On May 27, the Department of Health and Human Services
finalized
a regulation repealing a Trump-era rule known as the SUNSET rule. The SUNSET rule would have attached sunset provisions, which are expiration dates, to almost 18,000 existing HHS regulations. The idea was that these rules should have to be reviewed about once every decade to determine whether they are negatively affecting small businesses. If they aren’t reviewed, they expire. It’s an approach that is
popular
in about one-third of U.S. states as well as numerous countries around the world, but the Biden administration has decided the reviews aren’t worth doing and scrapped the rule instead.
What’s most startling about HHS’s action is not that it was finalized over Memorial Day weekend to avoid attention, but rather its all-or-nothing nature. In fact, HHS is already required under the 1980
Regulatory Flexibility Act
to review its regulations for their impacts on small businesses. The problem is that HHS, like many other federal agencies, doesn’t
consistently comply
with the law. Since a paper requirement isn’t enough, stronger incentives are clearly needed. That’s where the expiration clause comes in.
The SUNSET rule was founded on a clear economic principle: Incentives matter. The possibility of something bad happening to you (or, in this case, to a rule that regulators support) is a motivator to change behavior. In fact, the psychological phenomenon known as “loss aversion” shows how avoiding bad outcomes often motivates us more than the chance of obtaining equivalent good ones.
Strangely, the Biden administration isn’t offering a clear alternative. Essentially, HHS is arguing that the pre-Trump status quo of
violating the law
was just fine. But other options should be on the table.
Let’s assume for a moment that regulators respond to a threat with outright hostility, leading to unintended policy consequences. If that’s the case, why not reward civil servants for following the 1980 law? For example, they could be given extra days off or annual bonuses for completing their duties — or even just higher pay.
It may seem odd to bestow special benefits for something they should be doing anyway, but unfortunately, this is the sad state of the federal government. There are so many obligations falling on civil servants that complying with every law on the books is nearly impossible. Even the best regulators can’t turn on a dime if those around them don’t change their behavior too.
In all likelihood, we haven’t seen the last of the SUNSET rule. It was opposed by many special interest groups, but it is also quite innovative in its design.
Much like Odysseus tying himself to the mast of his ship while sailing past the sirens, the rule was a self-binding constraint the agency placed upon itself. Similar “process rules” have yielded fruit at agencies such as
the Department of Energy
. In 2019, Gov. Ron DeSantis of Florida
required
agencies to build sunset provisions into rules. Yet, attaching expiration dates to thousands of existing rules through a self-binding rule is novel for a federal agency.
In fact, this same power could be used with entire agency programs or even agency staff whose productivity is unclear. We often talk about term limits for elected representatives, but they may make more sense for unelected government workers. Showing proof of performance or else being shown the door is standard in the private sector, but too often, these incentives are missing in government. Of course, civil service laws could make it difficult to “sunset” federal employees, but not all temporary or contract employees are bound by the same agreements.
For now, the SUNSET rule is apparently riding off into the regulatory sunset. But don’t be fooled. The idea will make a comeback in some form, potentially in a more grandiose fashion. Given this reality, if the Biden administration is unhappy with the Trump administration’s approach, it should look for ways to reward civil servants for good work and penalize those not doing their jobs. Otherwise, a more aggressive system of incentives could be waiting for HHS and other agencies in a future administration.
James Broughel
is a senior research fellow with the Mercatus Center at George Mason University and the author of the
study
“Evidence-Free Policymaking at the Department of Health and Human Services.”
