observation beds from hospital bit counts but even if the court were to examine the secretary's decision on his own terms by looking at it as an administrative action frozen in time it still should conclude the reverse was appropriate because it is an arbitrary decision treat these hospitals differently without any rational justification for doing so specifically there are at least two independent legal reasons why this court should reverse the secretary's decision that do not require it to examine the secretar acquiescence for set but simply ask the court to look at the law that controls the question of that counts the first is the clarifying regulation itself and the second is the controlling law industry stiction the default rule of  is that current law applies in the absence of an impermissible retroactive effect the secretary does not dispute this principle of health education has when you when you come up with controlling law in this jurisdiction what is the controlling law on that the hospitals in this case is that the parties actually agree that the controlling regulatory law the law that is actually in effect and has never been altered remains that the exclusion of swing observation beds is required no you really don't mean controlling or you mean the correct interpretation of the regulation is someone who will hear someone make your own offer that's correct in addition to that it's not merely the correct one but it's one that the parties at least in this case agree the secretary absolutely agrees that the proper interpretation of whether it's the original regulation or the clarifying regulation in this jurisdiction does require the exclusion of swing observation beds and already made is that given that that laws needs to be applied there's no conclusion other than reversal of the secretary's decision and this really leads to the second basis for reversal that doesn't require the court to look at the acquiescence decision for say and that is this court's decision in hartland and judge lewis concurrence in the department of energy case both make clear that even if a secretary's decision is justifiable rational reasonable at an agency level that the moment of that decision is subject to judicial review the judicial officers reviewing that must review of the court into law that applies in that was the chief judge as indicated there is no circuit law decisional law in this court that would dictate that but because the parties agree that that's the proper interpretation of whichever regulation or wise here is these question articulated by judge lilly in the department of energy concurrence the reasonableness of the secretary's response to a judicial decision does not insulate that decision from her view according to the law like i didn't say it was insulated from decision i said the question is whether it's reasonable and we can get to the question later about what laws we apply but isn't the basic question was it reasonable i don't believe so your honor i believe that the basic question first is what law lies and that will tell you whether or not you need to examine the acquiescence decision for reasonable miss and the reason is because in this certain we review agencies decisions for reasonableness whe law that's the center the arbitrary capricious reasonable this question arises when the secretary has made a decision that relates to the interpretation of a statute or regulation acquiesces versus what the decision is that ultimately under review the reasons why it an agency may choose to acquiesce may ultimately be reasonable for administrative reasons and otherwise but that is not the question that ultimately determines whether decisions stands whether the decision stands is dependent on whether or not it as an independent decision can alternately be just right i don't understand that in holland i think court held that  that isn't what we have here this isn't an agency interpreting the statute the question is what was the agency did the agency act reasonably when it decided to acquiesce in the six circuits interpretate plain language interpretation of its own regulation did it act reasonably to acquiesce in that and simultaneous under all of the circumstances of the case isn't that this is just as setting aside th isn't that just that we get cases like that all the time that's what this is we're reviewing an agency decision is it arbitrary capricious i agree that you're reviewing an agency decision but i still think it matters what the agency decision is that you're reviewing and there is a distinction  decision to acquiesce in the sixth circuit and i don't believe that's the decision that's under review i believe the decision under review is to apply the bed accounting rule that includes swing observation beds to this particular subset of hospital or the rule that clarke announced the secretary disagrees with now while that decision was precipitated by an acquiescence analysis a decision of the secretary say i will follow this within the six circuit the decision that this  reviewing is whether or not there is any basis for the secretary to selectively apply that decision to this particular subset of hospitals and the reason why i think that distinction matters is because the secretary is not permitted to justify a decision to fall of the six circuits rule simply by invoking the six circuits decision unless the secretary takes the position that the six circuits decision mandated if it was a voluntary act then the secretary has chosen to apply a different bed counting rule to a particular subset of hospitals when he had knowledge as he was not required to anybody to p r b decision says he was down to five six and a decision that's correct  circuit ruled that the secretary's interpretation was inconsistent of the plain language of the right so it said the secretary or the said we're bound to follow that that is what the p r b said the news what the secretary adopted as his decision but it is not the position of the secretary maintains before this court the secretary's position before this court is that its decision his decision to apply the clarke bed counting rule to these hospitals was a discretionary act that was policy as a policy driven about what it says that's a decision revealing that's correct and i believe that it cannot be affirmed since the secretary has acknowledged that he was not in fact bound to apply clarke but did so as a matter of policy driven discretion and that now was the lead decision is that it's bound by the sixth circuit in fact it's not in this court that's arbitrary versus correct certainly does and it gets no chevron deference or our deference or any other kind of deference because they didn't exercise their discretion right that's correct and we've we've already held that in several cases so that's right ok so now imagine that the agency were saying which as you point out it didn't say but if it did say in the p r b we're doing this for administrative convenience we need this ministry of convenience that would be reasonable in the sense of not being arbitrary capricious but it would not be a reasonable in the sense of a interpretation of its own regulation unless we agree with that interpretation that right that's right with it and if i may with additional caviar or clarification which is it is difficult to see how it could ever be an interpretation of the regulation because by the secretary's own acknowledgement it is only an interpretation that because that is not an interpretation desirability of uniformity does not lead to chevron deference right that's right but so that would then leave us with the need to decide what the what the regulation actually means  right so in other words if they get no deference but if they are right in but if you are wrong about the meaning of the regulation then you would lose right except that they also agree with us on the meaning of the regulation and therefore this court doesn't need to pass on the question because the parties already know greenwood meaning of the regulation it wouldn't matter if they thought they were too permissible interpretations of the regulation and they had chosen for themselves what they  a better one but that they didn't think the six circuits interpretation was not permissible if they adopted it nationwide it would present a very different and more defensible so you think there's any way in which there could be two different interpretations of the regulation one that they prefer in most places and one that they're stuck with for administrative purposes because of the six are as long as are both permissible only if they were in fact stuck with it and that's where i think the rub is what if what a good point what if i'm very stuck with it because they feel they think and that and sue me agree that it's too difficult directly no you don't agree with that but assume we do assume that is that we would agree with their administrative just inconvenience argument in that case would it be appropriate permissible to have one interpretation for hospitals in six circuit and another everywhere else i would give to any answers the first is that if it were her miscible it still wouldn't change the outcome once that decision got reviewed in this court so that it might be permissible as a matter of agency decision would be able to defer to a permissible reading of the regulation even if it's not the agency's preferred convenience justification is not adequate to satisfy the rational basis requirement for treating hospitals differently that are similar i understand that's your equal protection argument and i want to leave that one aside just for purposes of secretary suggests that the position that the hospitals have taken would require a policy a strict not acquiescence and that's certainly not true because there are a number of unique circumstances of this case that make it a different analysis and this court own statements but also by the very act of only applying it to the six circuit hospitals no if you knew it didn't do what it did with its nationwide view is now incorporated into different regulation  the inclusion of inclusion of swing bands correct correct then would we ever get to issue a new regulation which now makes clear that they have to be  if they believe that that was the proper interpretation of the original regulation and then to adopt it they would have been said the entire country is now balanced by the correct interpretation i say and we will correct that now a prospect of living with a clarifying regulation i said that's not is not before this for the secretaries because the secretary adopted the board's decision and was free to modify it or reverse it in any way and when the hospitals presented to the board where the board was really and the secretary was very to modify the board's decision and so when th when the hospitals argued that the clarifying regulation obligated the exclusions when observation beds notwithstanding gave someone a nod the secretary could have then said to the board while i understand your desire to comply with my memorandum the hospitals are right clarifying regulation requires exclusion of these beds and i can't apply get someone to them that's that was the choice the secretary made was to stand by that and was the secretary did that the decision on review ultimately became the decision and so saying that the board was bound by j someone and i because of its place in the agency hierarchy doesn't resolve the problem for the secretary with what you refer to as the clarifying for you that was the regulation that followed the court decision in two thousand and three years except our position in this also was addressed in the brief says that the secretary frankly has changed positions over the course of the appeal initially arguing that it couldn't operate permissibly in a retroactive manner  and now says well it could or at least i don't dispute that it could but i'm saying that i intended to to promulgated only prospect of plea and the polk case in the seventh circuit makes abundantly clear that you know agencies are not free to simply pick and choose when they're clarif year the agencies chose not to part of the reason why that ultimately is nonsensical is because if it is a clarifying regulation secretary made abundantly clear it was in the facts on the record demonstrate that it was which is that it simply clarified a longstanding law then and the law before is and has always been that the beds must be excluded that the court decision while it is a disagreement with that the clarifying regulation has no less of an application both retrospectively in regulation to make clear that it is in the very nature of a clarifying regulation or honor that it clarifies what the hot what the agency's position on the law is and has always been and the secretary conspicuous declines to rebut any of the analysis so for the multiple pages of the briefing that the six circuits retroactivity jurisprudence would absolutely permit the application of clarifying regulation even in light of clarke to be backward looking because it was a longstanding position of the secretary that is in the essence of a clarifying regulation it's also why this court has said that to resolve circuit splits for example agencies are permitted is issued clarifying regulations to tidy up that type of disagreement on the law if that were the case if that were not the case then it wouldn't be permitted to apply retrospective but if you can tidy up a circuit conflicts that it has to as a terrifying regulation applied to everything cross i don't think that's correct entirely judge ginsburg i think that is correct in in this instance but that emerged the reason why that's wrong is in particular because the venue choice provisions of the medicare which is that the hospitals that are all located in the sixth circuit are themselves not necessarily subject to the court decision because they have rights of appeal circuit when the whim of ethics the question of what was your view well it doesn't have the sort of my question is so it doesn't entirely free to do exactly as he did at the agency level while we have arguments why that's arbitrary to simply do that in the moment that the hospitals file in the district court of the circuit the confessed judgment because as he recognized go can't control words that's correct and that's why the heart in cases extremely instructive that the only difference in that case apart from there being two actual circuit decisions as opposed to one circuit decision and then agreement of the parties us the law is that the decision from the sixth circuit for the n l r b was actually in the n l r b favor the n l r b did exactly what the secretary is doing here which is it entered this court and asked this court to affirm its decision on the basis of law that applied hume distinction between service even if that were actually what the secretary did or the objectives were once the decision is reviewed in this court just as once the decision the n l r b was reviewed in hartland the then hartman would have would have lost on the merits because this court would have said yes and l r b your decision at the agency level was justified because it's consistent with the beverly health decision of the sixth circuit and there's no reason why we shouldn't apply that it's perfectly reasonable it's not arbitrary to apply the law of the six circuit to a six circuit entity and even though you're here in this court we're going to allow you when in fact it's the opposite of what happened i realize that the bad faith issue arose because this court had binding circuit all because of his recent time after time from please the court willy shaw for the united states george carlin i would like to start by turning to your question about deference and whether it's appropriate to defer to more than one interpretation and you can see frank elation and i would just point the court to this court's decision and holland in that case this court specifically recognized that deference may be appropriate even if the agencies view of the correct interpretation of the statute again not somewhat different because of the statute or not regulation but this court question of whether you can have two different permissible interpretations i don't think that's what we were saying in holland how long they were asking whether they they had changed their mind and that was now the reasonable interpretation for which they want let me let me just back up for one second and see if we go through the same quote set of questions i had i look at the p r and i don't see any thing other than the fact that you thought you were bo doctrine requires administrative agencies to follow the law of the circuit which course jurisdiction over the cause of action in the absence of a controlling decision by the supreme court the respective courts of appeals express while the circuit as there is no controlling supreme court decision the board finds that the intermediary is obligated to follow the relevant decisions of the six or that was the basis of the p r pieces right i don't entirely agree with that and first i would just point out that in that section the board is largely paraphrasing the earlier on the administrators earlier decision and same vincent which included very similar language but then also went on to discuss why  the board was relying on the reason given by the administrator in st vincent but basically giving a shorthand version of that that was not as detailed as what the agency had previously provided but this is a decision that this is a discretionary decision  necessity is that enough yes i mean i think the ministry to be grounded in the purposes of the statue i mean the ministries are certainly a scheme in which hospitals were able to pick and choose the bad count formula that they are going to use is not in the six circuit just for some reason missed that point and said no no they have to be included for all purposes we don't quote me what if they said we don't care what h h s says we like swing beds and we're going to include that whatever would you be able to go with the six circuits reading even that the plain language with the opposite no i think as part of the review of whether the agency's acquiescence the system was reasonable and permissible in this case this court can consider whether the  interpretation that the agency adopted in its through its acquiescence decision was plainly plainly erroneous or inconsistent with the language of regulation and now the question is did the agency consider whether this  fact that your basic argument silent therefore is have big us and therefore we are free to interpret it as excluding but you didn't say here it's silent and very for clarke's interpretation is a reasonable one this paragraph is all about how wrong clark is clark told you that the plane reading required the opposite reading of yours in clark to hospitals challenge the exclusion the regulations tax was silent however despite our consistent and long standing policy of excluding the court said could not be recognized with the reconciled with a plain language and that ard our interpretation is therefore in permissible call i have to say this strikes me as nothing other than maybe a program only a challenge to clarke's read that clarke said on its face you cannot exclude  these beds and you're saying well wait a minute it's not even mention one way or the other so we can't isn't that what you're saying here you're not saying that clarke was a reasonable reading of our rule you know i think there are two distinct questions here our long standing room for interpretation is in permissible all the secretary had to do to acquiesce was find that the six circuits interpretation was reasonable regardless of where it is said that that's what i'm looking for where they say that them to six circuit decision six circuits reading was a reasonable reading of all regulations i don't find i see the paragraph you're looking in that's the one you discussed in your brief but i don't see that as being the point  or i think i cut you off when you were about to point to another place i personally don't have another citation handy but i do think that certainly the secretary indicated that the regulation was not agency does think that the better interpretation of its original regulation is the interpretation that excludes observation beds and swing beds but that said there are agencies also determined that given the  given the desire to respect the separation of powers and the role of law and given the need to operate an orderly reimbursement scheme that the better interpretation within the six circuit as applied to hospitals in the six is to adopt the is to adopt a that would we not at least have to decide that under stressful period we had to leave the room would we at least not have to decide whether it's the better interpretation or at least a permissible interpretation i think th what you thought was the right interpretation and i don't know of any our case that goes only on the question of what's a mystical interpretation the agency normally says this is a permissible interpretation and this is the one that we come to not this is a permissible interpretation pick one so i would point to this court's decision in national environmental development association and that was a case in which the again the agency acquiesce adverse decision of the six circuit and only within that circuit and ultimately this court did strike down that decision but only because the e p a and regulations requiring that have a uniform  what you did here in order to fix the problem it doesn't say it could reinterpret its regulations differently in different areas you know i think that is what the court was saying was that word not for the existence of an e p a regulations requiring that interpretations of regulations be uniform nationally then the e p a could have adopted a different interpretation in the sixth circuit then adopted in other circuits and that if the e p a wanted to achieve that uniform right but that the national uniformity regulation was a separate interpretation from the one that was i'm sorry it was a separate regulation from the one that was actually being interpreted by the agency at the time to agree with this other part of  correct sir and that is the reason why i think that i just want to get to the question about heartland i think that is an important reason why this case is different from heartland because while there are a few heartland first of all was a statutory interpretation case and it was a case in which the agency received no difference because it had no rule making authority under the statute and therefore when this court interpreted the statute contrary that the agency understood that it wasn't technically balland by clarke right there he said options right yes ok what under the circumstances of this case i would why would you do that so i can try to find out what their what the agency's options were under the circumstances of this case while the agency could have sought rehearing in the same court  agency could have started before congress could also have decided to acquiesce nationwide and clark but that of course is a decision that would present other sorts of problems as well the kinds of different from home and you know i i agree that that was not that would not have been a wise course and certainly that's not the course of the secretary or seared you know i think again if we look at statements and for example thank you for the time but asked the court to take a step back from the current discussion and to remember that regardless of the profile of the of the agencies actually at the administrative level there is a question of all that exists once that agency decision is reviewed in this court in the question of a law that is presented as one in which the parties agree they agree to the original regulation the better and in light of that and the administrative problems the better view or the better interpretation of the regulation in the sixth circuit to avoid administrative problems is to go with the six circuits  but that is not a rule of law decision rule that was it would be appropriate for this court to employ when it reviews the decision on its own this is the analysis the judge would it goes through at length when he says even if i can find it is arguably defensible for an agency to pick whatever why it chooses at the agency level when it is reviewed in that court he must review it according to the wall that applies there in a question that now has been presented to the court is the secretary have the ability whether by j s m one o nine or some other ifs addict's it to tell this court what law it will apply to the review of his own decision even though he acknowledges that within this jurisdiction he believes the proper interpretation of the regulation is to exclude does that so i would submit to the court that that the outcome of this case is not merely a question about the reasonableness of an agency response to a court decision it's about what power does an agency have to insulate that decision from review according to the very law that he acknowledges would require the opposite result and is being reviewed by a court that hasn't before it no opposing arguments about what the proper meaning of either of the regulations is