In February 1971, at the tail end of Richard Nixon’s first term, his Secretary of Health, Education and Welfare, Elliot Richardson, approved a directive that was printed in the Federal Register as a Statement of Policy on “Public Participation in Rulemaking”.

The statement asserted that the Department of Health Education and Welfare (the precursor to the current Department of Health and Human Services [HHS]) would NOT exempt from full notice and comment rulemaking any rules relating to public property, loans, grants, benefits or contracts. The Department made this decision even though it was permitted to exempt these rules by the text of the Administrative Procedure Act (APA). Additionally, the policy statement urged the agency to only sparingly use a “good cause” exemption from notice and comment that was also included in the text of the APA.

The initial basis for the statement, which became known as the “Richardson Waiver,” was legislation that was introduced to repeal those provisions of the APA. The Administrative Conference of the United States recommended that agencies not wait for statutory amendment to allow greater public participation in rulemaking.

That legislation never passed. Richardson moved on to become the Attorney General of the United States during Nixon’s second term and became known for resigning instead of carrying out Nixon’s order to fire Watergate Special Prosecutor Archibald Cox. In the intervening 54 years, the Richardson Waiver continued in effect, quietly forcing HHS to push rules through notice and comment rulemaking that could have been exempted under the APA.

Kennedy Revoked Richardson Waiver

On March 3, 2025, newly minted Secretary of HHS Robert Kennedy issued his own statement of policy entitled “Policy on Adhering to the Text of the Administrative Procedure Act”. The new policy rescinded the Richardson Waiver and indicated that the Department would “continue to follow notice and comment rulemaking procedures in all instances in which it is required to do so by the statutory text of the APA.”

Kennedy’s statement cited to Perez v. Mortgage Bankers Ass’n, 575 U.S. 92, 100 (2015) when arguing that the Richardson Waiver is “contrary to the clear text of the APA and imposes on the Department obligations beyond the maximum procedural requirements specified in the APA” and indicated that current HHS belief is that the Richardson Waiver in some way violated the APA.

However, it is important to note that the Court in Perez specifically focused on court authority to compel notice and comment process where none is mandated by the APA. In her majority opinion in Perez, Justice Sotomayor specifically and positively quoted Justice Rehnquist’s opinion in Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519 (1978), which noted that it was within the agency’s discretion to implement additional structures above and beyond what is present in the statutory text. Secretary Kennedy’s statement does not address this difference.

So, as of right now, any HHS rules involving “public property, loans, grants, benefits or contracts” may be exempt from full notice and comment rulemaking under the APA. Additionally, the policy statement not only revoked the Richardson Waiver’s language involving the “sparing” use of the good cause exemption by HHS; it went a step further. The policy statement affirmatively instructed HHS that the good cause exception “should be used in appropriate circumstances in accordance with the requirements of the APA.”

What Does This Mean?

It is possible that HHS is looking to avoid APA challenges to rules involving grants and funding because of recent United States DOGE Service (USDS) efforts to freeze funding and/or cancel contracts. If HHS does not have to obtain notice and comment on rules that impact the issuance of funding or contracts, it will be much easier to accomplish the cuts that USDS is potentially seeking within the HHS.

It is also possible that HHS is looking to change some Medicare payment methodologies as a way to save money or implement new policy shifts. The current budget framework that Congress is working on demands approximately $880 billion in savings from the programs under the jurisdiction of the House Energy & Commerce Committee, the Committee that has jurisdiction over Medicare and Medicaid.

However, this last pathway would seem to be, at least in part, foreclosed by Section 1871 of the Medicare Act, (42 U.S.C § 1395hh(a)(2)) which establishes a notice and comment requirement for any rule that makes a substantive legal change to Medicare payment policies. That statute specifically carves out an exception for national coverage determinations, which are not required to be evaluated through public comment but have customarily been available for a 30-day comment period at the end of their review period.

In Azar v. Allina Health Services, 587 U.S. 566, 139 S. Ct. 1804 (2019), the Supreme Court ruled that, because of Section 1871, HHS could not evade the notice and comment obligations in retroactive policies affecting Medicare payments.

Medicaid might be a different story, however, as much of the payments in that program are initially disbursed from the federal government to states in the form of contracts and grants. Thus, any change to Medicaid payments might be exempt from notice and comment going forward.

It is most likely that the main thrust of this policy statement was to revive the “good cause” exemption and allow HHS to use it more frequently to exempt rules from notice and comment that would otherwise be subjected to it.

The exemption is available where HHS shows, with good cause, that applying notice and comment would be “impracticable, unnecessary, or contrary to the public interest”. This typically applies in cases of emergencies, instances where the notice and comment process would subvert the statutory scheme or where Congress intended to waive notice and comment. However, all of these determinations by the Department that “good cause” exists to avoid notice and comment rulemaking are reviewable by a court. Further, under the new Loper Bright standard, which allows courts to more closely examine whether an agency is complying with the APA, it may be harder for HHS to argue that one of its rules falls under the “good cause” exemption.

It will be important to monitor upcoming HHS regulatory actions to determine if the end of the Richardson Waiver truly results in a flood of regulation without public participation, or if this was just a cleanup of a 54-year-old policy that will have little to no impact on the regulatory world.

Reed Smith will continue to track developments in health care regulations. If you have any questions about this or any other aspect of federal health care regulations, please feel free to contact the health care attorneys at Reed Smith.