March 12, 2013

GAO Calls on Agencies to Respond to All Comments

From: RegBlog

James Hobbs

Last summer, the Department of Health and Human Services (HHS) issued a rule defining “pre-existing condition” for the purpose of implementing President Obama’s Affordable Care Act (ACA). The agency called for public input and received 4,627 public comments, but never officially responded to any of them. Cases like this, according to the Government Accountability Office (GAO), have been happening too frequently.

In a recently-published report, the GAO called on the Office of Management and Budget (OMB) to issue a guidance that would encourage all agencies to respond to comments on all “major rules,” even when the agencies are not legally bound to reply. The GAO found that, from 2003 to 2010, the agencies avoided the full notice-and-comment rulemaking process on 35 percent of their “major” rulemakings and 44 percent of “nonmajor” rulemakings.

The OMB, which provides guidance to agencies, disagreed with these recommendations and argued for a “case-specific approach … given the often unique circumstances faced by agencies issuing rules without a prior notice of proposed rulemaking.”  However, the GAO maintained that its recommendations were “valid” and pointed to a similar recommendation by the Administrative Conference of the United States (ACUS) issued several years ago.

The general framework of notice-and-comment rulemaking comes from Section 553 of the Administrative Procedure Act (APA) and requires agencies to seek comments and respond to them before issuing a final rule.

There are exceptions to the statutory requirement to seek comments and respond to them. For instance, the APA allows agencies to skip the notice-and-comment process for “good cause,” which exists when the public input procedures are “impracticable, unnecessary, or contrary to the public interest.”  According to the GAO report, the “good cause” exception was the main rationale cited by agencies when choosing to avoid the full notice-and-comment process — used for 77% of major rules and 61% of nonmajor rules.

The agencies tended to use this exemption when the regulators faced a statutory time constraint, the rule was necessary to combat an emergency or public safety concern, or a statute directly fixed the language of a rule so that comments would be useless.

The GAO found that even in cases where the full notice-and-comment process was not required, agencies sometimes still asked for public input. One such case is HHS’s decision to solicit comments on its pre-existing conditions rule, despite citing the good cause exception. In the GAO sample, comments were solicited on 77 of the 123 major rules issued without using the full notice-and-comment process.

In twenty-six of those cases, the agency did not respond to the comments or alter the rule to address any public concerns. According to the GAO, these cases represent a “missed opportunity, because […] when agencies did respond to public comments they often made changes to improve the rules.” The GAO argued that public comments “add value by identifying issues, information, and analyses that the agency might not have initially considered.”

The GAO report was written in response to questions from several members of Congress who wanted to know more about the “frequency, reasons, and potential effects of issuing final rules without [providing a full opportunity for public comment], and whether these have changed over time.”

The GAO based its analysis on a representative sample of all final rules issued from 2003 through 2010. The sample included all major rules issued from 2007 to 2010. Major rules are roughly defined as those that have an annual economic effect of $100 million or more.

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