By Nadine E. Roddy, J.D.
The rule establishes procedures intended to ensure that regulated parties receive fair notice of the laws and regulations that apply to them, as well as an opportunity to contest an agency determination before the agency takes any action against them that has a legal consequence.
A final rule has been issued by HHS that is intended to promote transparency and fairness in the department’s civil enforcement actions. The department believes that the rule will ensure that regulated parties receive fair notice of the laws and regulations to which they are subject, and that they receive an opportunity to contest an agency determination prior to the agency’s taking an action that has a legal consequence. Effective as of January 12, 2021, the rule applies to all divisions of HHS (Final Rule, 86 FR 3010, January 14, 2021).
The final rule is a component of the department's broader regulatory reform initiative. It builds on the HHS Good Guidance Practices rule issued last year by setting forth rules for appropriate HHS reliance on guidance documents, and by requiring HHS to give fair notice of relevant agency positions before taking civil enforcement action. Concerning guidance documents, the rule generally prohibits the department from treating noncompliance with a standard or practice announced solely in such a document as itself a violation of law.
The final rule also sets forth a series of procedural requirements for the department’s civil enforcement actions. For example, HHS may apply only standards or practices that have been publicly stated in a manner that would not cause unfair surprise. The department also must conduct all civil administrative inspections according to published and publicly available rules of agency procedure. Whenever HHS relies on a document arising out of litigation to establish jurisdiction in future civil enforcement actions, HHS must publish that document and an explanation of the document’s jurisdictional implications, either in the Federal Register or in the HHS guidance repository. Prior to taking any civil enforcement action with legal consequence, the department must provide written notice and an opportunity to be heard, as well as a written response, unless an exception applies.
The term "civil enforcement action" is defined as an action with legal consequence taken by the department based on an alleged violation of the law. Such actions include administrative enforcement proceedings as well as enforcement adjudication, but they do not include actions taken in the normal course of the department's regulatory communications or decision-making. Examples of the latter include decisions on product applications such as approvals or denials, claims authorizations, responses to citizen petitions, food or color additive petitions, and public health notifications.
"Legal consequence" is defined as the result of an action that directly or indirectly affects substantive legal rights or obligations, including by subjecting a regulated party to potential liability in an enforcement action. The meaning of this term is informed by the Supreme Court's 2016 decision in U.S. Army Corps of Engineers v. Hawkes Co., and it includes, for example, agency letters or orders that establish or increase the probability of liability for regulated parties in a subsequent enforcement action. It does not include warning letters or other communications, such as those describing inspectional observations, that pursuant to agency policy are intended to provide notice to a regulated party to elicit voluntary compliance.
"Unfair surprise" is defined to mean a lack of reasonable certainty or fair warning, from the perspective of a reasonably prudent member of the regulated industry, of what a legal standard administered by an agency requires, or the initiation of litigation by HHS following "a very lengthy period of conspicuous inaction," suggesting that the agency previously held a different interpretation. An agency does not create unfair surprise, however, when it proceeds with a new interpretation established through notice-and-comment rulemaking.
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