HHS Rescinds Policy Extending Notice and Comment Rulemaking Procedures to Rules for Grants, Public Benefits, and Contracts

Effective March 3, 2025, the US Department of Health and Human Services (HHS) rescinded its long-standing policy that had waived a statutory exemption under the Administrative Procedure Act (APA) from notice and comment rulemaking requirements for rules and regulations relating to public property, loans, grants, public benefits, or contracts. HHS stated that this policy shift will “realign” the department’s rulemaking procedures with the APA. This seemingly minor change could have far-reaching impacts for HHS programs.

WHAT WAS THE POLICY BEING RESCINDED?

The APA provides that prior to promulgating regulations, government agencies must issue a notice of proposed rulemaking in the Federal Register and provide interested persons the opportunity to comment on the proposal. After consideration of the comments received, federal agencies issue a final rule. The APA exempts from the notice and comment requirements those rulemakings relating to “public property, loans, grants, benefits, or contracts.”

The APA also contains what is referred to as the “good cause exception” which allows agencies to excuse regulations from the notice and comment requirements if “the agency for good cause finds” that compliance with such requirements would be “impracticable, unnecessary, or contrary to the public interest.” In applying the good cause exception, agencies are supposed to provide adequate justification.

In 1971, acknowledging the important role of public input in agency actions, HHS established a policy waiving the exemption from notice and comment requirements for rulemakings related to public property, loans, grants, benefits, or contracts (36 FR 2532). This meant that HHS would comply with the notice and comment requirements for regulations relating to those categories, even if not compelled under the APA to do so. The policy statement also indicated that it would use the good cause exception from notice and comment requirements “sparingly.” This policy, referred to as the “Richardson Waiver,” was the policy of HHS from 1971 until now.

IMPACTS OF THE RESCISSION

Rescinding the Richardson Waiver means that HHS will no longer follow the notice and comment requirements for certain types of rulemakings unless required by the APA or otherwise required by law. More simply, HHS can now make changes related to its programs that provide loans, grants, benefits, or contracts with less public awareness and input, and with much greater speed and efficiency. A rulemaking following the typical notice and comment procedures can take multiple years to move from notice of proposed rulemaking to final regulation; that will no longer be the case for the types of actions that were previously impacted by the Richardson Waiver.

HHS oversees around 100 programs across its operating divisions, which include, among others, the National Institutes of Health (NIH), the Food and Drug Administration (FDA), Medicare and Medicaid regulated by the Centers for Medicare & Medicaid Services (CMS), the Centers for Disease Control (CDC), the Health Resources and Services Administration (HRSA), and social services, such as Temporary Assistance for Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP), and Head Start. It is the largest grant-making agency in the United States.

Most HHS grants are provided directly to states, territories, tribes, and educational community organizations, then given to people and organizations who are eligible to receive funding. While the NIH, which is the largest public funder of biomedical research, awards research grants to federal institutions, institutions of higher education, non-profit organizations, hospitals, and, in rare occasions, individuals.

Given the breadth of HHS and its programs, the rescission of the Richardson Waiver may pave the way for faster regulatory reform, but with reduced government transparency. Nonetheless, it is important to keep in mind that HHS remains bound by the APA and all other applicable laws. For actions not implicated by the Richardson Waiver, there has been no change, and the APA continues to govern all HHS rulemakings.

This change does not impact areas where other laws mandate notice and comment requirements, such as under the Medicare Act, where, after the US Supreme Court’s decision in Azar v. Allina Health Services, 139 S. Ct. 1804 (2019), CMS is required to engage in notice and comment rulemaking when Medicare policies or guidance change or establish a substantive legal standard even where the APA does not require such rulemaking procedures.

While the Richardson Waiver counseled “sparing” use of the good cause exception from notice and comment requirements, it remains to be seen whether HHS’s rescission of the Richardson Waiver will result in an increase in actions making use of this APA “good cause” exception from notice and comment rulemaking.

Of counsel Ariel Seeley contributed to this LawFlash.