//  10/6/17  //  Commentary

This morning, HHS released two rules that will allow many more employers to exclude contraception from the insurance plans they offer to their employees. The first expands an existing religious exemption; the second allows employers to exempt themselves by invoking a freestanding “moral objection.”

As I explained when a draft of the rules first leaked, I think there’s a good chance that the courts will stop them from taking effect. Procedurally, the administration still hasn’t offered a cogent explanation for why it thinks it can amend an existing rule, and adopt a new one, without going through notice and comment. Substantively, HHS doesn’t have the authority to excuse employers from complying with a statute because they have moral objections.

The final rules have changed somewhat since I wrote my initial posts. I’ve therefore decided to compile those older posts here into one longer post that I’ve updated to account for the changes. I’ve also included some thoughts about what we should expect to see next and why the administration has issued rules with such obvious legal vulnerabilities.

The Procedural Problem

The rules are styled as “interim final rules,” which means that they go into effect today. And, as David Anderson has explained, it’ll only take a hot minute for employers who wish to take advantage of the expanded accommodation to adjust their offerings. So if you’re thinking about getting an IUD, now might be a good time to get one.

The Administrative Procedure Act, however, requires new rules to go through notice and comment before they’re adopted. It’s a cumbersome process, often taking a year or more, but it’s not optional. So what’s HHS’s justification for skipping notice and comment?

The agency offers two rationales, neither of which is convincing. First, the agency says that it has statutory authorization—specifically, in 26 U.S.C. §983329 U.S.C. §1191c, and 42 U.S.C. §300gg-92—to skip notice and comment. (This isn’t an original claim; Obama’s HHS made it too.) But these provisions are just generic grants of rulemaking authority. They allow the Secretary to “promulgate such regulations as may be necessary or appropriate to carry out” his various responsibilities, including “any interim final rules as the Secretary determines are appropriate.”

The courts, however, don’t read generic grants of rulemaking power to displace the APA’s background rules. If Congress had really meant to license the Secretary to ignore public participation whenever he wanted to, Congress would have said so clearly. So yes, the Secretary can issue regulations, even interim final regulations, but only when he acts consistently with the APA.

Second, HHS says it has “good cause” under the APA to skip notice and comment. Good cause exists when notice and comment is “impracticable, unnecessary, or contrary to the public interest.” That’s a flexible standard, but the courts have said that it “is to be narrowly construed and only reluctantly countenanced,” with its use “limited to emergency situations.”

So what’s the emergency here? HHS’s explanation is somewhat rambling, but it points out that Obama’s HHS also issued two interim final rules relating to the contraception mandate. Now, that’s true—but only because the agency faced a tight statutory deadline and, later, a Supreme Court order in Wheaton College requiring a rule change. Those are classic reasons to find good cause. Indeed, that’s why the D.C. Circuit brushed back an earlier challenge to one of HHS’s interim final rules: “the modifications made in the interim final regulations are minor, meant only to ‘augment current regulations in light of the Supreme Court’s … order.’”

Here, there’s no deadline and no court order requiring a rule change. (Although the Supreme Court exhorted HHS and religious organizations to resolve their differences in Zubik v. Burwell, and although the Seventh Circuit has recently done the same, that’s not the same thing.) What’s more, the Obama administration did invite feedback before it initially adopted its religious accommodation— and received more than 400,000 comments in response.

In a twist, Trump’s HHS wants to exploit that deluge of comments to justify changing the accommodation without public feedback. “[T]he [agency] received more than 100,000 comments on multiple occasions,” including “extensive discussion about whether and by what extent to expand the exemption.”

If these new rules were just minor tweaks of the prior accommodation, HHS’s explanation might hold water. But they aren’t. They break with prior law in at least three big ways. First, they extend the accommodation any and all organizations, not just to religious nonprofits (like Catholic hospitals and universities) and privately held corporations (like Hobby Lobby). Second, they allow employers to drop contraception coverage without filing federal paperwork, potentially complicating efforts to guarantee alternative coverage for employees. Third, unspecified “moral” objections—not just religious ones—are now enough to justify relieving employers of their statutory obligations under the ACA.

HHS may have received hundreds of thousands of comments about contraception, but it hasn’t received focused feedback on these specific proposals. That’s likely to be a problem in court. The D.C. Circuit, in particular, can be really persnickety when agencies don’t provide adequate notice of a proposed change, even where earlier rounds of notice and comment seem to cover the issue. (I’ve been critical of the case law around good cause, and I have some sympathy with HHS’s position here. But the law is what it is.)

At the end of the day, HHS’s justification boils down to a concern with “delay[ing] the ability of … organizations and individuals to avail themselves of the relief afforded by these interim final rules.” The agency instead wants “to provide immediate resolution to this myriad of situations rather than leaving them [sic] to continued uncertainty, inconsistency, and cost during litigation challenging the previous rules.” But that’s just another way of saying that the rule is so important that it has to be rushed out the door without hearing what the public has to say about it.

That’s not how it works. Notice and comment always causes the delay of important rules. Notice and comment always extends any existing uncertainty. And yet the APA still requires public feedback—especially on rules that spark public controversy. If the administration really has a genuine “desire to bring to a close the more than five years of litigation,” why invite a lawsuit over a procedural question? Where’s the fire?

The Substantive Problem

HHS’s rule allowing employers with “moral objections” to decline to offer contraception is more deeply flawed. To date, the lawsuits over the contraception mandate have focused on the Religious Freedom Restoration Act (RFRA), which requires the federal government to avoid placing burden on the exercise of religion. It’s RFRA that gives HHS the power to craft a religious exemption for contraception coverage.

RFRA, however, does not extend to moral objections without a basis religious exercise. As such, RFRA can’t supply authority for HHS to exempt employers with moral objections to the contraception mandate.

So where does the agency find that authority? HHS points to section 2713(a)(4) of the Public Health Service Act, which is codified here:

A group health plan and a health insurance issuer offering group or individual health insurance coverage shall, at a minimum provide coverage for and shall not impose any cost sharing requirements for …

(4) with respect to women, such additional preventive care and screenings [beyond those rated “A” or “B”] as provided for in comprehensive guidelines supported by the Health Resources and Services Administration for purposes of this paragraph.

Does that look to you like it allows HHS to craft exemptions due to moral objections? Me neither.

The agency sees things differently. Employer and insurer obligations, HHS says, are confined to what’s “provided for in comprehensive guidelines,” and the statute doesn’t say what those guidelines should cover. HHS therefore believes that it can exempt whoever it wants, for whatever reason it wants. Just write the exemption into the guidelines.

I don’t think this is a reasonable interpretation of the statute. The guidelines are supposed to elucidate the “additional preventive care and screenings” that must be covered. That’s why Congress enlisted the help of the Health Resources and Services Administration. It’s a health agency, one that “work[s] to improve the health of needy people.” HRSA knows a lot about preventive services and screenings. HRSA isn’t equipped to decide when moral concerns are sufficiently grave as to require an exemption from a generally applicable law.

To sharpen the point, consider the following statute: “All cars must have seatbelts that meet certain specifications, including any additional specifications as provided for in guidelines drafted by the Seatbelt Safety Administration.” If the agency exempted red cars from its guidelines, that wouldn’t be an exercise of its delegated authority to write safety guidelines. It would be revising Congress’s judgment that “[a]ll cars”—red and blue and gray alike—must have safe seatbelts.

That’s what’s happening here. HHS isn’t specifying the services that employers and insurers are obliged to cover. It’s saying that everyone who objects on moral grounds—all those red cars—are exempted. That’s not a plausible interpretation of the statute. Fairly read, it allows HHS to say what gets covered, not who has to cover it.

Yes, it’s true that Congress didn’t prohibit the guidelines from including moral exemptions. But so what? As the D.C. Circuit has said, “the notion that an agency interpretation is permissible just because the statute in question does not expressly negate the existence of a claimed administrative power (i.e. when the statute is not written in ‘thou shalt not’ terms), is both flatly unfaithful to the principles of administrative law. . . and refuted by precedent.”

In a truly baffling legal argument, HHS identifies a long string of statutes that ostensibly “show Congress’ consistent protection of moral convictions alongside religious beliefs in the Federal regulation of health care.” Those statutes, it says, have guided its exercise of discretion to offer a religious exemption from the ACA. HHS then quotes at length from the legislative history of the Church Amendments, which were adopted in 1973. It points out that 45 states have from time to time adopted moral exemptions to statutes. And it invokes “founding principles,” scattering quotations from George Washington, Thomas Jefferson, and James Madison about liberty of conscience.

How is any of this relevant to the interpretation of the ACA, you might ask? Good question. None of the statutes purport to give HHS the authority to craft a freestanding “moral exemption” from the obligation to cover preventive services for women. To the contrary, the statutes demonstrate that, when Congress wants to add a moral exemption to a statute, it knows how to do so. Far from supporting HHS’s action, all of these statutes undermine it.

The right question, instead, is whether the statute can reasonably be read to have delegated to a health agency the freewheeling power to relieve entities of their responsibility to follow the law. And I don’t see it.

What Happens Now?

I expect that a bunch of advocacy organizations will immediately file suit to challenge the new rules. They’ll ask for an initial stay and then a preliminary injunction, preferably on a nationwide basis. I bet they’ll get it: Texas secured an injunction to stop the Obama administration from implementing DACA without going through notice and comment, and some judge in California or Hawaii will probably enter an injunction on the same theory here.

Yes, the organizations will have to find plaintiffs with standing. But that shouldn’t be hard, at least for the rule governing religious accommodations: there are lots of employers who’d like to limit access to contraception without informing the federal government. Finding a plaintiff for the rule governing moral exemptions might be more difficult, at least initially. HHS thinks that the effect of the rule will be “small,” and that fewer than 10 employers will take advantage of the moral exemption. Maybe that’s right, maybe it’s not—HHS has no way of knowing. But the uncertainty could make it hard to find a viable plaintiff right out of the gate.

Regardless, we’ve got a puzzle on our hands. Why did the Trump administration expose its rules to an obvious legal challenge, one that the challengers are quite likely to win? Conducting notice and comment would take time, but it’s not that hard.

Here’s my working theory: I think the Trump administration wants to signal to evangelicals and Catholics that it really, really cares about religious liberty and understands the importance of curtailing reproductive rights. Refusing to adhere to procedural niceties is one way of signaling that commitment: “We care so much we’ll even ignore the law.” Plus, if the courts enjoin the rules, that’ll play right into existing storylines about how mainline culture sidelines the Christian faith.

In the meantime, HHS is conducting after-the-fact notice and comment on the new rules—the comment period will close on December 5. Although the law on whether after-the-fact notice and comment can cure a “good cause” violation is a bit unsettled—Kristin Hickman and Mark Thomson have a good paper on the question, and I offer some views here—there’s a good chance that the basis for any initial injunction will evaporate. If that happens, the administration will (eventually) gets its rules, while sending a costly signal about the depth of its commitment.

Or maybe HHS is being foolish. I can’t rule that out. But the better explanation, I think, is that the administration is dead serious about curtailing access to contraception, whatever flaws these particular rules may have.

@nicholas_bagley


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