the court carol on behalf of the current transplants in our hospitals and patients in the proceedings below the district court felt compelled to defer to the agency under reflexive framework that the supreme court has since rejected and the district court has now i read the regulation and i sort of think the better reading is the other readings so explain to me why your reading is unambiguous lee correct yes your honor i'd like to start with to answer help answer that question with framing up the two different defendants interpretations that are present before this court federal register procedures to apply and that was if the policy was designated by the contractor to be quote unquote enforceable more but they don't need an ambiguous you need an ambiguous right so i would not submit to that but but to the extent that it is a question about ambiguity the only interpretation that there is evidence of on the record is a bureau associate administrator declaration post hoc that says and this is doc thirty four dollars dash fifteen the  procedures in dispute here are quote only required for policies that the opi t n proposes to be enforceable so now on appeal it just has changed its interpretation you know still maintains that the only way in which the procedures apply is if it's in force of all but h h s now says there are two pathways through which these procedures might be required the nd being directed by the secretary correct yes i mean that's just clear on the face of the regulation right i mean and as i read so too there are two ways by which the the sixty day advance notice to the secretary criterion begins this whole process one is that there are designated to be enforceable the other is that the secretary directs and then in the flow chart next sentences the secretary will refer and this is where the rubber really meets the road for you significant proposed policies on to in the federal register so the reason i say that it seems to me the better reading enforceable or directed and then after that secretary sort of hinge point and then he or she sends it out if it's a significant proposed policy so there is nothing in the th sentence the that will over the secretary will refer significant proposed policies to the advisory committee there's nothing there that's limiting it in this kind of flowchart structure that we think it doesn't that make sense i mean like with the secretary as the fulcrum that's the piece of that sort of i find compelling is that the before you get to the secretary if it's in force designated to be enforceable or directed then he gets sixty that he or she gets sixty days notice and then it's sort of like in the house and then the th and says and significant proposed policies get sent out it just seems like the stuff that's coming into the house is the stuff that's going out of the house so i think it's important to note for context that the way in which the secretary receives policies proposed by the opi t n is not exclusively through this sixty day met measure and in fact there's a declaration on the record that explicitly states that secretaries representatives from the administrative agency here hearst that were present at all of the meetings where this particular policy was discussed so the secretary i think it's reasonable to assume that the secretary would have nowhere ness of quote unquote significant policies so perhaps for non significant policies the structure that you're in visioning is required because you need some way in which the for the non significant policy to get to be called to the secretary's attention but in this case the secretary was present at all the meetings was fully aware this was a signify a significant policy secretaries are himself is on the record in congress acknowledged this very policy is significant and so he was completely aware that this policy was being developed and that reasonable to understand that there might be a different process you don't need the sixty day notice those two sentences that you're referring to to then trigger what might the secretary do with a quote unquote policy and again there is nothing in the text itself that is so limiting and to the extent that there are any questions that this court might have about the plaintext and whether it is a otherwise we would submit that kaiser now requires that you look to the other you must exhaust as keyser size the other tools of statutory construction and in this case the defendant's reading of the interpretation of the regulation conflicts with there is two bases one is that it conflicts with federal law and the federal contracting law that we discuss in our brief and i and two is that their interpretation is unreasonable so that before you would get to a conclusion that the regulation is genuinely ambiguous such that an interpretation of the agency should be deferred to that interpretation must be reasonable and in this instance so what happens at step two if i'm misunderstanding something if it step one i tend to think of this in chevron terms whether the context and the character of the interpretation entitles it to difference whether it was one actually made by the agency whether it's authoritative an official whether it's fair and considered so those are the elements that i would put into step t count one of our complaint that is a failure to act claim under the administrative procedure act and the failure to act in this case is clearly an obligation of the secretary it was the secretary's failure to submit the policy to the advisory committee and to publish in the federal register and so that is the agency's action that this court has cleared jurisdiction to review under seven o six some part one so with respect to counts two dollars and three dollars whether or not they there is jurisdiction there we would submit that the final agency action is the agency's ratification of the policy that is in dispute number one number two we also argued that there are reasons why you know it should be considered as an the st is that the action most marked for consummation of an agency is decision making process or more importantly number two has to be one which rights or obligations have been determined from which legal consequences will follow my concern is with regard to the nd requirement the can't be any legal consequences that will follow from that group policy if there were members ability to voluntarily comply or not comply with this policy it clearly affects their rights because it dramatically affect the way in which they have an opportunity to receive an organ so the secretary's failure to follow the process the distinction is that the enforceable innes does not affect your medicare billing so the only thing is that you can't be kicked out of medicare if you're not complying with an enforceable policy as a practical matter also note that our transplants and our hospitals if they were to not comply with this policy they would not be able to get organs to transplant so there is a system that is a federal system defendants have labelled the donated organs as a public trust in this  the policy there and dr ration submitted by h h s there are sanctions that both the b t n as well as the secretary may impose those sanctions do not include removal from medicare that is the distinction of enforceable however for the liver transplant patients who are on the wait list there is also the fact that they will not receive an organ offer if they have been adjusted in their position can i  ask you a question another question about the significant proposed policies so your point i take it is that these or going to location policies like this one are significant as a matter of law and you said so and seek knowledge that there is that it's significant how then do we explain that if you take the factual premise and you may dispute it but how then do we explain the fact that these have never been sent through the federal register notice comment process like oversight from time immemorial or something different so i think there's there's two things happening so st i can't speak to what happened why transplant centers did or did not decide to enforce these rules twenty years ago  and there is nothing in the record that informs us as to the historical motives of the parties however any decision of the plaintiffs to previously not enforce those procedures does not affect the ability of them now to enforce procedures and just because the government has been violating the law for twenty years doesn't give it permission to continue to violate the law and in this case i'd note that the past practice of the agency is just that a practice there was never a written interpretation of what a significant policy means intl this litigation and now the agency has in fact proffered two different interpretations so this is not a case where you have a long standing consistent agency interpretation that would warrant deference and in fact it's more akin to what use the supreme court reviewed  it please the court martin to terrify the united states department of health and human services plaintiffs argued that the acuity circles policy must be struck down because it did not go through the enhanced procedural requirements of  b two that argument is incorrect the new policy which went through the same notice and common procedures as every other organ allocation policy for the past twenty years was it published in the federal register it was not geographically entirely consistent with the regulations the procedures in b to apply in two scenarios i was thinking in terms of a funnel but judge newsome is correct in his interpretation too i think it comes t the significant arises in one of two scenarios either a policy is enforceable or the secretary reaches out and directs a policy to be to come before him neither scenario is present here and plaintiffs do not conten otherwise and now what about her point though that there are other ways that significant policies can come before the secretary so it's not always the sixty day advance notice kind of funnel that i was thinking about but they might come to him in other ways so to textual points your honor st if you look at one hundred and twenty one for b where it says in the significant requirement arises it st starts out with the board of directors shales so we're really talking about here about the board of directors taking action and then the secretary in his discretion deciding to quote refer significant proposed policies to the advisory committee and i think both the combination of board of directors there and the word refer suggest that a policy is before the secretary in one of the two  ways in the sentence that immediately proceed the requirement so in effect the funnel there may be other ways that significant proposed policies find their way onto the secretary's desk but this regulation is talking about the funnel so the critical point here is that significant is a term of art in one hundred and twenty one dollars for b two and so we're not saying that how the liver gets allocated to an individual person is insignificant we're saying significant in this limited  could be viewed is affecting the individual's rights because it would say that the secretary has decided again consistent with organization policies for the past twenty years that this has to go through the b one bucket only and doesn't that be one process only and doesn't need to go through the enhanced procedures to turning to the substance i readily acknowledge that in the ordinary case it would be it would take a lot to stand here and ask you to address the substance when the did the district court didn't do so in the st instance i submit that this is an extraordinary case what is on appeal is the denial of the preliminary injunction plaintiffs raised three separate arguments  did anybody at any point this just seemed odd to me to anybody at any point say in i realized things were moving quickly but say to the district court like well wait we had three claims you only adjudicated one of them and then denied milimeter injunction i think your honor it was pointed out in the briefing before when they were deciding the injunction pending appeal and so on i confess i'm not sure why the district court did not address the other sets of claims but all the critical point is all of the material is before the court right now and itself is arbitrary and capricious but according to the regulation what did the secretary have to do the secretary had to consider the policy in light of the national organ transplant act and the regulations and so this court must ask whether what the secretary did there was arbitra capricious and your honor that's in one thousand two hundred and fourteen d words laying out what the secretary has to do i think the most serious challenge to the policy for this court to confront is the point that this policy might lead to fifty seven fewer livers that wasn't a point that was overlooked by the opi t n or the scientific registry instead it was addressed and they said the model likely underestimated the number of organ transplants and the reason for that is because the model doesn't depend on doesn't factor in change behavior in response to this new policy that will allow livers to go further distances to individuals who are the sickest and so they were able to determine that they a prior policy that also was based on a prior model that also did not model for change behavior the o p s said well that probably also under estimates the number of liver transplants and that turned out to be correct so in the model thirty five policy which also predicted a fewer number of liver transplants said that probably wouldn't happen and in fact that did not happen in the st two years of that policy something like eight hundred and fifty more livers were transplanted with no in what was it was it possible for this given the timeline was it possible for this policy to have been vetted through a cut and through the federal register you do have time to do it or did you just get yourself kind of behind your own eight ball and said well we're not going to have time for that so we'll proceed under the one i don't think the eight ball is of the agencies making i think it's that the policy that gives livers to the sickest patients you know the quickest it needs to get into effect as soon as possible and that was sort of the the push behind why things happened as they did i don't know how long it would have taken to refer to the advisory committee on organ transplant i would note however that almost ten years ago in two thousand and ten the advisory committee said there was far too much emphasis being put on these donations to service areas and regions and what we have here is a national policy that has to be equitable on a national basis can h h s enforce the new policy and kim how your honor he just cannot enforce the new policy this is an open policy if for example hospitals decided well it's a policy but it's not and not enforceable so we're just going to ignore it then as we point out on page nine of our brief we could direct a p t end to try to make it an inflexible policy but i want to be crystal clear here this policy is not enforceable and no medicare or medicaid funding could be terminated for a violation of the policy or if it's not binding or enforceable it's not family agency action within the meaning of bennett versus spears and we lack subject matter jurisdiction to consider because we only subject matter jurisdiction to consider final agency action is my understanding wrong about the i think the right here could be construed as the right that the secretary concluded in a final action which is the response to the one hundred and twenty one dollars d letter which is that this policy you need to only undertake the procedures of be one or two instead of the two but i take your honor's point and the question for this court would be  and four by taking removing the secretary's discretion and pushing all these policies to the advisory committee as well as the federal register i see my time is up if i could just and with one final point the u s department of health and human and it will save more than one one hundred and forty dollars lives in the st year and that policy is currently on hold because of the injunction pending appeal which is why my colleague asked that that that injunction be lifted what that means is that suppose a liver becomes available in charge of charleston south carolina today that liver will be offered to a moderately ill person six hundred miles away in memphis before it will be go to a status one person two hundred and sixty six miles away in atlanta and it's going to have to fly directly over atlanta to get there so this policy needs to be changed now what you know is an organization that reflects the entire transplant community had by by regulation half of its board is made up of doctors h h s has and congress have wisely left the details of transplant allocation policy to the medical community in the form of you knows no policy has ever gone through the b to process the b two process is specifically designed for policies that are going to be enforceable or other policies as the secretary so direction in that context i would like to correct a misstatement made by counsel for the appellant we agree on what the regulation means at the bottom of page thirty five of our brief we say exactly what h h s has which is that the secretary also has discretion to apply that be to policy to other process to other policies as the secretary directs there are simply two different ways that the b two process can be triggered so let me ask you this because one thing i found a little weird is that you know your opponents as well so now opie t n which is effectively a non governmental entity correct can unilaterally sort of short circuit or enron the federal register process by just does a continuing to designate things on enforceable on a forcible enforceable enforceable so i the response to that well the check on that is that the secretary can always direct that things be sent to him or her so that he or she can then send them on to the federal register that there is the nd path exactly and that's why the secretary has said and this is in the federal register a publication associated with the original proposed final rule the secretary recognizes that compliance with certain policies such as those related to organize occasion are crucial to the success of the opi t n b to monitor compliance with these process policies closely which it does if violations are widespread or if uniform compliance is essential the secretary will consider making such policies in force go so the secretary does have that power and just to be clear no policy no organelle cation policies ever gone through the b two period because the system works and it works really well because in general it has built consensus over all these years now in this instance these hospitals believe they have an economic interest in maintaining the status quo so they objected they are a small subset of the transplant hospitals in this country and they didn't like it but they were outvoted they participated in this process they put in many of them put in comments as part of the o p s own process they put in a critical comment after the process and to be clear nobody including these hospitals took issue with the fact that this policy did not go through b two until eight days before the policy was to be implemented when they filed this lawsuit the critical comment that they filed with h h s does not raise the process issue that is what got the district court's attention and caused her to to take action now we believe because the district court did deny or you're going over i am and can i just make one more point your honor i did i just wanted to say we as far as the subject marriage or stiction issue is concerned and we do brief that in our in our brief we obviously think that the policy itself cannot be challenged under the a p a because it is not a final agency action we agree however with h h s that h h s his own action on the critical comments is a final agency action but it could not possibly good morning me please the court my name is not the showman and i are presenting the interviewer a pelleas i'd like to make three points st congress and trust the medical community to implement a system that allocates organs on a nationwide basis to the sickest st that is the opi t n the opi t and by its very design has representatives from the transplant community doctors medical professionals it has donors on the board of directors it has to have wait list candidate representatives on the board of directors there is a very broad spectrum of people who are in the best position to evaluate complicated medical issues oftentimes conflicting data with the real world practicalities of how organ donation works that's the design that congress put in place and that's the sign that the opponents are now asking this court to nd guess all was rejected a rd time this horse should have firm the district court and not revisit the medical communities decision on this nd point the scales of justice here are not for patients against the government or even against the government contractor the scales of justice here are for less sick waitlist candidates against hundreds of sicker weight loss candidates around the country who are  hospitals waiting for livers and can i get them because right now the current policy allocates livers in an unfair arbitrary manner that favors less sick people that's the two sides of the scale that's what this court ultimately has to weigh that's what the medical community weighed at the opi ten level that's the question over here and once again this court as the district court did not as the h h s the not as the o p m decided shouldn't let the medical professionals make that decision and balance those scale because they're best suited to do so and let me just make one final point the public interest everybody agrees it's in the public interest to follow the but you have over here a situation where because of the stay pending appeal there is in place a policy that has all the same procedural deficiencies as the cuties circle policy that the opi t n wants to implement it didn't go through the federal register it's just as procedurally possibly deficient depending on how this court decides but besides all those other problems it has a much bigger problem it is arbitrary because it allocates organs based on arbitrary geographic boundaries that's the problem that everybody agrees with and they're trying to solve to the extent any policy should continue in place it should be the policy that's the lesser of two evils the new policy which is now in joined by the district court because of the state pending appeal may have some problems but it's certainly not as problematic as the policy that's currently in place and therefore we ask the court to both affirm the district court and to overturn the stay pending appeal as expeditiously as possible because people's so it is inaccurate to say that there can be no governmental ramifications from the enforcement of a so called non enforceable policy i would also like to clarify that with respect to the plain language of the text as judge newsome was asking  about defense counsel says that there is no dispute that we don't agree that either one of those funnel steps took place and there actually is a dispute on the record as to whether or not this was a policy that was on a subject matter that the secretary directed so i believe that defendants interpret that rule to mean that it has to be something that the secretary directed a policy to be given to him but this is a matter on which the secretary directed the secretary said to the contractor you must develop a new policy and the district court found that document seventy two the transcript at page six that this was a policy that had been directed by the secretary with respect to counts two and three we would submit that really  appropriate scenario here because although we have briefed some of that information the record is is very little on what took place as you know the district court did not mention this in the order at all and so at the very least it's not suggesting sick patients donate organs we're saying that patients who are sick and are most likely to die need organs the new policy is going to reduce the number of transplants performed nationally but it's not in dispute the new policy will not save lives that is not a term that's in the government contractors report it is made up for this litigation and fifty seven fewer transplants will be performed under the new policy that means fifty seven fewer fewer see patients who can be saved fifty seven more liver is wasted even with the same number of organs that are donated and we would also like to know that the current policy has been in effect for seventeen years there is no need to hastily change it within a brief period of time if there are provisions that could be made that would benefit the national transplant community we submit that that the time that that need that needs to take place to make a thoughtful careful decision should be used to improve the policy and with that we