BIDEN ADMINISTRATION ISSUES DAY ONE “REGULATORY FREEZE” MEMO
As anticipated, the Biden Administration issued a “regulatory freeze” memo this afternoon, instructing all federal agencies to postpone any further policy development, and delay implementation of those regulations that have not yet taken effect.
WHAT IT MEANS
Incoming Administrations typically issue a “regulatory freeze” memo shortly after the new President is sworn in. In general, these memoranda are intended to put a halt on further policymaking at federal agencies until political appointees have had a chance to settle in, and stop implementation of any 11th hour regulations from the previous administration that have not yet taken effect.
The Biden Administration issued its regulatory freeze memo today, as the transition team indicated would happen in December. The memo is authored by Chief of Staff Ron Klain, and is directed to “heads of executive departments and agencies.”
- Stop on new regulations – The memo instructs agencies not to propose or issue any new rules “until a department or agency head appointed or designated by the President after noon on January 20, 2021 reviews and approves that rule.” The memo permits those heads to delegate that authority to other political appointees.
- Stop publication on regulations already at OFR – Technically, federal agencies don’t publish their own regulations. Federal agencies send regulations to the Office of the Federal Register (OFR), which incorporates the regulations into the Official Federal Register. The memo directs agencies to immediately withdraw any regulations that have been sent to OFR but not yet published in the Federal Register. Note this could create some confusion – HHS and other agencies often issue press releases when rules are sent to the OFR, but not necessarily when they are published.
- Delay in Effective Date – Most regulations published in the Federal Register have delayed effective dates. Under the Administrative Procedure Act, regulations should generally have a 30 day delay in effective date. The Congressional Review Act requires 60 days for major policies. In the case of rules that have been published in the Federal Register (or have been otherwise issued), but have not yet taken effect, the memo directs agencies to “consider postponing the rules’ effective dates for 60 days” from today, “for the purpose of reviewing any questions of fact, law, and policy the rules may raise.” The memo encourages agencies to consider opening a 30 day comment period during the 60 day implementation delay, and to issue subsequent 60-day delays if necessary. Following the review, agencies are instructed to notify OMB if concerns have been raised.
- Not just rules – The memo clarifies that the directive applies not just to rules, but also to “guidance documents,” which can include 1) any substantive action by an agency (normally published in the Federal Register) that is expected to lead to promulgation of a regulation (e.g. Advance Notice of Proposed Rulemaking), and 2) “any agency statement of general applicability and future effect that sets forth a policy on a statutory, regulatory, or technical issue or an interpretation of a statutory or regulatory issue.”
The memo is very closely worded to what the Trump Administration issued, and the Obama Administration before that. However, there are some discrepancies between the Biden Administration’s memo and the Trump Administration’s memo:
- “Environmental” exceptions – The memo describes circumstances under which the Administration would allow for regulations to proceed within the regulatory freeze memo, including “urgent circumstances” related to health, safety and national security matters. The Biden Administration includes an exception for urgent environmental matters (as did Obama’s), and Trump’s did not.
- Addressing avoidance tactics: Ron Klain’s memo includes a bit of a parting shot to efforts from the Trump Administration to circumvent the regulatory freeze memo:
“ Should actions be identified that were undertaken before noon on January 20, 2021, to frustrate the purpose underlying this memorandum, I may modify or extend this memorandum, pursuant to the direction of the President, to request that agency heads consider taking steps to address those actions.”
The takeaway – the Trump Administration finalized quite a few rules in the closing weeks of the Administration, many of which have not yet taken effect. A lot of those policies may be in jeopardy now, if the Trump Administration isn’t likely to agree.
- Example: Prior authorization – Last week, CMS announced a final rule updating requirements for how Medicaid managed care plans and marketplace plans implement prior authorization. CMS made the announcement on the day when the rule was sent to the Federal Register; however, it never published. The new Administration would now be in bounds to pull it back and re-evaluate it.
- Example: 2022 Payment Notice – Last week, CMS also published a version of the 2022 Notice of Benefit and Payment Parameters, setting rules for commercial health plans in 2022, including those offered on the marketplace. That rule does not make effect until March 15, meaning CMS could delay implementation, solicit further public comment, and ultimately change the rule. Note CMS is widely expected to step in here.
For rules already published in the Federal Register – do note that agencies can delay the effective date, but have to move though formal notice of comment and rulemaking to make policy modifications.
WHAT IT MEANS FOR YOU
Take a look at policies the Trump Administration put into place in the final weeks that impact your organization. Make sure you know for certain what stage that rule is in. If it falls within the categories for the regulatory freeze, there could be changes coming and some opportunities for advocacy with the new Administration.