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As the nation braced for a growing lockdown to combat the COVID-19 pandemic last week, organizations serving some of the populations most vulnerable to the virus challenged the Trump Administration for repealing nondiscrimination protections within dozens of critical safety-net programs. These organizations serve and advocate for older adults, homeless youth, and youth in foster care who are members of the LGBTQ community. The Department of Health and Human Services (HHS) rule would allow charities using federal grants to refuse social services to LGBTQ people, religious minorities, and in some cases, women.  While the policy merits of this move are hotly contested, the case also presents new wrinkles in the Administration’s regulatory corner-cutting and blurs the line between targeted exemptions and broad deregulation. 

Background: the Nondiscrimination Rule for HHS Grants 

A quick background on the rule itself: In 2016, HHS adopted a department-wide rule prohibiting discrimination based on any non-merit factor in any of its $500 billion in grant programs. The rule sought to ensure that need and eligibility alone determined access to critical services and listed age, disability, sex, race, color, national origin, religion, gender identity, and sexual orientation as examples of non-merit factors. In 2019, the largest foster and adoption placement agency in South Carolina sought an exemption that allowed the agency to refuse to work with Jewish or Catholic families, as well as same-sex couples. HHS granted the exemption last year, but then went much further by proposing to repeal the entire rule—not just for organizations with religious objections, or just for foster placements, but to repeal it entirely for all HHS grants. This would leave a patchwork of protections, with a rule against discrimination based on religion, sex, gender identity, sexual orientation, or other arbitrary factors in programs ranging from meal deliveries and adult daycare to youth shelters and other homelessness services.

An Interim Final Rule by Another Name: Nonenforcement Pending Repeal

In areas as varied as asylum, health coverage, and menu labeling, the Trump Administration has been faulted by the courts for abusing the Administrative Procedure Act (APA)’s “good cause” exception to public notice and comment by issuing interim final rules. And in cases touching on everything from special education to e-cigarettes to many involving climate change and pollution, the Administration has been dinged for evading notice and comment by declaring delays on Obama-era rules. In this case, HHS tried something different. In essence, it issued a proposed rule for notice and comment, but simultaneously issued a “Notification of Nonenforcement,” stating that its grants rule “will not be enforced pending a repromulgation” which repeals the nondiscrimination provision. So, from the time the proposed rule is issued until a final rule is in effect, the current rule will not be enforced at all. 

This is the functional equivalent of an interim final rule by another name. While agencies have occasionally issued non-enforcement notices in other circumstances, these have generally been limited to particular scenarios or have been for limited time periods. In other words, non-enforcement notices are usually simply a form of enforcement discretion. But when is coterminous in scope and duration with rulemaking, it is not so much an exercise of enforcement discretion as it is an end-run around public notice and comment. The only difference is that here, the agency did not feel obliged to make any finding of good cause. 

Cutting Public Comment in Half 

To speed things up further, HHS used another tactic that appears increasingly common across agencies: cutting public comment from the usual 60 days to 30 days. Again, the agency did this without any finding of good cause. While the APA does not dictate a specific period for public comment, Executive Orders 12866 and 13563 and Office of Management and Budget policy establish a strong norm of at least 60 days, absent good cause. In light of this norm, some courts have held that anything less is not “full notice and comment” and requires good cause. Yet recently, several controversial proposals have had only half that, without any finding of good cause. A few recent examples include:

• Several Department of Labor (DOL)  proposals to expand religious exemptions to equal employment requirements for federal contractors, exempt military medical contractors, and revamp contractor investigations.
• An EEOC proposal to limitfederal workers’ access to union representation in EEO complaints.
• DHS and DOJ proposals that expand bars to asylum eligibility and hike fees to apply for immigration benefits.
• Proposals by eight agencies to expand religious exemptions in federal aid programs and limit protections for beneficiaries. (A ninth, HUD, chose to stick to the 60-day norm.)

All of these proposals had 30-day comment periods, some of which included holidays in December, without reasonable rationale or cost-benefit analysis.

From Exemption to Repeal

The HHS grant rule’s end-run around notice and comment is the focus of the new lawsuit, but the rule raises other APA questions. In its proposed rule, the agency states it is repealing the nondiscrimination provisions because it has “faced several complaints, requests for exceptions, and lawsuits” involving religious adoption agencies. It cites the Miracle Hill waiver and a pending case where a similar agency seeks the same exemption in Michigan. Even assuming such waivers are appropriate for particular charities in particular grant programs—a point that is hotly contested, and currently pending before the Supreme Court in Fulton v. City of Philadelphia—HHS gave no reason why a handful of such requests would merit repealing the rule entirely, for all programs and organizations. Indeed, HHS did not discuss any regulatory alternatives at all. 

Ignoring the Benefits of Equality and the Costs of Discrimination 

As has become typical of the Trump Administration rulemaking on civil rights, HHS did not acknowledge the economic or other benefits of nondiscrimination rules or any costs or harms in repealing them. This is remarkable, since the rule affects dozens of programs and hundreds of billions of dollars, mostly in services to low-income and vulnerable people. Paradoxically, HHS states that the 2016 rule was fatally flawed for not sufficiently analyzing its economic effects—but also says, without analysis, that repeal would have “no economic impact.” Surely, the agency cannot have it both ways. (In other proposals, HHS has stated that any harms of allowing more discrimination will be outweighed by an influx of religious charities freed from burdensome rules, but has provided no evidence, nor explained how this would increase access without more funds and grants available.) 

In fact, as discussed in my previous post about the proposed rollback of ACA nondiscrimination rules, there is ample evidence that nondiscrimination rules in health and human services have major economic and non-economic benefits that outweigh any costs. Nondiscrimination rules help make sure that federally-funded help reaches everyone that Congress intended to get it in a timely fashion. Discrimination by its nature means arbitrary delay or denial of needed services for needy people, which can have severe effects on their health, safety, and economic security. The very experience of being discriminated against based on characteristics like religion, race, or gender has also been shown to discourage people from seeking help in the future, and to contribute to stress-related health problems over time. The costs of not getting help when you need it aren’t just personal, but end up being borne by health care systems, shelters, jails, and losses to the workforce. Given the number of the scale of federal grant programs, those impacts may be hard to quantify, but they are undoubtedly large. Until recently, agencies often discussed these costs and benefits when changing civil rights rules. Failing to mention them at all is arbitrary and capricious. 

Access to the Safety Net in a Time of Crisis 

APA litigation and civil rights policy disputes may seem overshadowed for the moment by the urgency of controlling a pandemic. But as COVID-19 and lifesaving social-distancing measures create growing economic dislocation, safety-net programs will be more critical than ever—and, as many have already pointed out, so will the rule of law.

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