By Rebecca Mayo, J.D.
A U.S. District Court for the Northern District of California issued a nationwide preliminary injunction enjoining HHS from enforcing the Interim final rules (IFRs) referred to as the Religious Exemption Rule (82 FR 47838) and the Moral Exemption Rule (82 FR 47792) that modify the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) pending resolution on the merits. The court found that the petitioning states—California, Delaware, Maryland, and New York and Virginia—were denied their rights to provide comment and be heard on the implementation of regulations that would impact the states and their residents, before the regulations were made effective. Because the states face potentially dire public health and fiscal consequences as a result of a process as to which they had no input, the found it appropriate to issue a preliminary injunction to prevent irreparable harm to the states. The court further ordered HHS to continue under the regime in place before the IRFs were issued (California v. HHS, December 21, 2017, Gilliam, Jr., H.).
Background. On October 13, 2017, the Trump Administration issued two IFRs that greatly expanded the scope of the ACA’s contraception coverage exemption (see Contraception coverage exemptions extended for objecting employers on religious, moral grounds, October 11, 2017). The Religious Exemption Rule was expanded from only applying to religiously affiliated nonprofits, houses of worship, and closely-held for-profits, to now include all companies, including publicly traded companies. It also eliminated the need for an accommodation process. The Moral Exemption Rule allows nonprofits, closely-held for profits, and private colleges to cease offering contraception coverage based on moral objections. On December 20, 2017, a Pennsylvania district court granted a preliminary injunction enjoining the government from enforcing these IFRs (see Court grants preliminary injunction against Trump’s religious and moral exemption rules, December 20, 2017). Now, the states have also brought suit seeking to enjoin enforcement of the new rules.
Standing. For the purposes of invoking federal jurisdiction, states have standing to protect their sovereign and quasi-sovereign interests, including the health and well-being—both physical and economic—of their residents. Here, the states assert a procedural injury, specifically that the failure to comply with the APA’s notice-and-comment requirement denied the states the opportunity to comment on the impact of the rules on the states and their residents prior to the effective date of the IFRs. These procedures are designed to protect the states’ concrete threatened interest in ensuring that women have access to no-cost contraceptive coverage under the ACA, because without that access the states will insure economic obligations, either to cover contraceptive services necessary to fill the gaps left by the IFRs or for expenses associated with unintended pregnancies. The states have sufficiently shown that the IFRs will impact their fiscs in a manner that is directly traceable to the decision to issue the IFRs without advance notice-and-comment, and thus have standing.
The states also showed that the IFRs are understood to be the consummation of the relevant agencies’ decision making process and are therefore a final agency action. The purpose of the APA’s notice-and-comment provision is to ensure agency regulations are tested via exposure to diverse public comment, fairness to affected parties, and to give parties an opportunity to develop evidence in the record to support their objections to the rule and thereby enhance the quality of judicial review. The states’ right to be heard regarding the prospective impact on them and their citizens is squarely within the APA’s zone of interests, and therefore the states have statutory standing.
Notice requirement. The agencies pointed to three separate provisions of the U.S. Code allowing agency Secretaries to promulgate IRFs in order to carry out statutory duties. The agencies interpret this to mean that they were exempt from the APA’s advance notice-and-comment requirement. The court disagreed and found that the statutory authority cited by the agencies does not support their argument that Congress intended to free them from the APA’s requirements.
The agencies further argued that engaging in notice-and-comment before issuing the IFRs would have been impracticable and contrary to the public interest. Notice-and-comment is impracticable when the agency cannot both adhere to the public rule-making requirements while also executing its statutory duties. It is contrary to the public interest when the public rule-making procedures prevent an agency from operating. The agencies set forth several purported justifications including the dozens of pending lawsuits challenging the contraceptive mandate, and their desire to (1) cure alleged violations of the Religious Freedom Restoration Act (RFRA); (2) bring provide immediate resolution to parties with religious objections to the mandate; and (3) avoid delay in making the accommodation available to a broader category of entities. None of these justifications show any reason why the agencies would not be able to follow the public rule-making procedures while executing their statutory duties, or that they would be unable to operate if the proper procedures were followed.
Finally, the agencies argue that they demonstrated a willingness to consider public comment by opening previous formulations of the rule to public comment and by offering public comment after the IFRs were issued. However, the previous formulations of the religious exemption was much more narrow in scope and the moral exemption did not exist, so relying on the previous public comments is not sufficient. Additionally, it is "antithetical to the structure and purpose of the APA for an agency to implement a rule first, then seek comment later."
Irreparable harm. The states are not only likely to suffer irreparable procedural harm in the absence of a preliminary injunction, they have already done so. The states were denied their right to provide input on the IFRs before they were made effective in violation of the APA’s notice-and-comment provision. This harm is ongoing because every day that the IFRs stand is another day that the regulations may be enforced without the states having an opportunity to be heard, and the health of their citizens and their fiscal interests hang in the balance.
The case is No.17-cv-05783-HSG.
Attorneys: Christina Bull Arndt, Office of the Attorney General, for the State of California. Justin Michael Sandberg, U.S. Department of Justice, for U.S. Department of Health and Human Services.
Companies: State of California; U.S. Department of Health and Human Services
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