Opinion ID: 409579
Heading Depth: 1
Heading Rank: 4

Heading: The Secretary's Compliance With The APA

Text: 74 Section 553 of the APA outlines the procedures an agency must follow when promulgating rules. Most notably, the agency is required to provide the public with general notice of its intent to act and to afford all interested parties an opportunity to comment on the proposed action. 93 The Secretary in the present litigation does not contest the district court's ruling that the December 1981 instruction was a rule within the meaning of the APA. 94 Nor does he dispute the court's finding that he failed to comply with the notice and comment provisions of section 553. However, the Secretary maintains that his actions were proper because the December 1981 instruction was a rule of agency procedure exempt from section 553's notice and comment requirements. 95 Thus, the procedural validity of the Secretary's actions depends on whether the December 1981 instruction can be brought within this limited exception. 96 We hold that it cannot. 75 Exceptions to the notice and comment provisions of section 553 are to be recognized only reluctantly. 97 Otherwise, the salutory purposes behind the provisions would be defeated. The notice and comment requirements were included in the APA for two main reasons. First, to reintroduce public participation and fairness to affected parties after governmental authority has been delegated to unrepresentative agencies. 98 And second, to assure ( ) that the agency will have before it the facts and information relevant to a particular administrative problem, as well as suggestions for alternative solutions. 99 This dual purpose of fairness and agency self-education is advanced if (e)xceptions (are) recognized only where the need for public participation is overcome by good cause to suspend it, or where the need is too small to warrant it. 100 Therefore, the exception of section 553(b)(A) ... does not extend to those procedural rules that depart from existing practice and have a substantial impact on those regulated. 101 Or, to use the words of this court, (t)he exemption (for rules of agency procedure) cannot apply ... where the agency action trenches on substantive rights and interests. 102 76 The December 1981 instruction does substantially affect the rights and interests of freestanding HHAs. Although we have held that these HHAs do not have an unlimited statutory right to deal directly with the Secretary, it is undisputed that for sixteen years freestanding HHAs had the option of choosing to deal with the Secretary or with an intermediary. Thus, freestanding HHAs had at least a qualified right to choose with whom they dealt. The December 1981 instruction foreclosed that option, eliminating the qualified right. Furthermore, the elimination of this right will cause freestanding HHAs great expense and inconvenience. Appellees presented uncontradicted evidence that the transfer will cost an estimated $10 million to $30 million. Many HHAs will be required to change or scrap electronic billing systems which have been designed to interface with equipment used by the Secretary. Numerous HHAs will be required to train and re-educate employees to implement the new system and operate within the guidelines of the new intermediary. This potential inconvenience was exacerbated by the Secretary's decision to speed up implementation of the transfer to 10 March 1982. The disruption caused by the transfer may not be great enough to persuade the Secretary to rescind the instruction, but the potential impact is such that the fairness element of section 553 requires that the HHAs involved be given a chance to present their case to the Secretary before he acts. 77 In addition, other decisions made by the Secretary in the December 1981 instruction were such that he could have benefited from the HHAs' viewpoint. The December 1981 instruction not only foreclosed freestanding HHAs from dealing directly with the Secretary, it also delineated the regions to be served by each intermediary and designated which intermediary would be chosen as the intermediary for each region. It is hard to imagine that HHAs, which had been dealing with the various intermediaries and working with the Medicare system for years, would not be able to provide the Secretary with valuable information concerning the most efficacious manner in which the regions could be organized and insights about the various organizations which might be chosen as regional intermediaries. 78 Thus, compliance with the notice and comment requirements of section 553 would not only result in increased fairness to freestanding HHAs, it would also enable the Secretary to receive valuable information concerning the various issues involved before he chose his course of direction. In such circumstances, the procedural exception to section 553 cannot apply. 103 As this court has previously observed: 79 Congress was alert to the possibility that these exceptions might, if broadly defined and indiscriminately used, defeat the section's purpose. Thus, the legislative history of the section is scattered with warnings that various of the exceptions are not to be used to escape the requirements of section 553. (Citations omitted). Further, the Senate Committee responsible for considering the APA concluded its report by investing courts with a duty ... to prevent avoidance of the requirements of the bill by any manner or form of indirection .... 104 80 We would not be true to that duty if we allowed the Secretary to ignore the requirements of section 553 when promulgating rules which, like the present one, substantially affect private parties and resolve important issues without the beneficial input that those parties could provide.