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Federal Regulations Advisor Insight and Commentary on U.S. Government Regulatory Affairs

Monday Morning Regulatory Review – 9/14/15: Human Research; Food Safety Rules; Extraordinary Writs Declined; Finality Petition & Obamacare Coverage Regulation Enjoined

Posted in Judicial Process, Judicial Review & Remedies, Regulatory Flexibility & Small Business, Regulatory Process

dawn over the capitol aocNew food safety rules and a proposed common rule on protection of human subjects in research deserve attention in the regulatory process. An unsurprising denial of an extraordinary writ and an unsurprising petition for certiorari deserve as much attention as a surprising injunction against an insurance coverage regulation in the judicial process.

Human Research: The Department of Health and Human Services (HHS) led multiple agencies too numerous to list in proposing an updated Federal Policy for the Protection of Human Subjects “common rule” on September 8. The proposed common rule updates regulations adopted by HHS and many other agencies in 1991 and new signatories have joined the proposal. The economically significant proposed rule represents a major undertaking by the agencies to improve research capacity, informed consent, and protection of human subjects in those instances where people are required to participate – and ranges widely from historical interviews to medical testing. Comments are due to a centralized HHS docket by December 7, 2015.

► The “common rule” is little (and under) utilized in managing government-wide efforts. A few agencies are required to promulgate rules or comply with established rules for the protection of human subjects in research, but most agency participation is discretionary.

A clarification of how a common rule works deserves attention. Each agency must propose and adopt the regulatory language of the common rule in its own title and chapter of the Code of Federal Regulations, but the regulatory language is the same or nearly the same, depending on certain internal administrative requirements. A common preamble discusses provisions with a generic citation form. An unfortunate downside of the “common rule” lies in the necessary but inelegant multiple reproductions of the regulatory text – in this case 16 times – when proposed and promulgated.

Food Safety Rules: The Food and Drug Administration (FDA) will publish two of its massive economically significant Food Safety Modernization Act (FSMA) regulations next Thursday:

Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventive Controls for Human Food, and

Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventive Controls for Food for Animals.

In short, the final rules require facilities to have and implement preventive controls to significantly minimize or prevent the occurrence of hazards and quickly identify pathogens. A court order required FDA to promulgate these rules by August 30. The complex rules have staggered effective and compliance dates, with most businesses granted one year from the publication date to comply with the rule, while small businesses granted two years and very small businesses granted three years to comply with the rule.

► These are the first two of a number of FSMA rules that are scheduled in the next year – well after Congressional deadlines and pursuant to negotiation and court order. The costs are significant and pervasive and will be reflected in consumer prices eventually. The potential for litigation is hard to assess at this point, and this blog will continue to monitor the court dockets.

Extraordinary Writ Declined: In an unsurprising order, the United States Court of Appeals for the District of Columbia Circuit denied a petition for an extraordinary writ to stay all dates in the Environmental Protection Agency (EPA) critical rules in the Clean Power Plan pending judicial review. The latest petition failed simply because the petitioners “have not satisfied the stringent standards that apply to petitions for extraordinary writs that seek to stay agency action.”

► Like the first attempt to stop EPA’s rulemaking, the second is simply premature. While the petitioners sought to stay compliance dates before publication of the final rule, the unanswered question is whether EPA will continue to use those compliance dates when the rule is actually published – the agency may alter much prior to public inspection release and publication in the Federal Register, without further notice. Litigation will eventually be joined on the substance, but these procedural scuffles do not serve the plaintiffs well.

Finality Petition: The Department of Justice (DOJ)’s Solicitor General last week petitioned the United States Supreme Court (SCOTUS) to review the United States Court of Appeals for the Eighth Circuit decision finding that Clean Water Act (CWA) approved jurisdictional determinations (ADJ) are final agency actions for the purpose of judicial review. The Solicitor General presents the question in United States Army Corps of Engineers v. Hawkes Co., Inc. as:

Whether the United States Army Corps of Engineers’ determination that the property at issue contains “waters of the United States” protected by the Clean Water Act, … constitutes “final agency action for which there is no other adequate remedy in a court,” … and is therefore subject to judicial review under the Administrative Procedure Act [(APA)], ….

The Eighth Circuit, disagreeing with a Fifth Circuit contrary decision, determined that the Engineers’ formal determination that a property constitutes WOTUS within the meaning of the CWA is a “final agency action” within the meaning of the APA and thus subject to judicial review. The “square but shallow” intercircuit conflict presents a significant question concerning the proper mode and timing of judicial review of a jurisdictional determination stating that particular property contains “waters of the United States” covered by the CWA. While the petition cites the WOTUS rule on several occasions, as it must as intervening applicable regulations, it makes no mention of the ongoing litigation over the legality or efficacy of the WOTUS rule discussed in many posts of this blog (search: WOTUS).

► Although the petition claims that the jurisdictional determination does not direct the landowner to take (or refrain from taking) any action, and does not impose any obligations not already imposed by the CWA, the ADJ does require the landowner to obtain a permit before discharging broadly-defined “pollutants” into those WOTUS-rule-broadened waters. The WOTUS rule’s expanded definition gives context to the importance of whether the ADJ is final – and may increase the likelihood that SCOTUS will grant the petition.

Obamacare Coverage Regulation Enjoined: One of the more complex legal issues raised by Obamacare (Patient Protection and Affordable Care Act or PPACA) regulations was resolved against the government in Central United Life Insurance Company v. Burwell. After wading through the standing issues, the United States District Court for the District of Columbia resolved whether HHS regulations could limit “fixed indemnity insurance” to individuals who had already acquired minimum essential coverage. A fixed-indemnity insurance plan pays a fixed amount for specific injuries and illnesses, unlike the variable rates paid by traditional insurance plans that depend on severity, and include income replacement, vision, dental, and long-term care insurance – i.e. not primary health insurance, mostly secondary or supplemental insurance.

In 2014, HHS promulgated a rule that barred plaintiffs from selling fixed indemnity plans to individual consumers unless those consumers certify that they have “minimum essential coverage” under Obamacare. Plaintiffs sought to enjoin rule as exceeding statutory authority under the APA and the Public Health Service Act (PHSA) as amended by the Health Insurance Portability and Accountability Act of 1996 (HIPAA), if offered as “independent, noncoordinated benefits.” The statute provides no further definition, but plaintiffs argued that Obamacare did not alter the exemption in existing law and HHS could not promulgate away that exemption. The district court agreed that whatever definition, it was not related to the Obamacare’s “minimum essential coverage.”

Central United Life does not appear to be a large new loophole in Obamacare – the injunction appears to apply only to the requirement that a purchaser of a fixed indemnity policy also have minimum essential coverage. That does affect a specific tranche of the insurance industry and individuals exempted from the minimum essential coverage. The degree of further loss of Obamacare universality is likely to play heavily in whether HHS and the DOJ appeal.