While we await the major decisions of the year by the United States Supreme Court (SCOTUS), the regulatory process was relatively quiet last week. The most significant activity focused on proposed emission standards for heavy duty trucks and a proposed rethinking of the orphan drug program, both of which deserve critical review for regulatory process issues.
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Truck Emissions Standards: The Environmental Protection Agency (EPA) and Department of Transportation (DOT) National Highway Traffic Safety Administration (NHTSA) released a massive 1,329 page single spaced draft proposed rule: Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles – Phase 2. EPA’s proposed carbon dioxide (CO2) emissions standards and NHTSA’s proposed fuel consumption standards would apply to four regulatory categories of heavy-duty road vehicles: tractors; trailers for tractors; (3) heavy-duty pickup trucks and vans; and (4) vocational vehicles (e.g. buses, refuse trucks, and concrete mixers). The phase-in would begin in 2018 and extend through 2027.
EPA and DOT also released a draft regulatory impact analysis (RIA) (with an initial regulatory flexibility analysis (IRFA) required by the Regulatory Flexibility Act (RFA), another 971 pages)) and a redline of proposed changes to existing regulations. The agencies assert that the proposed standards would lower carbon dioxide emissions, cut fuel costs, and reduce oil consumption, more than offsetting the agencies’ assumptions of direct and indirect costs, and such complex calculations of reduced federal and state fuel tax revenue, over the lifetime of vehicles manufactured, reaching to 2050.
► Four thoughts: some good, some not so good:
The agencies will accept public comments for 60 days (a default public comment period) after publication of the proposed rule in the Federal Register. Experience has shown that publication may be significantly delayed and changes may be made before publication – for example, EPA and Army Corps of Engineers’ released the contentious final Clean Water Rule: Definition of “Waters of the United States” on May 26 and has not yet been published, but the original release has been altered. (Indeed, EPA plans to replace them with the published edition, so their lifespan is limited). The idea of prepublication release deserves support, and intervening changes are not uncommon, but a 60-day formal comment period may be far too short to compare, analyze and comment effectively.
The agencies provide a Table of Contents in the draft proposed rule (good), but it is unpaginated (unhelpful), limiting its use in this leviathan. The agencies could be more helpful by releasing a paginated table of contents in the draft and “turning off” that feature in the electronic submission to the Federal Register. Most helpful would be for both the agencies and the Federal Register to provide paginated tables of contents for proposals and rules of this size.
Deep within the proposal resides a detailed benefit / cost analysis, including the social cost of carbon. The question that commenters should ask is whether the agencies have provided a balanced review – analysis that reflects equivalent depth, criticality, quantification, and objectivity to both benefits and costs. Imbalanced analysis inherently will appear skewed and suspicious, whether justified or otherwise.
Finally, the agencies’ commendable draft redline of the proposed rule against the existing regulations can be quite helpful when agencies are amending existing regulations. This tool can give the reader a concise statement of the exact changes proposed and other agencies should consider such redlines.
Orphan Drugs Revisited: The Department of Health and Human Services (HHS) Health Resources and Services Administration (HRSA) proposed revisions to its orphan drug program last Wednesday in 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation. “Orphan” drugs treat rare diseases or conditions but the costs of research and production of the drugs would not be economically feasible except for external incentives such as a seven-year (rather than two-year) market exclusivity period; a clinical tax credit for any expenses incurred in development; research grants for clinical testing; and exemption from new drug application fees. A year ago, the United States District Court for the District of Columbia vacated HHS’s regulations for want of statutory authority, which the proposed rule acknowledges, but does no more. The proposed rule might remedy the authority issues with a more carefully drawn to the authorizing statutes.
► HHS does not explain how this proposed rule resolves the lack of authority problem that lead to vacatur of prior regulations; the proposed rule only notes the vacatur and little more. Perhaps HHS believes that it is incumbent on commenters to raise this issue, but that shirks HHS’ responsibility to explain its legal authority to regulate. Agencies may receive Chevron deference under City of Arlington for their interpretation of ambiguous statutory delegations of authority, but agencies may not assume authority, they must establish and explain it, particularly after the courts vacated prior regulations.
The post Monday Morning Regulatory Review – 6/22/15: Truck Emissions Standards & Orphan Drugs Revisited appeared first on Federal Regulations Advisor.