HHS Suggests It Will Provide Less Notice and Opportunity for Comment on Grant and Contract Rules

On February 28, the Department of Health and Human Services (HHS) announced that it was rescinding the Richardson Waiver, a policy in place since 1971 which said HHS would provide notice of proposed rulemaking in certain cases where it was not otherwise required to do so by law. This announcement signals a policy shift for the agency and suggests that where permitted by law, HHS will generally now issue rules relating to “agency management or personnel or to public property, loans, grants, benefits, or contracts” without providing notice and comment to stakeholders, and may otherwise find good cause to forego notice and comment procedures.

Background

Under the Administrative Procedure Act (APA), federal agencies are required to provide notice and opportunity for comment on proposed rules, subject to certain exemptions, including for matters “relating to agency management or personnel, or to public property, loans, grants, benefits, or contracts,” and when the agency finds “good cause” that notice and public procedures are “impracticable, unnecessary, or contrary to public interest.”

In 1971, Elliot Richardson, then the Secretary of Health, Education, and Welfare waived some applicability of these exemptions, issuing a statement of policy stating that the Department and its agencies would follow APA notice and comment procedures on matters relating to public property, loans, grants, benefits, or contracts. Further, the statement of policy said that the good cause exemption in the APA “should be used sparingly.” The policy has remained in place since it was first issued.

Under the announcement of February 28, Secretary of HHS Robert F. Kennedy, Jr. said the Richardson Waiver is rescinded “effective immediately,” and matters relating to public property, loans, grants, benefits, or contracts are exempt from notice and comment procedures. Further, claiming that the direction to use the good cause exemption sparingly was “contrary to the clear text of the APA,” and “impose[s] costs on the Department and the public,” Secretary Kennedy said that the good cause exemption “should be used in appropriate circumstances.” The announcement does not elaborate on what the Department determines would be an “appropriate circumstance.” The statement also notes individual agencies and offices within HHS would have discretion to provide notice and comment procedures, but would not be required to do so except where required by law and the Department would follow the APA when required by the statutory text of the law.

Context and Analysis

Secretary Kennedy’s policy announcement makes clear that the agency will provide notice and opportunity for comment less frequently than stakeholders may have become accustomed to under the policy in place for the past 54 years. This will inevitably allow the agency to issue new rules and policies concerning grants and contracts more quickly, with little to no stakeholder input and transparency.

The policy announcement comes after the Trump Administration previously announced a freeze of all federal grants. Despite court orders to resume grantmaking, public reports indicate that grants at the National Institutes of Health (NIH) were delayed after HHS has prohibited the agency from providing public notice of grant review meetings in the Federal Register, a necessary step for awarding grants.

Although this new announcement indicates that the agency will follow the strictures of the APA, in practical terms, the ramifications of this announcement could be significant. Regarding the delay of NIH grants noted above, for example, a move toward issuance of rulemaking that would further restrict or reduce new NIH grantmaking without an opportunity for notice and a comment period will likely hinder the ability of affected stakeholders to become aware of the measures in a timely manner and may limit opportunity for input in the policymaking process. 

Crowell attorneys are monitoring ongoing policy developments at HHS, including changes to federal grantmaking. They are available to assist clients in developing appropriate legal and government affairs strategies to address concerns and take advantage of opportunities.