Signs of increased speed in the Obama Administration’s quest to institutionalize its policies became apparent with the approval and publication of several economically significant / major rules, even more lesser rules, and even a proposed adjudication. Much publicity has suggested a gaming of the system, but this is a natural result of the end of any Administration, and a more nuanced review suggests that some actions will stand the test of transition and time while others will not. Some exam
ples illustrate how the perspicacity of the President of the United States (POTUS)’s current Administration tests the perspicacity of the POTUS-elect’s incoming Administration.
Healthcare Funding Responses: Reaching back slightly, one classic example of an end-of-Administration response may be the Department of Health and Human Services (HHS), Centers for Medicare and Medicaid Services (CMS), Medicaid Program; The Use of New or Increased Pass-Through Payments in Medicaid Managed Care Delivery Systems, proposed rule published on November 22 with a 30-day public comment period – i.e. December 22. The bottom line here is that the proposed rule seeks to prevent increases in pass-through payments and the addition of new pass-through payments above the transition periods in extant Medicaid managed care regulations.
CMS determined that the rule was “economically significant” as measured by the $100 million threshold and prepared a regulatory impact analysis (RIA), and the proposed rule is listed as such by the Office of Management and Budget (OMB) on its docket. OMB’s determination of whether a final rule has the requisite $100 million economic impact qualifies a final rule as a major rule under the Congressional Review Act (CRA), and therefore subject to a 60-day delayed effective date.
► Recent press has seized on the proposed rule is targeting “red” States that did not expand Medicaid eligibility, but the timing seems to undercut that possibility. A 30-day public comment period is certainly too short for an economically significant proposed rule, but the numbers do not appear to be malleable below that threshold. Thus, even if HHS were able to prepare and publish a final rule immediately on closing the comment period, the Administrative Procedure Act (APA) minimum 30-day delayed effective date would push the final rule beyond the end of this Administration, and, therefore, subject to an immediate cooling-off stay by the incoming Administration while reassessing the costs – both to the United States and the States.
Hardrock Mining Liabilities: In a totally different costing vein, the Environmental Protection Agency (EPA) released last Friday an advance copy of its Financial Responsibility Requirements under CERCLA § 108(b) for Classes of Facilities in the Hardrock Mining Industry proposed rule. The proposed rule implements provisions of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for specific industries to demonstrate financial responsibility in light of potential CERCLA environmental remediation liabilities. The proposed rule would define requirements for demonstration of financial responsibility, define requirements for financial responsibility bonding, and establish criteria for releases from financial responsibility requirements.
EPA estimated the financial responsibility amount for the regulated industry to be $7.1 billion, and after applying assumptions about allowable self-insurance (based on at least a Standard & Poors’ AAA- rating – EPA’s financial self-responsibility proxy), the nearly $5 billion remainder requiring third party bonding would cost from $111 million to $171 million annually, depending on the regulatory options selected. Thus, the proposed rule is economically significant and would be major rule under the CRA if finalized as proposed. EPA has recognized also that hardrock mining (metals), unfortunately, represent the most volatile of commodity and capitalization markets.
CERCLA has provided for such regulations for over 30 years, but EPA has proceeded this far only after being ordered (ultimately on consent) by the United States Court of Appeals for the District of Columbia Circuit per In re: Idaho Conservation League. Pursuant to the negotiated settlement, EPA was required to sign off on a first industry proposed rule by December 1, 2016, and sign off on a final rule by December 1, 2017. The proposed rule 60-day comment period transcends the transition between Administrations.
► Bear in mind that CERCLA remediation from a bankrupt company can fall on then United States, subject to the availability of appropriation (the reason numerous Superfund sites remain unremediated). The proposed rule would spread the financial risk potential back to the existing companies, but may raise some interesting questions under the Bankruptcy Code. Once again, the question for the new Administration will be one of who pays and the answer is less likely to be the taxpayer. EPA has recognized also that hardrock mining (metals), unfortunately, represent the most volatile of commodity and capitalization markets. Although the final rule will likely be different, expect a final rule in due course.
Mid-Term CAFE: On the other hand, EPA, in an adjudicatory action that has regulatory implications, released a Proposed Determination on the Appropriateness of the Model Year 2022-2025 Light-Duty Vehicle Greenhouse Gas Emissions Standards under the Midterm Evaluation last week and requested public comments by December 30, 2016. “EPA is seeking public comment on its proposed adjudicatory determination that the GHG standards currently in place for MY2022-2025 remain appropriate under the Clean Air Act and thus need not be amended to be either more or less stringent.” The proposed decision may be viewed as being ahead of the required mid-term review of the greenhouse gas (GHG) emissions and Clean Air Act (CAA) corporate average fuel economy (CAFE) standards for MY2017-2025 light-duty vehicles. EPA seeks public comments on the proposed determination by December 30, 2016.
► The proposed determination is not due until next year, and a final determination is not due until 2018. The concern has been raised that the sum of the early release of the proposed determination and a highly limited public comment period could lead to a rushed final determination before the end of the Administration and a subsequent argument that the CAA’s “anti-backsliding” provision insulates the determination from modification. This possible, and perhaps the cynicism will be justified, but such an action begs for adverse action by Congress – and risks changes in the CAA that could undo even more.
Last Education Regulations Tango: The Department of Education (ED) published its economically significant Elementary and Secondary Education Act of 1965, As Amended By the Every Student Succeeds Act–Accountability and State Plans final rule last Tuesday. The final rule is the last substantial set of changes to a complex educational management system governing the transfers over a 4-year authorization cycle based on FY 2016 appropriations of more than $86 billion (and including new costs). The final rule becomes effective January 30, 2017.
► In this instance, the final rule is simply too late. The final rule will undoubtedly be stayed by the incoming Administration for further review – indeed, it would be surprising of the transition team is now preparing the stay order for publication in the Federal Register for the incoming Secretary’s signature.
Banning the Personnel Box: The Office of Personnel Management (OPM) published a Recruitment, Selection, and Placement (General) and Suitability final rule on December 1, 2016. The bottom line of the final rule is to bar an agency, in the employee hiring process generally, but with business-need exception process, from inquiring about an applicant’s criminal or adverse credit background (suitability determinations) until the agency has made a conditional offer of employment to the applicant. The process is colloquially referred to as “ban the box” and is intended to encourage more individuals with the requisite knowledge, skills, and ability to apply for positions by moving the suitability determination further back on the process. The final rule is effective January 3, 2017, and agency compliance is required by March 31, 2017.
► Although the rule becomes effective before the inauguration, that effective date may not have great meaning because the rule is process oriented – the ultimate decisions on suitability for a specific position in light of past criminal or financial difficulty remain intact. The issue here is regulatory process: although the rule is clearly exempt from the advance notice and an opportunity for public comment process under the APA as a personnel rule, the Civil Service Reform Act (CRSA) imposed the advance notice and an opportunity for public comment requirements, and more, on OPM for such government-wide rules. OPM does not restate that requirement, but its CRA inapplicability argument is instructive: “This action pertains to agency management, personnel and organization and does not substantially affect the rights or obligations of non-agency parties.” Thus, the incoming Administration faces a procedural requirement that is of dubious external enforceability and its choice of action may illustrate its procedural commitment.
The post Monday Morning Regulatory Transition Review – 12/5/16: Healthcare Funding Responses; Hardrock Mining Liabilities; Mid-Term CAFE; Last Education Regulations Tango & Banning the Personnel Box appeared first on Federal Regulations Advisor.