Gray Panthers Advocacy Committee, et al., Appellants, v. Louis W. Sullivan, M.d., Secretary, Department of Health Andhuman Services, Appellee, 936 F.2d 1284 (D.C. Cir. 1991)

At issue in this appeal are regulations promulgated by the Health Care Financing Administration of the Department of Health and Human Services (HHS or the Department) governing the requirements that a nursing home must meet for its services to be covered under Medicare and Medicaid. The appellants, plaintiffs below, are nursing home residents and an organization that represents the interests of the low-income elderly. They claim that, in promulgating the challenged regulations, the appellee HHS Secretary failed to heed congressional direction that the new regulations be at least as stringent as those they supersede. They further assert that some of the regulations in question are invalid because the Secretary failed to follow the Administrative Procedure Act's notice-and-comment procedures before issuing them. Our review of the record compels us to reject the appellants' arguments and affirm the district court's holding that the regulations are valid and its grant of summary judgment to the defendants.I. BACKGROUND

Federal regulation of the nursing home industry is accomplished primarily through the conditions that Congress imposes on nursing home facilities' receipt of funds under Medicare and Medicaid.¹  In order to receive federal moneys under either of these programs, a nursing home must qualify as a "skilled nursing facility." 42 U.S.C. § 1395x(j) (Medicare); id. Sec. 1396a(a) (28) (Medicaid). The interplay between the regulatory and congressional definitions of this term forms the backdrop against which we decide this appeal.

On October 16, 1987, the Department issued a notice of proposed rulemaking (NPRM) containing substantial revisions to the regulations governing nursing home participation in Medicare and Medicaid. 52 Fed.Reg. 38582. After HHS's publication of the NPRM, but before the close of the comment period and before the publication of the final regulations, Congress passed the Omnibus Budget Reconciliation Act of 1987 (OBRA '87), Pub. L. No. 100-203, 101 Stat. 1330 (1987). In amending the Social Security Act, this statute extensively modified the criteria a nursing home facility must meet to participate in the Medicare and Medicaid programs. See id. Sec. 4201, 101 Stat. 1330-160 to 1330-175 (codified as amended at 42 U.S.C. § 1395i-3) (Medicare); see also id. Sec. 4211, 101 Stat. 1330-182 to 1330-207 (codified as amended at 42 U.S.C. § 1396r) (Medicaid). Of particular importance to this appeal, OBRA '87 required the Secretary to issue regulations governing nursing homes that "are adequate to protect the health, safety, welfare, and rights of residents." OBRA '87 Sec. 4201(a) (3), 101 Stat. at 1330-172 (codified at 42 U.S.C. § 1395i-3(f) (1)); id. Sec. 4211(c), 101 Stat. at 1330-200 (codified at 42 U.S.C. § 1396r(f) (1)).

Using the extensive new OBRA '87 requirements and the comments it had received in response to its 1987 NPRM, the Department published final nursing home regulations on February 2, 1989. 54 Fed.Reg. 5316. Where possible, the final regulations were designed to be consistent with both OBRA '87 and the comments to the 1987 NPRM; these regulations were to become effective on August 1, 1989. Id. at 5317. In some instances, OBRA '87 imposed new requirements. The Secretary determined that some of these new requirements were sufficiently detailed to be self-executing and they were implemented in new regulations that merely restated the language of the statute; these regulations were issued without further notice and comment. Id. For those portions of the statute imposing new requirements that were inconsistent with earlier law, the effective date of the regulations implementing them was postponed until October 1, 1990; otherwise, the regulations were to become effective on August 1, 1989.²  Id. Finally, OBRA '87 imposed certain requirements that could neither be squared with the NPRM nor implemented by regulations that merely tracked the statutory language. In these cases, the Department stated it would later publish a proposed rule implementing the new requirements. Id. Those requirements are not at issue in this appeal.

The portions of HHS's regulations primarily at issue in this appeal are those governing nursing homes' provision of dietary and social services. See 42 C.F.R. Secs. 405.1125, 405.1130 (1989). On two occasions after the publication of the 1987 NPRM, Congress spoke on the requirements for nursing home participation in Medicare and Medicaid. The conference report to the Medicare Catastrophic Coverage Act of 1988, Pub. L. 100-360, stated:

It is the intent of the conferees that the Secretary ensure that [Medicare and Medicaid] requirements regarding consultation and supervision of social work services be at least as stringent as those in effect prior to the enactment of these changes.

The conferees also wish to clarify that it was the intent of [the Medicare and Medicaid amendments to OBRA '87] that the Secretary ensure that the requirements for dietary services be at least as stringent as those in effect prior to enactment of [OBRA '87].

H.R.CONF.REP. NO. 661, 100th Cong., 2d Sess. 269, reprinted in 1988 U.S.CODE CONG. & ADMIN.NEWS 803, 923, 1047 (emphasis added).³  Later, in the Omnibus Budget Reconciliation Act of 1990 (OBRA '90), Congress directed that

Any regulations promulgated and applied by the Secretary of Health and Human Services after the date of the enactment of the Omnibus Budget Reconciliation Act of 1987 with respect to [social and dietary] services ... shall include requirements for providers of such services that are at least as strict as the requirements applicable to providers of such services prior to the enactment of the Omnibus Budget Reconciliation Act of 1987.

OBRA '90, Pub. L. 101-508, Sec. 4801(e) (17) (A), 104 Stat. 1388, 1388-218 (emphasis added).

As they did in the district court, the appellants assert that the dietary and social services regulations are invalid because they are not "at least as strict as" the regulations they replaced. They further contend that those portions of the regulations that merely restate the statutory requirements and that were issued without following the notice-and-comment procedures violate the Administrative Procedure Act (APA), 5 U.S.C. §§ 551 et seq. The district court rejected both arguments and granted the defendants' summary judgment motion. It found that, in issuing the final rule, the Department adequately compared the stringency of the new regulations to that of the old ones. Gray Panthers Advocacy Comm. v. Sullivan, No. 89-0605, slip op. at 15-16 (D.D.C. Sept. 17, 1990). It also compared the new and the old dietary and social services regulations itself and concluded that "the new regulations are at least as stringent as existing requirements." Id. at 13; see also id. at 17-19. With respect to the plaintiffs' second challenge to the regulations, the district court held that neither OBRA '87 nor relevant legislative history imposed on HHS the duty to adhere to notice-and-comment procedures when issuing all of the challenged regulations. Id. at 22-26. Those portions of the regulations that merely restated requirements contained in OBRA '87, the court held, were not subject to the APA's notice-and-comment requirements. Id. at 28-31. This appeal followed.

II. APPELLANTS' CHALLENGE TO THE STRINGENCY OF THE NEW REGULATIONS

In analyzing the plaintiffs' claim regarding the stringency of the new regulations, the district court looked to the conference report accompanying the Medicare Catastrophic Coverage Act of 1988 (MCCA '88) for the definition of a term included in OBRA '87. The MCCA '88 conference report purported to define OBRA '87's requirement that new nursing home regulations be "adequate" to protect the welfare of residents as meaning that they be "at least as stringent as" the regulations already in place. The district court treated this conference report as "an authoritative indication of the meaning that Congress has attached to the term 'adequate' in the provision of social and dietary services to nursing home residents." Slip Op. at 10. Even if a conference committee report could provide an "authoritative" indication of congressional intent with respect to contemporaneous legislation, we have serious doubts whether the MCCA '88 conference report can authoritatively define a term used in the earlier statute.⁴  See Consumer Prod. Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 118 n. 13, 100 S. Ct. 2051, 2061 n. 13, 64 L. Ed. 2d 766 (1980) (" [a] mere statement in a conference report of [subsequent] legislation as to what the Committee believes an earlier statute meant" provides "an extremely hazardous basis for inferring the meaning of a congressional enactment"); Pierce v. Underwood, 487 U.S. 552, 566, 108 S. Ct. 2541, 2550, 101 L. Ed. 2d 490 (1988) (committee report's statement regarding earlier statute cannot be "authoritative interpretation" because "it is the function of the courts and not the Legislature ... to say what an enacted statute means"). However, in light of language contained in OBRA '90, that is an issue we need not decide.

In OBRA '90, Congress clearly stated that any regulations governing social and dietary services promulgated after OBRA '87 must be "at least as strict" as those in effect before OBRA '87. OBRA '90 Sec. 4801(e) (17) (A), 104 Stat. at 1388-218. The question then becomes whether, in promulgating the contested regulations, the Secretary satisfied the requirements of the congressionally imposed "at least as strict as" standard.

In United Mine Workers of America v. Dole, 870 F.2d 662, 666-67 (D.C. Cir. 1989) (UMW), we considered an agency's rulemaking burden when a statute constrains it to issue only those new regulations that are at least as protective as regulations already in force. When operating under such restraints, an agency engaged in notice-and-comment rulemaking under section 553 of the APA must explain how the new rules meet the statutory standard. The stringency requirement constitutes an express congressional limitation on the agency's authority to issue new regulations; to facilitate judicial review, the agency must discuss, in the "concise general statement of [the rule's] basis and purpose," 5 U.S.C. § 553(c), how it has complied with the applicable strictures in promulgating its new regulations. UMW, 870 F.2d at 666-67; see also Independent U.S. Tanker Owners Comm. v. Dole, 809 F.2d 847, 852-54 (D.C. Cir.), cert. denied, 484 U.S. 819, 108 S. Ct. 76, 98 L. Ed. 2d 39 (1987). Only when an agency has offered such an explanation for its action may the court properly "consider whether the decision was based on a consideration of the relevant factors," Bowman Transp. Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 285, 95 S. Ct. 438, 442, 42 L. Ed. 2d 447 (1974), while, at the same time, deferring, as we must, to determinations that fall within the scope of the agency's expertise. See UMW, 870 F.2d at 667; Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S. Ct. 814, 823, 28 L. Ed. 2d 136 (1971).

With this standard in mind, we turn to the contested regulations. The Secretary viewed himself as bound by the "at least as stringent as" standard contained in the MCCA conference report. He stated as much in connection with the issuance of the dietary services regulations,⁵  54 Fed.Reg. 5339, and, after adverting to the standard, he discussed how the new dietary services regulations meet it. See id. (treating qualifications of dietary services supervisor, length of daily service of food services personnel and allowable time span between dinner and breakfast). Similarly, with regard to social services,⁶  the Secretary compared the new regulations to the requirements of OBRA '87. See 54 Fed.Reg. 5343. The appellants correctly point out that, in connection with the social services recommendations, the Secretary did not refer explicitly to the stringency requirement. The appellants agree, however, that OBRA '87 works "a substantial and significant revision of federal nursing home law" and "sets out a new vision of nursing home care and a new set of expectations for facilities [and] residents." Appellants' Brief at 11. If the new rules meet the heightened requirements of OBRA '87, as the Secretary has stated they do, we think it clear that they are at least as strict as the old ones; we will not invalidate the new rule merely because it contains no explicit comparison with the old regulations. As did the district court, we hold that the preamble to the challenged regulations adequately "discuss [es] the relative protectiveness of the new regulations." Slip.Op. at 15; see also id. ("preamble to the final rule includes a comparison between existing requirements and new requirements mandated by OBRA 87").

After concluding that the Secretary had performed a sufficient comparison between the two sets of regulations, the district court undertook its own evaluation of the stringency of the new rules. See slip op. at 12-13 ("Upon comparing the text of these regulations, it appears that the new regulations are at least as stringent as existing requirements"); id. at 17-19 ("A comparison of the current rules with the new rules reveals that [plaintiffs'] argument is without merit;" the "new provision is not less stringent than existing requirements"). We note that the district court itself should not conduct such a comparison. Under our UMW decision, the district court should determine only whether the agency has adequately explained its compliance with the standard at issue; it may not "substitute its own judgment on the comparative protectiveness of the old and new regulations for that of the Secretary." UMW, 870 F.2d at 667; see also Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S. Ct. 2856, 2866, 77 L. Ed. 2d 443 (1983). In light of the sufficiency of the Secretary's comparison, however, the district court's error in this regard is harmless.

III. APPELLANTS' ADMINISTRATIVE PROCEDURE ACT CHALLENGE

The appellants further contend that the portions of the challenged regulations that did not appear in the NPRM, but were issued for the first time in the final regulations, are invalid because they were not issued pursuant to the notice-and-comment provisions of the APA. The provisions with respect to which the appellants make this argument are those that either restate or paraphrase the detailed requirements imposed by OBRA '87 that the Secretary determined to be self-executing. The appellants do not contend that these regulations fail to accurately carry out the requirements of OBRA '87: they concede that the regulations properly "quoted or paraphrased" the requirements of the statute. Appellants' Brief at 28; see also slip op. at 28. Nor do they argue that the Secretary erred in deciding that portions of the statute are self-executing. Rather, they claim portions of OBRA '87 and relevant legislative history impose a blanket notice-and-comment requirement for all regulations implementing the new law and they assert that, by deciding to issue regulations, the agency obligated itself to follow the full notice-and-comment procedures.

We turn first to the passage in OBRA '87 on which the appellants rely:

It is the duty and responsibility of the Secretary to assure that requirements which govern the provision of care in skilled nursing facilities under this title, and the enforcement of such requirements, are adequate to protect the health, safety, welfare, and rights of residents and to promote the effective and efficient use of public moneys.

OBRA '87 Sec. 4201(a) (3), 101 Stat. at 1330-172 (codified at 42 U.S.C. § 1395i-3(f) (1)); id. Sec. 4211(c), 101 Stat. at 1330-200 (codified at 42 U.S.C. § 1396r(f) (1)). The appellants argue that this language imposes on the Secretary a duty to implement all portions of OBRA '87 through further substantive regulations that, in turn, must be issued through the APA's notice-and-comment procedure. This argument stretches the language of the statute too far. We are unwilling to find, in a passage setting out the Secretary's general responsibilities, a congressional direction for comprehensive substantive rulemaking. Our reluctance in this regard is strengthened where, as here, other portions of the same statute clearly and explicitly impose a rulemaking requirement. See, e.g., 42 U.S.C. §§ 1395i-3(f) (2) (a) (i)-(iii), 1396r(f) (2) (a) (i)-(iii) (stating "secretary shall establish " regulations governing nurse aid training and competency evaluation programs) (emphasis added); Secs. 1395i-3(f) (4), 1396r(f) (4) (directing Secretary to develop standards to ensure adequate qualifications for nursing facility administrators).

Seeking support for their argument in OBRA '87's legislative history, the appellants point to a report from the House Energy and Commerce Committee calling on the Secretary to "discard the existing regulatory practices associated with the terms 'conditions' and 'standards' and develop a regulatory approach that will assure the clear articulation and enforcement of the requirements in the Committee amendment." H.R.Rep. No. 391(I), 100th Cong., 1st Sess. 453, reprinted in 1987 U.S.CODE CONG. & ADMIN.NEWS 2313-1, 2313-273. Far from imposing the blanket notice-and-comment rulemaking obligation for which the appellants argue, this language reflects only a terminology change in the regulation of nursing homes. OBRA '87 abandoned a complicated regulatory scheme in which the criteria imposed on nursing homes were subdivided into "conditions," "standards" and "elements." See id. The new law uniformly designates the criteria nursing homes must meet as "requirements." We do not construe this change in terminology to affect the agency's rulemaking responsibilities.⁷ 

Finally, the appellants contend that, whenever an agency issues regulations it intends to enforce, it must follow the notice-and-comment procedures. They offer no support for this proposition and it runs directly contrary to the prevailing authority. The appellants have conceded that the contested regulations faithfully restate the relevant portions of OBRA '87. Our decision in Komjathy v. National Transportation Safety Bd., 832 F.2d 1294 (D.C. Cir. 1987), cert. denied, 486 U.S. 1057, 108 S. Ct. 2825, 100 L. Ed. 2d 926 (1988) holds that, when regulations merely restate the statute they implement, notice-and-comment procedures are unnecessary:

The fact that the regulation merely reiterates the statutory language precludes any serious argument that the regulation affects the agency or [regulated individuals] in such a way as to require notice-and-comment procedures pursuant to 5 U.S.C. § 553. The regulation does not restrict the agency's statutory discretion in any way. Nor could the reprinting of the statutory language in a regulation have affected [a regulated individual's] rights and interests. This is therefore not a case where the court needs to make the sometimes difficult decision about whether a given rule ... is substantive, thus requiring notice and comment pursuant to 5 U.S.C. § 553, or interpretative and therefore exempt from notice and comment requirements.

Id. at 239-240 (citations omitted); cf. American Hosp. Ass'n v. Bowen, 834 F.2d 1037, 1045-46 (D.C. Cir. 1987). The appellants attempt to distinguish Komjathy on the ground that the reiterative regulation there at issue was much briefer than those here. It was not the brevity of the regulation on which the Komjathy court based its decision, however; it was the fact that the "regulation merely reiterates the statutory language." 832 F.2d at 1296. The same is true here and we can see no reason to require notice-and-comment procedures solely because HHS chose to place a more extensive portion of its statute into its regulations.

The district court was correct in holding that HHS adequately determined the challenged regulations to be at least as strict as their predecessors and that the portions of the statute reiterating portions of OBRA '87 are valid although not promulgated in compliance with the APA's notice-and-comment procedures. Accordingly, the district court's grant of summary judgment is

Affirmed.