By Miranda A. Franco
The U.S. Department of Health and Human Services (HHS) recently issued a policy statement limiting the circumstances under which HHS agencies must publish proposed rules for public comment before the rules are finalized.
Moving forward, HHS agencies are directed to:
Waive Notice and Comment for Rulemaking on “Grants, Benefits, or Contracts” and Other Specified Areas. As a general rule, the Administrative Procedure Act (APA) does not mandate notice-and-comment rulemaking for matters related to “public property, loans, grants, benefits, or contracts” (although some specific statutes may require it). In 1971, under the Richardson Waiver, HHS decided to require notice-and-comment rulemaking in these areas, seeking “greater public participation” despite potential administrative delays. HHS’ new policy rescinds this stance, granting agencies the discretion to apply notice-and-comment procedures but without the requirement, unless mandated by law.
Broaden the “Good Cause” Exemption. Under the APA, agencies can bypass notice and comment if there is “good cause” (e.g., impracticability, unnecessary or contrary to the public interest). Previously, the Richardson Waiver encouraged HHS to use this exemption sparingly – only for emergencies or technical matters. Now, HHS has rescinded that policy and is allowing the “good cause” exemption to be applied more broadly in “appropriate circumstances.”
Potential Impacts
In its policy statement issued on Feb. 28, 2025, HHS argues that the added obligations of the Richardson Waiver impose unnecessary costs on the department and the public, hinder efficient operations and reduce flexibility in responding quickly to legal and policy changes.
Under this new policy, HHS agencies are expected to increase the number of rules that are published in their final form without the agency first publishing a proposed rule and providing the public an opportunity to submit comments. This flexibility applies equally to rulemakings that create new rules or repeal existing ones, as long as the subject matter qualifies for an exception.
This policy appears intended to allow HHS to modify the Medicaid program and other federal health benefit programs without undergoing the traditional notice-and-comment rulemaking process. Under its new policy statement, HHS may interpret the exclusion of “benefits” from notice-and-comment requirements as a justification for exempting Medicaid policymaking from this process. However, because the term “benefits” is not explicitly defined in the APA, the extent of its application remains uncertain. Other programs such as the Affordable Care Act insurance exchanges or Temporary Assistance for Needy Families could also be affected.
In the area of grants, HHS – being the largest grant-making agency in the country – has historically sought public input on its grant regulations. This policy shift may also be aimed at addressing National Institutes of Health (NIH) grants, particularly in light of a recent lawsuit against HHS. Earlier this month, NIH grant recipients sued the agency for significantly reducing funding for research overhead and administrative costs without a public comment period.
The policy statement is unlikely to directly impact the U.S. Food and Drug Administration (FDA), as the agency’s regulatory actions typically do not fall under “agency management, public property, loans, grants, benefits, or contracts.” However, FDA may adopt the revised “good cause” exemption outlined in the policy statement for guidance documents and other agency actions where public participation is expected. Though guidance documents are not subject to the APA’s notice-and-comment requirements, FDA could issue its own policy statement clarifying its approach to public participation and the use of the “good cause” exception.
It is also unlikely to impact Medicare regulation, as a separate rulemaking standard applies to most Medicare regulations (where Congress has expressly required public notice and comment under Section 1871 of the Social Security Act). The reasoning of the U.S. Supreme Court’s 2019 decision in Azar v. Allina Health Services also confirms that these Medicare rulemaking requirements apply independently from any rulemaking obligations imposed under the APA.
Conclusion
If HHS issues a final rule without prior public comment, affected parties can still challenge the rule legally, arguing it doesn’t qualify for an exception and raising issues with the agency’s reasoning or authority.
Though the full impact of this procedural shift remains unclear, it may limit the ability to formally provide input on policy changes. As a result, stakeholders will need to be ready to act swiftly when new rules are released.
Miranda A. Franco is a senior policy advisor in Holland & Knight’s Washington, D.C., office.
