This Week in 340B: April 8 – 14, 2025
Find this week’s updates on 340B litigation to help you stay in the know on how 340B cases are developing across the country. Each week we comb through the dockets of more than 50 340B cases to provide you with a quick summary of relevant updates from the prior week in this industry-shaping body of litigation.
Issues at Stake: Rebate Model; Contract Pharmacy
In five cases against the Health Resources and Services Administration (HRSA) related to rebate models:
In one case, amici filed an amicus brief in support of the government.
In one case, a plaintiff filed a brief in opposition to defendants’ cross motion for summary judgment and reply in support of summary judgment.
In four cases, intervenor defendants filed a reply brief in support of their cross motion for summary judgment.
In a case challenging a Utah law that would restrict manufacturers’ ability to restrict contract pharmacy arrangements, the plaintiffs filed a motion for a preliminary injunction.
In two appealed cases challenging a Louisiana law governing contract pharmacy arrangements, the defendant and intervenor-defendant filed their briefs.
In a case by a drug manufacturer challenging an Arkansas state law governing contract pharmacy arrangements, the drug manufacturer filed a motion to strike a declaration.
Two drug manufacturer filed four separate complaints to challenge four state laws restricting contract pharmacy arrangements.
Reuben Bank and Deepika Raj also contributed to this article.
CMS Spring Provider Enrollment Updates
Centers for Medicare & Medicaid Services (CMS) released several pieces of Medicare provider enrollment guidance this spring, both emphasizing current policy and requirements as well as providing guidance and clarification relating to provider enrollment practices and forms. In particular, CMS reminded Medicare providers of the sanctions associated with failure to disclose their “managing employees” and updated its sub-regulatory guidance to clarify that Medicare providers’ legal business name as reported to CMS must very closely match what is listed on its IRS and NPI documentation.
In its Medicare Learning Network newsletter released on April 3, 2025, CMS reiterated Medicare enrollment requirements for providers and suppliers to report managing employees or face enrollment deactivation. CMS specified that managing employees are “general managers, business managers, administrators, directors, or other individuals who exercise operational or managerial control or directly or indirectly conduct day-to-day operations.” Roles that typically qualify as “managing employees,” per CMS, are Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Compliance Officer, Regional Manager, Clinical Manager, Operations Manager, Care Coordination Manager, Location Manager, Administration Manager, Compliance Director and Clinical Director. This guidance is a reminder to providers and suppliers to ensure the appropriate individuals are listed on its enrollment records as well as to continue to update enrollment records as individuals holding managerial positions change within an organization.
CMS also recently updated the Medicare Program Integrity Manual, Chapter 10, through Transmittal 13062. The updates became effective April 11, 2025.
Of note, CMS made several clarifications related to legal business name matches between provider enrollment systems (i.e., NPPES and PECOS) and a provider or supplier’s IRS CP-575. CMS’s general rule is that the legal business name must match between the IRS CP-575 as well as NPPES/PECOS. Deviations in legal business names across these sources can cause issues for providers and suppliers, particularly when punctuation, special characters or common words are involved. CMS addresses these situations by providing flexibility specifying cases where a Medicare Administrative Contractor (MAC) may accept certain mismatches.
CMS permits the MAC to accept a legal business name mismatch between the CP575 and NPPES/PECOS if there is no more than one punctuation/character discrepancy between the legal business name as listed on the CP575 and NPPES/PECOS and if the MAC believes based on the data and documentation furnished on and with the application that the legal business name listed on the CP575 and NPPES/PECOS belong to the same provider.
CMS also clarifies its stance in instances where certain common words may be present on the CP-575 but not in PECOS/NPPES or vice versa (for example, “the”, “a”, “to”, “of”, “and”, “in”, “for”, “as”, “you” and “at”). CMS permits the MAC to accept a legal business name mismatch between the CP575 and NPPES/PECOS if there is no more than one discrepancy between the two LBNs involving any of these 10 words, and if the MAC believes based on the data and documentation furnished on and with the application that the legal business name listed on the CP575 and NPPES/PECOS belong to the same provider.
A provider may have one discrepancy involving punctuation/special characters and one involving a common word, but no more than one of either. A discrepancy involving a common word only applies to the 10 words above, however, the discrepancy can be between one of the common words and a non-common word (for example, “of” and “with”).
Additional updates included in the transmittal mainly involve clarifying requirements involving provider enrollment forms and approval letter templates. A summary of those updates can be found below.
CMS has included instructions clarifying that the account holder’s street address on the CMS 588 EFT Form can be the provider or supplier’s practice location address, correspondence address, special payment address or chain home office address for those providers reporting a chain home office on the CMS 855A.
CMS also provides guidance indicating an already-enrolled supplier is not required to submit a new CMS-460 if they are enrolling in another state or MAC jurisdiction. A copy of the already-enrolled supplier’s CMS-460 must be provided to the new contractor.
CMS has included additional language in its Part A/B Certified Provider and Supplier Approval Letter Templates clarifying that if the provider/supplier has elected to use a CMS approved accreditation organization (AO), the AO will conduct the survey and recommend approval to the State Agency to finalize certification.
CMS to Withdraw Federal Medicaid Match for Workforce, Social Needs, and Infrastructure: What States, Health Care Providers and Community Organizations Need to Know
In a move signaling a major shift in federal priorities, the Centers for Medicare & Medicaid Services (“CMS”) recently announced it will limit federal funding for state Medicaid initiatives that support services beyond direct medical care. New policy guidance indicates that CMS intends to narrow the scope of the federal-state Medicaid partnership, refocusing matching funds on core healthcare services delivered to Medicaid beneficiaries. The timing is notable, as Congress and state Medicaid leaders brace for the potential of more significant cuts to federal funding for Medicaid in the upcoming federal budget reconciliation process.
On April 10, CMS notified states that it will no longer approve new, or renew existing, state proposals for Section 1115(a) Demonstration Project expenditure authority to provide federal matching funds for state expenditures for designated state health programs (“DSHP”) and designated state investment programs (“DSIP”).
Section 1115 of the Social Security Act authorizes the Secretary of the U.S. Department of Health and Human Services (“HHS”) to waive any federal Medicaid requirements for demonstration projects that are “likely to assist in promoting Medicaid objectives.” Section 1115 waiver authority has long been a tool for states to expand coverage to populations or services not otherwise eligible for federal Medicaid matching funds and to reinvest savings in other Medicaid initiatives – provided the overall project remains budget neutral to the federal government. Budget neutrality is typically assessed against what projected federal expenditures would be without the waiver and is the subject of detailed negotiations between states and CMS.
Beginning in 2005, CMS allowed states to claim federal matching funds for certain existing, state-funded programs that would not otherwise qualify – designated as DSHPs. Although CMS sought to phase out these arrangements during the Trump administration in 2017, the Biden administration resumed approval of DSHPs and DSIPs in several states, including New York Arizona, California, Hawaii, Massachusetts, North Carolina, Oregon and Washington.
For many states, DSHP and DSIP were a key part of their broader strategies to address healthcare provider shortages, strengthen care delivery systems, and support vulnerable populations through upstream public health and health-related services interventions. The shift in federal policy leaves state Medicaid agencies, hospitals, health care providers, and community-based organizations facing a new set of tradeoffs about where and how to support Medicaid patients and their communities.
Approved programs must meet specific parameters established by CMS, including that they are population or public health focused and serve a community largely made up of low-income individuals, and the state must show that the “freed up” state funding is used for another demonstration initiative that will promote the objectives of the Medicaid program. Some of the recently approved programs include:
$310 million in grant funds to support the training for primary care professionals who commit to practicing in an underserved area, and $17 million for a physician loan repayment program in California;
$105 million to support caregivers and people with dementia through community-based supports and $20 million for non-medical services such as housekeeping, personal care, and case management for older adults in New York; and
$20 million in telehealth infrastructure grants to rural healthcare providers to purchase equipment and high-speed internet access necessary to support telehealth services in North Carolina.
CMS explained that: “DSHPs and DSIPs have grown from approximately $886 million in 2019 to nearly $2.7 billion in eligible expenditures in 2025, representing increasing costs to the federal government without a sustainable state contribution.”
CMS’s policy announcement follows another policy change in early March, when CMS signaled it would evaluate state requests for federal Medicaid support for housing and nutrition services and supports on a case-by-case basis – rolling back broader flexibilities previously offered to state Medicaid programs to address health-related social needs.
The withdrawal of federal matching funds for Medicaid initiatives targeting health-related social needs, workforce development and infrastructure marks a significant shift in the federal-state partnership. States may now have to reassess or scale back innovative approaches that have shown promise in improving health outcomes and keeping low-income individuals – particularly older adults and children – out of institutional settings. At the same time, a growing body of research underscores the value of these investments in achieving long-term cost savings and better population health. It remains to be seen how CMS will handle discussions with states about their existing DSHP and DSIP authority or how states will respond in future Section 1115 waiver proposals and renewals. We will be tracking these developments closely in the coming months.
Safety Basics XII: Key Insights into OSHA Investigations and Inspections [Podcast]
In episode 12 of Ogletree Deakins’ Safety Basics podcast series, John Surma (shareholder, Houston) sits down with Karen Tynan (shareholder, Sacramento) to discuss the intricacies of OSHA inspections and investigations. Karen and John cover how to effectively manage interactions with OSHA and ensure compliance. They also discuss the various types of inspections, the importance of understanding employer rights, and best practices for handling document requests, walkarounds, and employee interviews.
OSHA in 2025: Observations and Expectations
The beginning of the second Trump administration has left employers asking myriad questions with respect to the Occupational Safety and Health Administration (OSHA). Are there plans to eliminate OSHA? Will inspections and citations continue? What will happen to proposed rules? Will new rules be introduced?
We have been closely monitoring federal OSHA developments and are well positioned to help employers navigate these difficult questions. Here are a few of our takeaways from what we have seen so far.
Yes, OSHA Still Exists, and A Return to OSHA as We Knew it Under the First Trump Administration is Likely
Speculation that the Trump administration would move to eliminate OSHA has proven to be just that — speculation. Indeed, the following nominations signal a return to the OSHA we knew under his first administration:
Representative Lori Chavez-DeRemer as Secretary Labor. With the support of the Teamsters Union and a reputation as one of the more pro-labor Republicans in the House of Representatives, this nomination projects a balanced approach.
David Keeling as Assistant Secretary of Labor for Occupational Safety and Health. As a former high-level safety director at Amazon, Mr. Keeling’s nomination mirrors that of former FedEx safety official Scott Mugno during the first administration.
Deputy Solicitor of Labor Jonathan Snare for the Occupational Safety and Health Review Commission (OSHRC). This appointment at a minimum shows the administration’s intent to not let the Commission be vacant.
What a Return to “Trump 1.0” Means for Occupational Safety and Health
Inspections and citations will continue. Make no mistake, OSHA inspectors at the state and federal levels will continue to conduct in-person inspections of your worksite and will issue citations. While the total number of OSHA inspectors was reduced during his first administration, the overall number of inspections was on par with the Biden administration.
Current proposed rules will likely not be finalized. During the Biden administration, OSHA advanced three rules to the proposed stage that are unlikely to advance during the current administration.
Heat Stress. While a public hearing is tentatively scheduled for June 16, 2025 the proposed rule received significant pushback from the regulated community, especially with respect to the regulation of indoor worksites.
Walkaround Rule. This proposed rule, which would allow union representatives to accompany an OSHA inspector for inspections at non-unionized worksites, has been challenged in court by the U.S. Chamber of Commerce.
Emergency Response Rule. This is another rule that received significant pushback from the regulated community, including from the Chemical Safety and Hazard Prevention Board, which commented that the rule was not sufficiently protective of frontline responders.
Few if any new rules will be proposed. In line with the lack of rulemaking during the first Trump administration, coupled with the new Regulatory Freeze and significant staffing cuts at the National Institute for Occupational Safety and Health (NIOSH), employers can expect few if any new proposed rules from OSHA for the next four years.
Increased reliance on the general duty clause. Instead of advancing specific rules (such as heat stress and workplace violence), this administration’s OSHA will likely return to its reliance on the general duty clause to issue citations. Note that the burden of proof for OSHA is significantly higher in these general duty cases.
States will push agendas in different directions. With OSHA on the rulemaking sidelines for the foreseeable future, expect state plan states to attempt to grab, or rescind, regulatory power over workplace health and safety. For example, CalOSHA officials have recently commented on the need to create “an independent Cal/OSHA that is not dependent in any way on a federal OSHA.” Meanwhile, the Kentucky Legislature recently introduced House Bill 398, which would prevent the state from issuing a safety regulation that is more stringent than federal OSHA.
Next Steps for Employers:
Given the current state of OSHA and what we expect moving forward, employers should:
Review current OSHA injury and illness recordkeeping and reporting practices.
Develop a written plan for responding if an OSHA inspector arrives at your worksite.
Assess what OSHA standards currently apply to your worksite.
Take reasonable steps to address known hazards and document all efforts to abate.
Evaluate training programs and train managers on compliance with the current standards.
Watch for state legislation regarding workplace safety and health, especially in state plan states.
Continue evaluating the pending rules from the Biden administration; compliance with these rules is not currently mandated.
CMS Releases FY 2026 Hospital Inpatient Prospective Payment System (IPPS) Proposed Rule
On April 11, 2025, the Centers for Medicare & Medicaid Services (CMS) issued the fiscal year (FY) 2026 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) Prospective Payment System proposed rule. The proposed rule would update Medicare fee-for-service payment rates and policies for inpatient hospitals and LTCHs for FY 2026. Comments on the proposed rule are due on June 10, 2025. A fact sheet is available here. The proposed rule notably does not include anticipated provisions on hospital conditions of participation related to gender-affirming care.
KEY TAKEAWAYS FROM THE FY 2026 IPPS PROPOSED RULE
Standardized Amount: CMS proposes a 2.4% increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting Program and are meaningful electronic health record users. This reflects a projected FY 2026 hospital market basket increase of 3.2%, less a 0.8 percentage point productivity adjustment.
Medicare Severity Diagnosis-Related Group (MS-DRG) Updates: CMS proposes creating new MS-DRG 209 for complex aortic arch procedures, MS-DRG 213 for endovascular abdominal aorta and iliac branch procedures, MS-DRGs 359 and 360 for percutaneous coronary atherectomy with intraluminal device, MS-DRG 318 for percutaneous coronary atherectomy without intraluminal device, and MS-DRGs 403 and 404 for hip or knee procedures with principal diagnosis of periprosthetic joint infection. CMS proposes to delete hypertensive encephalopathy MS-DRGs 077, 078, and 079.
Transforming Episode Accountability Model (TEAM): CMS proposes several updates to TEAM, including a limited deferment for certain hospitals, neutral scoring on quality for hospitals with insufficient quality data, changes to the payment methodology and risk adjustment, and expansion of the skilled nursing facility three-day rule waiver. The basic tenets of the model remain the same: it is a five-year mandatory model that will begin on January 1, 2026.
Special Rural Designations: While Congress typically extends the Medicare-dependent hospital (MDH) program and low-volume hospital payment adjustment, both are set to expire on September 30, 2025, and Congress has not yet acted to extend them further. Because CMS could not assume the continuation of these programs for purposes of the FY 2026 proposed rule, CMS states that as of October 1, 2025, hospitals that previously qualified for MDH status will be paid based on the federal rate. On the same date, both the qualifying criteria and the payment adjustment methodology for the low-volume adjustment will revert to the statutory requirements that were in effect prior to FY 2011.
New Technology Add-On Payments: For FY 2027 and beyond, CMS proposes one minor policy change and proposes to broaden the application details publicly posted online.
Quality Reporting Programs: The rule signals future quality measures supporting the Make America Healthy Again priorities of well-being and nutrition, and proposes to remove quality measures on health equity and social determinants of health.
Wage Index: CMS proposes to discontinue the low wage index policy and to use a different transition policy to phase out the policy for affected hospitals.
Disproportionate Share Hospital Payments and Uncompensated Care Payments: The total proposed uncompensated care payment to eligible disproportionate share hospitals for FY 2026 is $7.29 billion, an increase from the $5.78 billion finalized in FY 2025.
Graduate Medical Education: CMS proposes technical changes to the calculation of full-time equivalent resident counts, caps, and three-year rolling averages for direct graduate medical education. CMS also proposes technical changes to the calculation of net nursing and allied health education costs.
Requests for Information (RFIs): CMS solicits comments on the use of the Health Level 7® Fast Healthcare Interoperability Resources® in electronic clinical quality measure reporting in various quality reporting programs. CMS also seeks public input on ways to streamline regulations, reduce administrative burdens, and identify duplicative requirements across the Medicare program. Responses to this RFI are to be submitted through a web-based form, separate from other comments on the rule.
Additional Authors: Maddie News, Simeon Niles, Kristen O’Brien, Parashar Patel, Erica Stocker, Devin Stone, and Eric Zimmerman
Recent Federal Developments for April 15, 2025
TSCA/FIFRA/TRI
EPA Releases New TSCA And FIFRA Enforcement Policies: On January 17, 2025, days before the end of President Biden’s term, the U.S. Environmental Protection Agency (EPA) released two new enforcement documents: (1) Expedited Settlement Agreement Pilot Program Under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) (FIFRA Settlement Pilot Program or Pilot Program); and (2) Interim Consolidated Enforcement Response and Penalty Policy (CERPP) for the Toxic Substances Control Act (TSCA) New and Existing Chemicals Program. In that both of these enforcement documents were prepared by the prior Administration, their enduring relevance, like so many other issues at EPA, is unclear. As new leadership populates the ranks at EPA program offices, including the Office of Enforcement and Compliance Assurance, we may learn more. For more information on these enforcement documents, please read our March 21, 2025, memorandum.
EPA Argues For Remand Of Final Rule Amending Risk Evaluation Framework: On March 21, 2025, the U.S. Court of Appeals for the District of Columbia Circuit heard oral argument in a case challenging EPA’s May 3, 2024, final rule amending the procedural framework rule for conducting risk evaluations under TSCA. United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW) v. EPA, Consolidated Case No. 24-1151. If you have a couple of hours to spare, listening to the argument is well worth the time. The court was uniquely curious about the litigants’ request for a remand and probed deeply into the difference between a remand and a vacatur. Judge Rao bluntly questioned on what authority the court could rely to remand the case. An answer was not forthcoming, fueling speculation the court will rule on the merits. According to EPA, the court should not rule on the case when the Agency plans to revise and issue a new final rule by April 2026. The court expressed skepticism that EPA can complete a rulemaking so quickly. The court also questioned when TSCA requires that conditions of use (COU) be identified, whether making a single risk determination for a chemical is consistent with TSCA, and whether USW has standing to challenge the May 2024 rule’s provisions regarding personal protective equipment (PPE). More information is available in our March 31, 2025, blog item.
EPA Postpones Effective Date Of Certain Provisions Of TCE Risk Management Rule To June 20, 2025: On April 2, 2025, EPA announced that it is postponing the effectiveness of certain provisions of its December 17, 2024, final risk management rule for trichloroethylene (TCE) until June 20, 2025. 90 Fed. Reg. 14415. EPA states in the April 2, 2025, notice that, in light of pending litigation, it has reconsidered its position from its earlier denial of an administrative stay pending judicial review and determined that justice requires a 90-day postponement of the effective date of the conditions for each of the TSCA Section 6(g) exemptions. According to EPA, petitioners allege that because the interim workplace conditions would require petitioners to reduce TCE exposure levels to the interim existing chemical exposure limit (ECEL) of 0.2 parts per million (ppm), the final rule effectively requires the use of PPE “that cannot feasibly be worn all day, and therefore could cause petitioners to cease operations.” EPA notes that although it does not concede these allegations, “petitioners have raised significant legal challenges and allege significant harms as a result of the workplace conditions required by the final rule’s TSCA section 6(g) exemptions.” EPA states that “[m]oreover, a limited postponement that maintains the status quo for these uses appropriately balances the alleged harm to petitioners and other entities with critical uses against the public interest in the health protections that will be afforded by the broader TCE prohibitions and workplace protections going into effect.”
EPA Announces Changes To Pesticide Data Submission Process For Data Matrix Form: On April 3, 2025, EPA announced changes on how the data matrix form (EPA Form 8570-35) is submitted to EPA, stating this change is an improvement to simplify the process for how companies submit data to EPA as part of a pesticide registration package. EPA states these improvements also will make EPA’s processing of this information more efficient. Companies are required to submit a data matrix form when their pesticide registration packages contain submitted data or cited data from outside sources. Previously, companies submitted two versions of the data matrix form (in either paper or electronic format): one for internal EPA use and one with reference data redacted for public use. EPA states in the interest of reducing burden and, according to EPA, because no information on the data matrix form is confidential business information (CBI), it determined that there is no need for a redacted version and is now only requiring one unredacted version of the form to be submitted for both internal and public use. Additionally, EPA will no longer accept paper submissions of this form and will only accept this information via a web-based portal.
Additional information on the new update is available in EPA’s recently issued Pesticide Registration (PR) Notice 2025-1. Instructions on how to complete and submit the revised forms will be available in the updated Pesticide Registration Manual.
EPA Proposes SNURs For Certain Chemical Substances: EPA proposed significant new use rules (SNUR) on April 4, 2025, for certain chemical substances that were the subject of premanufacture notices (PMN) and are also subject to an Order issued by EPA pursuant to TSCA. 90 Fed. Reg. 14743. The SNURs require persons who intend to manufacture (defined by statute to include import) or process any of these chemical substances for an activity that is proposed as a significant new use by this rulemaking to notify EPA at least 90 days before commencing that activity. The required notification initiates EPA’s evaluation of the conditions of that use for that chemical substance. In addition, the manufacture or processing for the significant new use may not commence until EPA has conducted a review of the required notification, made an appropriate determination regarding that notification, and taken such actions as required by that determination. Comments are due May 5, 2025.
RCRA/CERCLA/CWA/CAA/PHMSA/SDWA
States Take Action To Regulate And Limit PFAS In Industrial Effluent Despite Federal Inaction: On January 21, 2025, EPA’s proposed rule seeking to set effluent limitation guidelines for certain PFAS under the Clean Water Act (CWA) was withdrawn from Office of Management and Budget (OMB) review following President Trump’s Executive Order (EO) implementing a regulatory freeze. Federal action may be halted, but states are beginning to enact legislation that seeks to address PFAS contained in industrial effluent. These laws are currently sparse, with Maryland being the most recent state to establish a robust framework that requires industrial sources to limit PFAS in effluent. A handful of other states have laws establishing monitoring and reporting protocols for PFAS in industrial effluent, and other states have similar frameworks planned for future implementation. While these efforts are not yet widespread, heightened scrutiny of PFAS use suggests that more and more states will seek to monitor and limit PFAS in industrial effluent. For more information, please read our March 28, 2025, memorandum.
EPA Accepts Requests For Presidential Exemption Under CAA Section 112: On March 12, 2025, EPA set up an electronic mailbox to allow the regulated community to request a Presidential Exemption under Section 112(i)(4) of the Clean Air Act (CAA). EPA states that the CAA allows the President to exempt stationary sources of air pollution from compliance with any standard or limitation under Section 112 for up to two years if the technology to implement the standard is not available and it is in the national security interests of the United States to do so. EPA notes that submitting a request does not entitle the submitter to an exemption and that the President will make a decision on the merits. An exemption may be extended for up to two additional years and can be renewed, if appropriate. Requests were due March 31, 2025.
EPA Extends Reporting Deadline Under GHG Reporting Rule For 2024 Data: On March 20, 2025, EPA extended the reporting deadline under the Greenhouse Gas (GHG) Reporting Rule for reporting year 2024 data from March 31, 2025, to May 30, 2025. 90 Fed. Reg. 13085. The rule changes only the reporting deadline for annual GHG reports for reporting year 2024. It does not change the reporting deadline for future years, and it does not change the requirements for what regulated entities must report. The rule was effective March 20, 2025.
EPA And Army Corps Of Engineers Announce WOTUS Listening Sessions And Solicit Stakeholder Feedback: On March 24, 2025, EPA and U.S. Army Corps of Engineers announced that they will hold listening sessions on specific key topic areas to hear interested stakeholders’ perspectives on defining “waters of the United States” (WOTUS) consistent with the Supreme Court’s interpretation of the scope of CWA jurisdiction and how to implement that interpretation as the agencies consider next steps. 90 Fed. Reg. 13428. The listening sessions will be held in-person with a virtual option for states, Tribes, industry and agricultural stakeholders, environmental and conservation stakeholders, and the general public. The agencies seek input from a full spectrum of co-regulators and stakeholders on key topic areas related to the definition of WOTUS in light of Sackett v. EPA regarding “continuous surface connection,” “relatively permanent,” and jurisdictional versus non-jurisdictional ditches. The agencies also seek input on implementation challenges related to those key topic areas. Information on the listening sessions is available on EPA’s website. The agencies are also accepting written recommendations from members of the public via a recommendations docket. Written recommendations are due April 23, 2025.
EPA Issues Partial Stay Of Integrated Iron And Steel Manufacturing Facilities Technology Review: By a letter dated August 14, 2024, and supplemented by a letter dated March 5, 2025, the EPA’s Office of Air and Radiation announced the convening of a proceeding for reconsideration of certain requirements in the final rule “National Emission Standards for Hazardous Air Pollutants: Integrated Iron and Steel Manufacturing Facilities Technology Review,” published on April 3, 2024. On March 31, 2025, EPA issued a final rule that stayed provisions establishing compliance deadlines in 2025 for requirements that were added or revised by the April 3, 2024, final rule for 90 days pending reconsideration. 90 Fed. Reg. 14207. EPA states that it will reconsider the following topics from two petitions pursuant to CAA Section 307(d)(7)(B): work practice standards for unmeasured fugitive and intermittent particulate from unplanned bleeder valve openings; the opacity limit for planned bleeder valve openings; work practice standards for bell leaks; and the opacity limit for slag processing and handling. The final rule was effective March 31, 2025.
EPA Will Review NESHAP For Brick And Structural Clay Products Manufacturing And Clay Ceramics Manufacturing: On March 31, 2025, EPA requested comments for a review pursuant to Section 610 of the Regulatory Flexibility Act of the National Emission Standards for Hazardous Air Pollutants (NESHAP) for Brick and Structural Clay Products Manufacturing; and Clay Ceramics Manufacturing (Brick and Clay 610 Review). 90 Fed. Reg. 14227. EPA states that as part of this review, it will consider comments on the following factors: the continued need for the rule; the nature of complaints or comments received concerning the rule; the complexity of the rule; the extent to which the rule overlaps, duplicates, or conflicts with other federal, state, or local government rules; and the degree to which the technology, economic conditions, or other factors have changed in areas affected by the rule. Comments are due May 30, 2025.
EPA Will Review New Science On Fluoride In Drinking Water: EPA announced on April 7, 2025, that it will “expeditiously review new scientific information on potential health risks of fluoride in drinking water.” According to EPA, the evaluation will inform its decisions on the standard for fluoride under the Safe Drinking Water Act (SDWA). EPA notes that the National Toxicology Program (NTP) released a report in August 2024 concluding with “moderate confidence” that fluoride exposure above 1.5 milligrams per liter is associated with lower intelligence quotient (IQ) in children and that more research is needed to understand better if there are health risks associated with exposure to lower fluoride concentrations. EPA states that it “is committing to conduct a thorough review of these findings and additional peer reviewed studies to prepare an updated health effects assessment for fluoride that will inform any potential revisions to EPA’s fluoride drinking water standard.”
FDA
FDA Provides Summary Data On Cosmetic Product Facility And Product Registration Listing: On March 13, 2025, the U.S. Food and Drug Administration (FDA) updated constituents by providing a tabulated summary of the data collected from its mandatory registration of cosmetic product facilities and listings of cosmetic products under the Modernization of Cosmetics Regulation Act of 2022 (MoCRA). MoCRA requires manufacturers and processors to register their facilities and renew registrations every two years. This requirement includes providing details on the type of cosmetic products manufactured or processed, and a list of ingredients used in those products at each facility. The tabulated list includes the number of domestic and foreign registered facilities as of January 1, 2025. There are 1,800 domestic facilities registered and 7,732 foreign facility registrations, with the highest number of facility registrations being noted in China with 4,260.
FDA Announces Chemical Contaminants Tool: On March 20, 2025, FDA announced the Chemical Contaminants Transparency Tool for foods, which is an online database providing a list of contaminant levels used by FDA to evaluate potential health risks of contaminants in human foods. The tool lists thresholds (e.g., action levels, recommended maximum levels) for contaminants such as heavy metals and pesticides, in foods. The FDA Acting Commissioner stated that “Ideally there would be no contaminants in our food supply, but chemical contaminants may occur in food when they are present in the growing, storage or processing environments.”
FDA Intends To Extend Compliance Date For FSMA Program: On March 20, 2025, FDA announced an intention to extend the compliance date for the Food Safety Modernization Act (FSMA) Food Traceability Rule by 30 months. An excerpt from the announcement states that “FDA intends to use the extended time period to continue the agency’s work with stakeholders, including by participating in cross-sector dialogue to identify solutions to implementation challenges and by continuing to provide technical assistance, tools, and other resources to assist industry with implementation.” Additional details for the Food Traceability Rule are available at the link here.
NANOTECHNOLOGY
EC Scientific Committee Begins Public Consultation On Preliminary Opinion On Hydroxyapatite (Nano): On April 3, 2024, the European Commission’s (EC) Scientific Committee on Consumer Safety (SCCS) began a public consultation on its preliminary opinion on the safety of hydroxyapatite (nano) in oral products. The EC asked SCCS if it considers hydroxyapatite (nano) safe when used in toothpaste up to a maximum concentration of 29.5 percent and in mouthwash up to a maximum concentration of ten percent according to the specifications as reported in the submission, taking into account reasonably foreseeable exposure conditions. According to the preliminary opinion, based on the data provided, SCCS considers hydroxyapatite (nano) safe when used at concentrations up to 29.5 percent in toothpaste, and up to ten percent in mouthwash. Comments on the preliminary opinion are due May 30, 2025. More information is available in our April 9, 2025, blog item.
EUON Publishes Nanopinion On Enhancing The Regulatory Application Of NAMs To Assess Nanomaterial Risks In The Food And Feed Sector: On April 8, 2025, the EU Observatory for Nanomaterials (EUON) published a Nanopinion entitled “A Qualification System to Accelerate Development and Regulatory Implementation of New Approach Methodologies (NAMs).” The authors explain how the NAMs4NANO project, funded by the European Food Safety Authority (EFSA), enhances the regulatory application of NAMs for assessing nanomaterial risks in the food and feed sector. The authors propose to establish three qualification programs, covering NAMs for nanomaterial physicochemical characterization, characterization of nanomaterials in relevant biological fluid and toxicity screening. More information is available in our April 15, 2025, blog item.
PUBLIC POLICY AND REGULATION
What It Means To Be “Essential” In The Federal Workforce: Current news on the government efficiency and reform front concerns the near-miss of a government shutdown (the budget would have lapsed at midnight on March 14, 2025). One reason some cited against allowing a shutdown to occur is how it might encourage or otherwise aid in attempts to eliminate positions if they were deemed “essential” or not. The recent potential shutdown was averted, but the essential/non-essential distinction will have little meaningful impact on workforce planning. Federal agencies have long had plans for a possible shutdown, especially in recent years, distinguishing who or what positions were needed if the budget was not authorized in time. These designations are already made, so if the categorization was useful as some kind of autonomous decision mechanism to make personnel decisions, shutdown or no shutdown would not make a difference. For more thoughts on this issue, please read our March 19, 2025, blog item.
Reorganize EPA? A Very Old Idea: Recent press reports tell of rumors of impactful (some fear catastrophic) budget cuts to EPA. The organization of EPA, and how that organization impacts its effectiveness, has been an issue since its founding. From its earliest days, there have been proposals for making EPA a cabinet-level Department. During the George H.W. Bush Administration, to knit together the programs and statutes more coherently, the EPA policy office developed a comprehensive draft of possible ways to reorganize the underlying environmental legislation and a parallel EPA structure. Most recently, and perhaps most important given the current Administration’s efforts at government reform, the subject of “reorganizing” EPA is included as a chapter in the Project 2025 report. That chapter has led to fears from many that budget and personnel cuts are part of a larger plan to upend the Agency. Recent press reports (like The Washington Post’s March 27, 2025, article, “Internal White House document details layoff plans across U.S. agencies”) indicate that the “plan” for EPA is to cut 10 percent of its workforce — which would seem less than some aggregated possibilities discussed in the Project 2025 chapter but could still include “firing up to 1,115 people” from the Office of Research and Development (ORD) alone. Project 2025 suggests large cuts to regional offices, the elimination of the Integrated Risk Information System (IRIS) program, a “reorganization” of the enforcement office and environmental justice programs, and other changes which would seem to add up to less than a 10 percent cut to the workforce. Attrition rates alone are estimated to be an average of 6 percent, and early retirements accelerated by, among other things, the fear of possible cuts, would likely add up to 10 percent or more.
But the goal of reforming, reorganizing, or reducing the workforce is neither a new idea nor one lacking merit. EPA’s organizational structure has been under review since its inception. In the present moment, however, the lack of a cohesive or consistent approach leaves significant questions not only about the underlying motivation but also about the final impact of the effort. “Less bureaucracy” does not necessarily equate to reduced numbers of staff. And as some government functions will now contend with seemingly disorganized staff reductions, public resentment about “the bureaucracy” may only increase. Something to think about as we wait (and hope) to get our social security check or passport — or pesticide registration — on time. More information is available in our April 2, 2025, blog.
The Clock Is Ticking For Republicans To Use The Congressional Review Act: Congress has approximately one month to use the Congressional Review Act (CRA) to undo qualifying Biden Administration-issued regulations. According to an updated analysis by Bloomberg Government, the estimated period to expedite repeal of Biden Administration rules ends May 8, 2025. This gives Congress approximately four weeks to act on the dozens of pending CRA bills. More information is available in our April 10, 2025, blog item.
LEGISLATIVE
House Bill Would Codify EPA’s Office Of Children’s Health Protection: On March 25, 2025, Representatives Jerrold Nadler (D-NY), John Garamendi (D-CA), and Kathy Castor (D-FL) reintroduced the Children’s Health Protection Act of 2025 (H.R. 2339) that would codify into law the only office within EPA dedicated to children’s health, the Office of Children’s Health Protection (OCHP). According to Nadler’s March 25, 2025, press release, this office would be responsible for rulemaking, policy, enforcement actions, research, and applications of science that focus on prenatal and childhood vulnerabilities, safe chemicals management, and coordination of community-based programs. The bill would make the EPA Children’s Health Protection Advisory Committee a permanent advisory committee. This advisory committee will advise the EPA Administrator in regard to the activities of the Office of Children’s Health Protection, all relevant information regarding regulations, research, and communications related to children’s health, and continue to serve the EPA in protecting children from environmental harm.
Nitrate And Arsenic In Drinking Water Act Reintroduced In The House: On Aril 3, 2025, Representatives David Valadao (R-CA) and Norma Torres (D-CA) reintroduced the Nitrate and Arsenic in Drinking Water Act (H.R. 2656). According to Valadao’s April 3, 2025, press release, the bipartisan bill would:
Amend the SDWA to provide grants for nitrate and arsenic reduction;
Authorize $15 million for fiscal year 2026 and every fiscal year after; and
Direct the EPA Administrator to conduct a review on programs under the SDWA, taking into consideration the diverse needs of underserved populations.
Bipartisan Bill Would Clean Up Marine Debris: On April 3, 2025, Representatives Suzanne Bonamici (D-OR), Amata Coleman Radewagen (R-American Samoa-At Large), and James Moylan (R-Guam-At Large) introduced the Save Our Seas (S.O.S.) 2.0 Amendments Act of 2025 (H.R. 2620) to strengthen efforts to combat marine debris and protect the ocean. According to Bonamici’s April 3, 2025, press release, the bipartisan bill builds upon the success of the Save Our Seas 2.0 Act and provides greater flexibility to the National Oceanic and Atmospheric Administration (NOAA) to work with other stakeholders in marine debris prevention and removal efforts.
MISCELLANEOUS
Canada Releases Final State Of PFAS Report And Proposed Risk Management Approach: On March 5, 2025, Environment and Climate Change Canada (ECCC) announced the availability of its final State of Per- and Polyfluoroalkyl Substances (PFAS) Report (State of PFAS Report) and proposed risk management approach for PFAS, excluding fluoropolymers. The State of PFAS Report concludes that the class of PFAS, excluding fluoropolymers, is harmful to human health and the environment. To address these risks, Canada proposed on March 8, 2025, to add the class of PFAS, excluding fluoropolymers, to Part 2 of Schedule 1 to the Canadian Environmental Protection Act, 1999 (CEPA). ECCC states that it will prioritize the protection of health and the environment while considering factors such as the availability of alternatives. Phase 1, starting in 2025, will address PFAS in firefighting foams to protect better firefighters and the environment. Phase 2 will focus on limiting exposure to PFAS in products that are not needed for the protection of human health, safety, or the environment. ECCC notes that this will include products like cosmetics, food packaging materials, and textiles. ECCC states that it will publish a final decision on the proposed addition of 131 individual PFAS to the National Pollutant Release Inventory (NPRI) with reporting to take place by June 2026 for PFAS releases that occurred during the 2025 calendar year. ECCC states that these data will improve its understanding of how PFAS are used in Canada, help it evaluate possible industrial PFAS contamination, and support efforts to reduce environmental and human exposure to harmful substances. Comments on the proposed risk management approach and the proposed order to add the class of PFAS, excluding fluoropolymers, to CEPA Schedule 1 Part 2 are due May 7, 2025. More information is available in our March 24, 2025, memorandum.
Amazon Files Suit Against CPSC, Challenging CPSC’s Determination That Amazon Is A Distributor: On March 14, 2025, Amazon filed suit against the Consumer Product Safety Commission (CPSC) in the U.S. District Court for the District of Maryland, challenging CPSC’s July 29, 2024, and January 16, 2025, orders determining that Amazon is “a ‘distributor’ of certain products that are defective or fail to meet federal consumer product safety standards, and therefore bears legal responsibility for their recall.” According to CPSC’s January 17, 2025, announcement, “[m]ore than 400,000 products are subject to this Order: specifically, faulty carbon monoxide (CO) detectors, hairdryers without electrocution protection, and children’s sleepwear that violated federal flammability standards.” CPSC determined that the products, listed on Amazon.com and sold by third-party sellers using the Fulfillment by Amazon (FBA) program, pose a “substantial product hazard” under the Consumer Product Safety Act (CPSA). In its complaint, Amazon argues that CPSC “overstepped” the statutory limits of the CPSA by ordering “a wide-ranging recall of products that were manufactured, owned, and sold by third parties,” not Amazon itself. Amazon states that CPSC’s recall order “relies on an unprecedented legal theory that stretches the [CPSA] beyond the breaking point and fails to discharge” CPSC’s obligations under the Administrative Procedure Act (APA). More information is available in our March 20, 2025, blog item.
NSF Announces PFAS-Free Certification For Nonfood Compounds And Food Equipment Materials: On March 24, 2025, NSF announced the release of NSF Certification Guideline 537: PFAS-Free Products for Nonfood Compounds and Food Equipment Materials (NSF 537). The press release states that to be certified, nonfood compound products “must first be registered under NSF’s Nonfood Compounds Guidelines or certified by NSF to ISO 21469, Safety of Machinery, Lubricants with Incidental Product Contact-Hygiene Requirements.” According to the press release, food equipment materials “must be certified to NSF/ANSI Standard 51: Food Equipment Materials to ensure that products meet minimum public health and sanitation requirements.” The press release notes that “PFAS-Free means that the product contains no intentionally added PFAS, no post-consumer recycled material, no intentionally used PFAS additives (PPA, etc.) and the Total Organic Fluorine [(TOF)] is less than 50 ppm.” Certification will require that TOF levels be retested annually. NSF will add certified nonfood compounds to the NSF White Book™ and add certified food equipment materials to the NSF Certified Food Equipment listing.
Petitions Filed To Add Chemicals To List Of Chemical Substances Subject To Superfund Excise Tax: On April 2 and April 3, 2025, the Internal Revenue Service (IRS) announced that petitions have been filed to add the following chemicals to the list of taxable substances:
Polyisobutylene (90 Fed. Reg. 14521): Petition filed by TPC Group, Inc., an exporter of polyisobutylene;
Acrylonitrile butadiene styrene (90 Fed. Reg. 14687): Petition filed by Trinseo LLC, an importer and exporter of acrylonitrile butadiene styrene;
Acrylonitrile-butadiene rubber (90 Fed. Reg. 14684): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of acrylonitrile-butadiene rubber;
Chloroprene rubber (90 Fed. Reg. 14691): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of chloroprene rubber;
Emulsion styrene butadiene rubber (90 Fed. Reg. 14692): Petition filed by Michelin North America, Inc., an importer of emulsion styrene butadiene rubber;
Emulsion styrene-butadiene rubber (90 Fed. Reg. 14686): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of emulsion styrene-butadiene rubber;
Ethylene vinyl acetate (VA < 50 percent) (90 Fed. Reg. 14688): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of ethylene vinyl acetate (VA < 50 percent);
Ethylene vinyl acetate (VA ≥ 50%) (90 Fed. Reg. 14683): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of ethylene vinyl acetate (VA ≥ 50 percent);
Ethylene-propylene-ethylidene norbornene rubber (90 Fed. Reg. 14695): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of ethylene-propylene-ethylidene norbornene rubber;
Hydrogenated acrylonitrile-butadiene rubber (90 Fed. Reg. 14686): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of hydrogenated acrylonitrile-butadiene rubber;
Hydrogenated acrylonitrile-butadiene rubber (90 Fed. Reg. 14685): Petition filed by Zeon Chemicals L.P., an importer and exporter of hydrogenated acrylonitrile-butadiene rubber;
Isobutene-isoprene rubber (90 Fed. Reg. 14689): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of isobutene-isoprene rubber;
Solution styrene-butadiene rubber (90 Fed. Reg. 14690): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of solution styrene-butadiene rubber;
Bromo-isobutene-isoprene rubber (90 Fed. Reg. 14694): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of bromo-isobutene-isoprene rubber;
Poly(ethylene-propylene) rubber (90 Fed. Reg. 14690): Petition filed by Arlanxeo USA LLC and Arlanxeo Canada Inc., importers and exporters of poly(ethylene-propylene) rubber;
Solution styrene-butadiene rubber (90 Fed. Reg. 14693): Petition filed by Michelin North America, Inc., an importer of solution styrene-butadiene rubber; and
Styrene-acrylonitrile (90 Fed. Reg. 14693): Petition filed by Trinseo LLC, an importer and exporter of styrene-acrylonitrile.
Comments on the petitions are due June 2, 2025.
Maine Board Approves Motion To Adopt Rule On PFAS In Products; CUU Proposals For Products Prohibited As Of January 1, 2026, Are Due June 1, 2025: As reported in our April 1, 2025, blog item, the Maine Board of Environmental Protection (MBEP) was scheduled to consider the Maine Department of Environmental Protection’s (MDEP) December 2024 proposed rule regarding products containing PFAS during its April 7, 2025, meeting. As reported in our December 31, 2024, memorandum, on December 20, 2024, MDEP published a proposed rule that would establish criteria for currently unavoidable uses (CUU) of intentionally added PFAS in products and implement sales prohibitions and notification requirements for products containing intentionally added PFAS but determined to be a CUU. During the April 7, 2025, meeting, MBEP unanimously approved a motion to adopt the Chapter 90 rule, the Chapter 90 basis statement, and MDEP’s response to comments “as presented and with correction of minor typographical errors, and the addition of ‘Maine Department of Transportation’ at section 4(A)(8),” according to MBEP’s draft meeting minutes. Under the approved rule, CUU requests for products scheduled to be prohibited January 1, 2026, are due June 1, 2025. The products containing intentionally added PFAS that are scheduled to be prohibited include:
Cleaning products;
Cookware;
Cosmetics;
Dental floss;
Juvenile products;
Menstruation products;
Textile articles. The prohibition does not include:
Outdoor apparel for severe wet conditions; or
A textile article that is included in or a component part of a watercraft, aircraft or motor vehicle, including an off-highway vehicle;
Ski wax; or
Upholstered furniture.
The January 1, 2026, prohibition applies to any of the products listed that do not contain intentionally added PFAS but that are sold, offered for sale, or distributed for sale in a fluorinated container or container that otherwise contains intentionally added PFAS. More information is available in our April 11, 2025, blog item.
OMB RFI Seeks Proposals To Rescind Or Replace Regulations: On April 11, 2025, OMB published a request for information (RFI) to solicit ideas for deregulation. 90 Fed. Reg. 15481. OMB seeks proposals to rescind or replace regulations “that stifle American businesses and American ingenuity,” including regulations “that are unnecessary, unlawful, unduly burdensome, or unsound.” According to the notice, “comments should address the background of the rule and the reasons for the proposed rescission, with particular attention to regulations that are inconsistent with statutory text or the Constitution, where costs exceed benefits, where the regulation is outdated or unnecessary, or where regulation is burdening American businesses in unforeseen ways.” Comments are due May 12, 2025. Earlier in the week, on April 9, 2025, President Trump issued the following memorandum and EOs regarding federal regulations:
Presidential Memorandum Regarding Directing the Repeal of Unlawful Regulations;
EO on Reducing Anti-Competitive Regulatory Barriers; and
EO on Zero-Based Regulatory Budgeting to Unleash American Energy.
More information is available in our April 14, 2025, blog item.
Caffeine Warning Bill Introduced in House of Representatives
A new bill introduced in the U.S. House of Representatives would require a “high caffeine” warning on beverages that contain more than 150 milligrams of caffeine, as well as require manufacturers to declare the amount of caffeine in their products.
Representative Robert Menendez introduced H.R.2511, the Sarah Katz Caffeine Safety Act, stating that “the bill is about transparency and safety,” aimed at preventing tragedies such as the death of Sarah Katz, a college student who died after drinking a highly caffeinated beverage. As we previously blogged, Katz’s parents filed a lawsuit alleging that Panera Bread Company’s “Charged Lemonade” caused their daughter’s death and that the beverage contained anywhere from 260-390 mg of caffeine, depending on the size of the beverage.
The bill would require menu items in chain restaurants containing at least 150 mg of caffeine to bear a statement such as “high caffeine” on the menu. In addition, the bill amends Section 403 of the Food, Drug, and Cosmetic Act to consider foods and dietary supplements containing more than 10 mg of caffeine as misbranded unless the label includes the amount of caffeine in the product, a statement of whether the caffeine is naturally occurring or an additive, and an advisory statement regarding FDA’s daily recommended limit of caffeine for healthy adults.
The bill also directs FDA to define “added caffeine” and review the status of caffeine and other stimulants as generally recognized as safe (GRAS). Specifically, FDA would be directed to consider:
Whether caffeine should be considered GRAS;
The safety of caffeine or other stimulants, either alone or in a blend;
The safety of guarana, taurine, and similar substances in food and dietary supplements with added caffeine;
Thresholds for the amount of caffeine or blends of caffeine and other stimulants; and
Whether any regulations relating to caffeine in food and dietary supplements should be issued or updated.
Finally, the National Institutes of Health would be required to conduct or support a review of the effect of caffeine consumption in vulnerable populations, and FDA and CDC would be required to conduct a public education campaign on caffeine safety.
FDA’s webpage on caffeine indicates that 400 mg a day is “not generally associated with dangerous, negative effects,” but that the level of sensitivity can vary widely.
Keller and Heckman will continue to monitor this bill and other developments regarding caffeinated beverages.
New Section 232 Trade Investigations on Pharmaceutical and Semiconductor Imports Could Lead to Tariffs Mid-Year
On April 1, 2025, the Secretary of Commerce initiated, pursuant to President Trump’s directive, two new investigations under Section 232 of the Trade Expansion Act of 1962 (Section 232), one on imports of pharmaceuticals and pharmaceutical ingredients, and derivative products of those items (collectively, pharmaceuticals) and the other on imports of semiconductors, semiconductor manufacturing equipment (SME) and their derivative products (collectively, semiconductors). These investigations are initiated to determine whether imports of pharmaceuticals and semiconductors threaten to impair U.S. national security. Around one third of investigations completed under Section 232 during President Trump’s first and second administrations have led to tariffs at a rate of 25% on U.S. imports of these products.
To determine the effects of pharmaceutical and semiconductor imports on national security, the Secretary of Commerce is soliciting written comments, data, analyses or other pertinent information from the public, with an anticipated deadline of May 7, 2025. Information and argument provided should aid Commerce’s assessment of the factors set forth in 19 U.S.C. § 1862(d), such as domestic production needed for projected national defense requirements, the capacity of domestic industries to meet such requirements and the availability of the resources essential to the national defense.
In addition to these statutory factors, Commerce will evaluate the criteria listed in 15 C.F.R. § 705.4 as they affect national security and are soliciting information and argument from the public on these criteria as well.
For pharmaceutical imports, the criteria include the following 10 factors:
The current and projected demand for pharmaceuticals and pharmaceutical ingredients in the United States;
The extent to which domestic production of pharmaceuticals and pharmaceutical ingredients can meet domestic demand;
The role of foreign supply chains, particularly of major exporters, in meeting United States demand for pharmaceuticals and pharmaceutical ingredients;
The concentration of United States imports of pharmaceuticals and pharmaceutical ingredients from a small number of suppliers and the associated risks;
The impact of foreign government subsidies and predatory trade practices on United States pharmaceuticals industry competitiveness;
The economic impact of artificially suppressed prices of pharmaceuticals and pharmaceutical ingredients due to foreign unfair trade practices and state-sponsored overproduction;
The potential for export restrictions by foreign nations, including the ability of foreign nations to weaponize their control over pharmaceutical supplies;
The feasibility of increasing domestic capacity for pharmaceuticals and pharmaceutical ingredients to reduce import reliance;
The impact of current trade policies on domestic production of pharmaceuticals and pharmaceutical ingredients, and whether additional measures, including tariffs or quotas, are necessary to protect national security; and
Any other relevant factors.
For semiconductor, relevant criteria include the following 14 factors:
The current and projected demand for semiconductors (including as embedded in downstream products) and SME in the United States, differentiated by product type and node size;
The extent to which domestic production of semiconductors can or is expected to be able to meet domestic demand at each node size for each product type, and similarly the extent to which domestic production of SME can or is expected to be able to meet domestic demand;
The role of foreign fabrication and assembly, test and packaging facilities in meeting United States semiconductor demand, and similarly the role of foreign supply of SME in meeting domestic demand;
The concentration of United States semiconductor imports (including as embedded in downstream products) from a small number of fabrication facilities and the associated risks, and similarly the concentration of United States SME imports from a small number of foreign sources;
The impact of foreign government subsidies and predatory trade practices on United States semiconductor and SME industry competitiveness;
The economic or financial impact of artificially suppressed semiconductor and SME prices due to foreign unfair trade practices and state-sponsored overcapacity;
The potential for export restrictions by foreign nations, including the ability of foreign nations to weaponize their control over semiconductors and SME supply chains;
The feasibility of increasing domestic semiconductor capacity (in different product types and node sizes) to reduce import reliance, and similarly the feasibility of increasing domestic SME capacity to reduce import reliance;
The impact of current trade policies on domestic semiconductor and SME production and capacity, and whether additional measures, including tariffs or quotas, are necessary to protect national security;
What product types and node sizes could be built only using SME from U.S. companies;
What SME is manufactured abroad and faces limited competition from U.S.-made products;
What SME parts or components are only available outside the United States;
Where the U.S. workforce faces a talent gap in production of semiconductors, SME or SME components; and
Any other relevant factors.
Section 232 requires the Secretary of Commerce to complete an investigation and submit a report to the President within 270 days of initiating any investigation; the President then has up to 90 days to decide whether to concur with the report and take action, which may include import tariffs, quotas or other measures as needed to address the threat. Notably, however, there is nothing preventing the Commerce or the President from moving more quickly – and, in statements issued shortly before the investigation announcements, Secretary of Commerce Howard Lutnick stated that pharmaceutical tariffs will be implemented “in the next month or two.”
President Trump has initiated a total of 12 Section 232 investigations during his first and second administrations, of which eight have been completed. Three completed investigations – pertaining to imports of steel, aluminum, and automobiles – have resulted in import tariffs currently set at 25%. Three other investigations (uranium, titanium sponge and grain-oriented electrical steel) reached affirmative determinations but resulted in alternative actions. The other two investigations resulted in a finding of no national security threat or were withdrawn.
President Trump’s directive that Commerce investigate semiconductor and pharmaceutical imports under Section 232 follows his recent executive orders that it investigate imports of copper and lumber under this same provision and marks a continuation of the Trump Administration’s use of Section 232 as a preferred mechanism to bolster domestic production and reduce reliance on foreign suppliers.
Post‑Chevron Spotlight: Federal Court Nixes FDA Rule Reclassifying Laboratory Services as Medical Devices
In another rebuke to federal regulatory overreach, the U.S. District Court for the Eastern District of Texas (“District Court”) has vacated the Food and Drug Administration’s (“FDA”) 2024 final rule that sought to bring laboratory‑developed test services (“LDTs”) within the scope of the agency’s medical device regulatory framework. The case, American Clinical Laboratory Association et al. v. FDA, Nos. 4:24 CV 479 and 4:24 CV 824, marks a watershed moment for clinical laboratories and diagnostic providers in a post‑Chevron landscape and underscores the judiciary’s growing willingness to police the limits of agency authority in the wake of Loper Bright Enterprises v. Raimondo.
The Regulatory Framework Governing LDTs
LDTs are diagnostic services developed, validated, and performed by professionals within a single clinical laboratory, often in response to individual physician orders. These services, which range from standard pathology tests to advanced genomic sequencing, have long been regulated under the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”), which are administered by the Centers for Medicare & Medicaid Services (“CMS”). CLIA’s framework—developed after its predecessor law, the Clinical Laboratories Improvement Act of 1967—was designed to govern services, not products. It imposes requirements on laboratory staffing, quality control, methodology validation, and proficiency testing. Laboratories are certified under CLIA and must meet rigorous federal and accreditation‑based standards.
By contrast, the Federal Food, Drug, and Cosmetic Act (“FDCA”), enacted in 1938 and amended in 1976 by the Medical Device Amendments (“MDA”), grants the FDA authority to regulate products—specifically, drugs, devices, foods, and cosmetics. The FDCA’s definition of a “device” encompasses physical items such as instruments, machines, and reagents—not intangible services performed within clinical settings. Notably, Congress’s enactment of CLIA in 1988, more than a decade after the MDA, reaffirmed this division of regulatory labor: the FDA governs devices while CMS governs services. Since then, Congress has repeatedly declined to legislate FDA oversight of LDTs, instead preserving CLIA as the operative statute governing the field.
The Final Rule: A Costly Expansion of Authority
The FDA’s final rule, issued May 6, 2024, would have upended this regulatory equilibrium by reclassifying LDTs as medical devices. Specifically, the rule, as amended, sought to clarify that in vitro diagnostic products “are devices . . . including when the manufacturer of these products is a laboratory.” In effect, the rule would have treated LDTs as manufactured devices, requiring laboratories to obtain premarket authorization for each test and to comply with the FDA’s Quality System Regulation. This dramatic shift would have affected more than 79,000 existing tests and over 10,000 new tests annually. The FDA further estimated that compliance costs would have exceeded $1 billion per year, with total implementation costs ranging from $12.5 billion to $79 billion over twenty years, potentially forcing some LDTs off the market and suppressing future innovation.
Judicial Review in a Post‑Chevron Era: Loper Bright Takes Center Stage
In response to the FDA’s proposed expansion of its authority, a coalition of plaintiffs—including the American Clinical Laboratory Association, the Association for Molecular Pathology, HealthTrackRX, and a practicing clinical pathologist—filed suit in the Eastern District of Texas, arguing that the final rule exceeded the agency’s statutory mandate and moved for summary judgment under the Administrative Procedure Act. On summary judgment, the Court’s analysis turned on Loper Bright, which overturned Chevron deference and restored the task of interpreting statutes to the courts. Applying this new standard, the District Court declined to defer to the FDA’s interpretation of the FDCA, instead undertaking its own statutory analysis.
In its analysis, the District Court found that the term “device” under the FDCA referred to tangible articles—not professional services. It emphasized that none of the listed terms in the FDCA’s definition section (“instrument,” “machine,” “in vitro reagent,” etc.) could be read to encompass laboratory services. The Court also rejected the FDA’s argument that laboratories’ use of devices during diagnostic testing somehow converted those services into devices subject to the FDA oversight. The District Court further held that Congress clearly intended to treat laboratory services separately from devices when it enacted CLIA in 1988, reaffirming a services‑based regulatory regime administered by CMS.
Importantly, the District Court also noted that Congress had multiple opportunities to legislate FDA oversight of LDTs—and yet declined to do so. On the contrary, the District Court observed, the statutory framework governing LDTs has remained unchanged since 1988, and the FDA’s rule was an impermissible attempt to rewrite that framework through regulation. As a result, the District Court granted summary judgment for the plaintiffs, vacated the final rule, and denied the FDA’s cross‑motion, concluding that remand without vacatur was inappropriate given the final rule’s legal defects and the absence of any persuasive justification from the agency.
What’s Next? Another Brick in the Post‑Chevron Wall
This decision is the latest in a growing line of federal court rulings reining in agency authority in the wake of Loper Bright. As with recent invalidations of other federal agency rules across multiple courts, this decision reflects a reshaped judicial posture that demands clear congressional authorization before agencies can regulate new areas or expand their reach. Providers and regulated entities should, thus, take note: in this evolving legal landscape, agency interpretations of rules may no longer suffice. Courts are now scrutinizing regulatory assertions with fresh eyes and heightened textual rigor. For diagnostic labs and other stakeholders in particular, this ruling marks not only a reprieve, but also a call to vigilance as Congress and agencies revisit regulatory pathways for diagnostics and digital health.
Governing Health Podcast | 2025 Executive Compensation Committee: Key Priorities and Strategic Insights [Podcast]
This special quarterly series of the Governing Health podcast with SullivanCotter highlights developments in and offers support to the board’s executive compensation committee as it navigates a range of complex operational, technical, and strategic challenges.
In this episode, Michael Peregrine, Tim Cotter, Bruce Greenblatt, Kathy Hastings, and Jeff Holdvogt offer recommendations for the committee to focus on in 2025, including:
Establishing appropriate incentive goals in an evolving health system
Prioritizing executive succession planning/leadership development
Keeping appraised of regulatory and market trends
Ensuring flexibility and defensibility in committee approval processes
Aligning key governance documents to fulfill committee fiduciary duties
Evaluating committee reporting and coordination with other board committees
Overseeing executive compensation in for-profit and not-for-profit ventures subsidiaries
Considering board compensation trends in not-for-profit health systems
Determining the need to evolve committee composition
Addressing executive compensation scrutiny
CMS Tells States “No More” Medicaid Section 1115 Matching Funds for Designated State Health Programs (DSHP) and Designated State Investment Programs (DSIP)
In recent years, the Centers for Medicare & Medicaid Services (CMS) has approved demonstrations under Section 1115 of the Social Security Act, providing federal matching funds for state expenditures for Designated State Health Programs (DSHP) and Designated State Investment Programs (DSIP) that advance the Medicaid program.
But on April 10, CMS published a State Medicaid Director Letter stating CMS “does not anticipate approving new state proposals of section 1115 demonstration expenditure authority for federal DSHP or DSIP funding or renewing existing Section 1115 demonstration expenditure authority for federal DSHP or DSIP funding, including when current DSHP or DSIP authority concludes before the expiration date of the demonstration.”
The reasoning? CMS has concluded that these programs were funded entirely without Medicaid funds prior to their approval, and the additional federal funds that they received “does not render these programs as integral components of section 1115 demonstration programs.” CMS now frowns on the notion that the federal government should: (i) share in the costs of funding these state programs; (ii) reduce state obligations with respect to services that CMS deems not otherwise covered by Medicaid; (iii) and “[serve] primarily as a financing mechanism for states, resulting in increased federal expenditures.”
“Despite the safeguards implemented in the post-2022 approvals of DSHP, CMS has renewed concerns about the same issues originally identified in 2017,” the letter states.
Background
Section 1115 of the Social Security Act provides the Secretary of Health and Human Services (HHS) with authority to approve experimental, pilot, or demonstration projects likely to further the traditional goals of the Medicaid program. The waiver authority specifically allows states to include the costs of such projects as spend under its Medicaid State plan, which makes the spend eligible for federal matching support so that the state no longer has to fund the services entirely out of its general fund. CMS reviews proposals on a case-by-case basis to determine alignment with Medicaid and federal policies (which we note tend to shift with each administration). These projects are, or were, generally approved for an initial five-year period and may be extended upon approval.
CMS attempted to phase out expenditure authority for DSHP in Section 1115 Demonstrations in 2017 and in 2022, limited the size and scope of DSHP with required state contributions, a cap on the total amount of federal and state DSHP expenditure authority, and time limits for federal funds.
The April 10 letter comes one week after the U.S. Senate voted 53-45 to confirm Dr. Mehmet Oz as the 17th CMS Administrator. A press release issued the same day briefly outlined Oz’s vision for the agency, focusing on:
Implementing the president’s February 25, 2025, executive order on health care price transparency;
Equipping health care providers with better patient information and holding them accountable for health outcomes (as an example, streamlining access to life saving treatments);
Identifying and eliminating fraud, waste, and abuse;
Fostering prevention, wellness, and chronic disease management over a focus on sick care (mentioning a focus on programs that improve holistic outcomes)
Another April 10 press release—entitled “CMS Refocuses on its Core Mission and Preserving the State-Federal Medicaid Partnership”—describes CMS policy with respect to DSHPs and DSIPs in more detail. It announces “an end to spending that duplicates resources available through other federal and state programs and are not tied directly to healthcare services.”
“DSHPs and DSIPS are state-funded health programs that, without ‘creative interpretations’ of section 1115 demonstration authority, would not have qualified for federal Medicaid funding,” the Core Mission press release states. It added that DSHPs and DSIPs have grown from approximately $886 million in 2019 to nearly $2.7 billion in eligible expenditures in 2025.
While it remains to be seen how far the “Core Mission” will go with respect to cutting initiatives that it deems too distant, examples of services that CMS has already determined do not tie “directly” to services provided to Medicaid beneficiaries include:
$11M in grants to a labor union in New York to reduce costs of health insurance for certain childcare providers;
$241M for a program in New York for non-medical in-home services, such as housekeeping;
$17M for a California student loan repayment program;
$20M in grants to high-speed internet for rural health care providers in North Carolina; and
$3.8M for a diversity in medicine initiative in New York.
Note that New York’s current 1115 Waiver Amendment, for example, covers a range of health-related social needs services (HRSNs) beyond “housekeeping” to address food, housing, and transportation instabilities that impact health outcomes for New York Medicaid enrollees; all of these would fall under the April 10 letter. We previously discussed New York’s 1115 Waiver Amendment here and here.
The Trump Administration has already changed its public resources to align with the messaging in the April 10 State Medicaid Director Letter. CMS updated its Medicaid pages to include the April 10 letter and to emphasize that demonstrations must be “budget neutral” to the federal government.
Takeaways
At an unprecedented time of cost-cutting in the federal government, CMS’s refusal to share in the costs of funding these state programs shifts the burden back to the states—which will also have to decide, at an unprecedented time of upheaval, whether to cover these costs. Too, we are perhaps looking at a CMS that is less likely to recognize, for example, long-recognized home and community asked services that provide assistance to daily living activities for someone electing to age in the community instead of in an institution, or education and workforce supports to those looking to contribute to the health care field. CMS pulled back on guidance relating to HRSNs in early March.
There are currently 25 states with approved social determinants of health provisions in their 1115 waivers—which may fall under the policies outlined in the April 10 letter—and another six states with pending waiver amendments. Providers, vendors, and community-based organizations operating in states with Section 1115 waivers may encounter significant revenue pressure as the funding for these services dries up. To the extent possible, alternate plans will be needed and the challenges will be substantial. Stakeholders potentially impacted should be aware of when their funding is slated to end; CMS states that the Center for Medicaid and CHIP Services (CMCS) will conduct direct outreach to states to confirm the end date for current DSHP or DSIP authority.