changes that would require Department expenditures to implement. 
Although the preambles theorized that stakeholders might eventually 
benefit from greater transparencies and efficiencies from these 
procedural changes, the Final Rules did not identify any benefits that 
were likely to be immediately realized. See 85 FR 78784; 86 FR 3013.
    In the current rulemaking, the Department is repealing the Final 
Rules, which were effective on January 6, 2021, and January 12, 2021. 
When effective, this repeal rule will restore the status quo that 
existed just prior to the January 2021 effective dates for the Final 
Rules. The Department may then take further action as needed to undo 
any minimal actions taken since those effective dates to implement the 
rules' procedural directives.
    Compared to the baseline scenario under the rules on guidance, 
enforcement, and adjudication procedures, we identify several impacts 
of the final repeal rule. We anticipate that the final repeal rule will 
result in: reduced costs to the Department to administer the 
Department's programs; reduced costs associated with litigating 
internal procedures; and reduced costs

[[Page 44025]]

associated with responding to citizen petitions purported to be 
submitted under the Guidance rule. The sum of these cost savings 
attributable to the final repeal rule are very unlikely to exceed the 
$100 million threshold in any year. As an additional impact, we 
anticipate that the final repeal rule will result in benefits from 
reduced regulatory confusion, such as confusion from two sets of 
regulations governing FDA guidance practices, citizen petitions related 
to FDA guidance, and CMP proceedings.
    The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires 
us to prepare a written statement, which includes an assessment of 
anticipated costs and benefits, before issuing ``any rule that includes 
any Federal mandate that may result in the expenditure by State, local, 
and tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more (adjusted annually for inflation) in any one 
year.'' The current threshold after adjustment for inflation is $165 
million, using the most current (2021) Implicit Price Deflator for the 
Gross Domestic Product. This final repeal rule would not result in an 
unfunded mandate in any year that meets or exceeds this amount.
    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
OIRA has determined that this final repeal rule is not a ``major rule'' 
as defined by 5 U.S.C. 804(2).

B. Regulatory Flexibility Act

    The Department has examined the economic implications of this final 
repeal rule as required by the Regulatory Flexibility Act (RFA), 5 
U.S.C. 601 et seq. The RFA and the Small Business Regulatory 
Enforcement and Fairness Act of 1996 (Pub. L. 104-121), which amended 
the RFA, require HHS to analyze options for regulatory relief of small 
businesses. If a rule has a significant economic effect on a 
substantial number of small entities, the Secretary must specifically 
consider the economic effect of the rule on small entities and analyze 
regulatory options that could lessen the impact of the rule. The 
Department considers a rule to have a significant economic impact on a 
substantial number of small entities if it has at least a three percent 
impact on revenue of at least five percent of small entities.
    When finalized, this repeal rule will restore the status quo just 
prior to the respective January 6, 2021, and January 12, 2021, 
effective dates of the Guidance rule and the Civil Enforcement rule, 
and undo changes, if any, to procedures followed by the Department 
during the interim period. This rule repeals two rules that the 
Department concluded, and the Secretary certified, would not result in 
a significant impact on a substantial number of small entities. 
Further, the Department believes that any effects associated with 
future regulatory actions, including any positive or negative impacts 
to small entities, should be attributable to those regulatory actions 
rather than to this repeal rule. As a result, the Department has 
determined, and the Secretary certifies, that this final repeal rule 
does not have a significant economic impact on the operations of a 
substantial number of small entities.

C. Executive Order 13132 (Federalism)

    We have analyzed this final repeal rule in accordance with the 
principles set forth in E.O. 13132, ``Federalism.'' The Department has 
determined that this final repeal rule does not contain policies that 
have substantial direct effects on the States, on the relationship 
between the National Government and the States, or on the distribution 
of power and responsibilities among the various levels of government.

D. Executive Order 13175 (Consultation and Coordination With Indian 
Tribal Governments)

    HHS has analyzed this final repeal rule under Executive Order 
13175, dated November 6, 2000, and has determined that this action does 
not have tribal implications as specified therein. This final repeal 
rule would not impose any direct compliance requirements on Indian 
tribal governments and will not have any economic or other impacts on 
the viability of Indian tribes. Therefore, a tribal summary impact 
statement is not required.

E. National Environmental Policy Act

    HHS had determined that this final repeal rule will not have a 
significant impact on the environment. Because the Final Rules that are 
being repealed established only procedures related to issuing guidance 
and initiating civil enforcement, this repeal is not a major Federal 
action significantly affecting the quality of the human environment 
within the meaning of NEPA.

F. Paperwork Reduction Act of 1995

    In accordance with the Paperwork Reduction Act of 1995 and its 
implementing regulations, 44 U.S.C. 3501-3521; 5 CFR part 1320, 
appendix A.1, the Department has reviewed this final repeal rule and 
has determined that it does not create new collections of information.

List of Subjects in 45 CFR Part 1

    Government employees, Guidance, Reporting and recordkeeping 
requirements.

PART 1--[REMOVED AND RESERVED]

0
For the reasons set forth in the preamble, the Department of Health and 
Human Services amends 45 CFR, subtitle A, subchapter A, by removing and 
reserving part 1.

    Dated: July 18, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2022-15567 Filed 7-22-22; 8:45 am]
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