Opinion ID: 655359
Heading Depth: 2
Heading Rank: 1

Heading: Failure to Explain a Change in the Regulation.

Text: 22 An agency must give a reasoned basis for adopting a regulation. See 5 U.S.C. § 553(c); S.E.C. v. Chenery Corp., 332 U.S. 194, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947). When a new rule reflects a departure from the agency's prior policies, the agency is obligated to supply a reasoned analysis for the change beyond that which may be required when an agency does not act in the first instance. Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42, 103 S.Ct. 2856, 2866, 77 L.Ed.2d 443 (1983). Samaritan argues that the Secretary violated this principle in adopting § 412.92(a)(3) because she did not explain why she departed from the prior policy of allowing market factors, such as physician admitting practices, to be considered in determining the SCH status of a hospital located less than twenty-five miles from a like hospital. 23 This contention is without merit for a number of reasons. First, § 412.92(a) was promulgated in response to a significantly amended statute, a factor not present in Motor Vehicle Mfrs. Ass'n. In the 1983 amendments, Congress both changed the method of reimbursement from a cost-based system to a prospective payment system and also supplied new statutory guidance for the granting of SCH designations. These substantial amendments were sufficient reason for the Secretary to adopt new regulations. In completing that task, her primary obligation was to be consistent with the new statute. If she fulfilled that obligation, we would be loathe to invalidate a new regulation simply because she did not also provide a complete dissertation on how and why it differs from the prior regulatory regime. 24 Second, Samaritan's assertion of a change in policy is largely wishful thinking. Under the prior cost limitation regulation, the Secretary had issued a 1974 Intermediary Letter declaring that, Generally ... a hospital located within a 25-mile radius of a like facility would not qualify as a SCH. I.L. 74-22. Although some hospitals in this category succeeded in overturning SCH denials on appeal because of factors such as physician admitting practices, see, e.g., St. Elizabeth Community Hosp. v. Heckler, 745 F.2d 587 (9th Cir.1984), the Secretary never embraced those decisions. Thus, § 412.92(a)(3) reflected adherence to, rather than a change from, the Secretary's prior policy regarding hospitals less than twenty-five miles from a like hospital. In this regard, we note that none of the extensive comments contained in the Secretary's rulemaking record, including a July 5, 1989, comment from Samaritan, criticized the Secretary for failing to explain a change from prior law. 25 Third, we have reviewed the Secretary's repeated, detailed explanations of the initial regulation and its subsequent amendments. 6 The Secretary did provide a reasoned analysis supporting each of these regulatory actions. For example, the Secretary justified § 412.92(a) in part by stating that, a single set of objective criteria will promote uniformity throughout the nation in designating SCHs, 49 Fed.Reg. 234, 271 (1984), a rationale consistent with a concern expressed in the legislative history to the 1983 amendments. 7 We conclude that the Secretary did provide a concise general statement of [the regulation's] basis and purpose, as required by 5 U.S.C. § 553(c). 26