bowen georgetown university hospital argued october decided december medicare program government reimburses health care providers expenses incurred providing medical services medicare beneficiaries medicare act authorizes secretary health human services secretary promulgate regulations also provides uch regulations shall ii provide making suitable retroactive corrective adjustments provider services fiscal period aggregate reimbursement produced methods determining costs proves either inadequate excessive secretary issued schedule changed method calculating wage index factor used reflect salary levels hospital employees different parts country prior rule wage index given geographic area calculated using average salary levels hospitals area rule excluded computation wages paid federal government hospitals federal district invalidated rule suit brought various hospitals district columbia secretary settled hospitals cost reimbursement reports applying method secretary reissued rule proceeded recoup sums previously paid hospitals including respondents result district ruling exhausting administrative remedies respondents brought suit federal district claiming retroactive schedule invalid inter alia medicare act granted summary judgment respondents appeals affirmed held administrative agency power promulgate regulations limited authority delegated congress general matter statutory grants rulemaking authority understood encompass power promulgate retroactive rules unless power conveyed express terms pp reinstatement rule invalid pp section authorize retroactive promulgation rules structure language statute require conclusion clause ii applies rulemaking adjustments reimbursement payments regulations prescribing computation methods reach correct result individual cases interpretation clause ii consistent secretary past implementation provision pp medicare act general grant authority secretary promulgate rules contains express authorization retroactive rulemaking absence express authorization weighs heavily secretary position moreover legislative history provision indicates congress intended forbid retroactive rules secretary past administrative practice consistent interpretation statute pp kennedy delivered opinion unanimous scalia filed concurring opinion post richard lazarus argued cause petitioner briefs acting solicitor general ayer assistant attorney general bolton deputy solicitor general merrill deputy assistant attorney general spears john cordes mark pennak ronald robertson terry coleman henry goldberg ronald sutter argued cause respondents brief mary susan philp thomas hyatt briefs amici curiae urging affirmance filed sisters mercy health et al james robinson anthony derezinski american hospital association linda tomaselli robert klein justice kennedy delivered opinion medicare program health care providers reimbursed government expenses incurred providing medical services medicare beneficiaries see title xviii social security act stat amended et seq medicare act congress authorized secretary health human services promulgate regulations setting limits levels medicare costs reimbursed question presented whether secretary may exercise rulemaking authority promulgate cost limits retroactive secretary authority adopt rules established social security amendments stat amending authority first implemented promulgation schedule hospital services new schedules issued annual basis thereafter june secretary issued schedule included technical changes methods calculating cost limits one changes affected method calculating wage index factor used reflect salary levels hospital employees different parts country prior rule wage index given geographic area calculated using average salary levels hospitals area rule provided wages paid federal government hospitals excluded computation fed reg various hospitals district columbia area brought suit district seeking schedule invalidated april district struck rule concluding secretary violated administrative procedure act apa et failing provide notice opportunity public comment issuing rule see district columbia hospital assn heckler app pet cert hereinafter dcha enjoin enforcement rule however finding lacked jurisdiction hospitals yet exhausted administrative reimbursement remedies order stated secretary wishes put place valid prospective wage index begin proper notice comment proceedings wage index currently place promulgated without notice comment invalid schedule dcha app pet cert february secretary published notice seeking public comment proposal reissue rule retroactive july fed reg congress subsequently amended medicare act require significantly different cost reimbursement procedures readoption modified method apply exclusively period commencing july considering comments received secretary reissued schedule final form november proceeded recoup sums previously paid result district ruling dcha fed reg effect secretary promulgated rule retroactively net result original rule never set aside respondents group seven hospitals benefited invalidation schedule required return million reimbursement payments exhausting administrative remedies sought judicial review applicable provisions apa claiming retroactive schedule invalid apa medicare act district district columbia granted summary judgment respondents applying balancing test enunciated retail wholesale department store union nlrb app held retroactive application justified circumstances case secretary appealed appeals district columbia circuit affirmed app based holding alternative grounds apa general matter forbids retroactive rulemaking medicare act specific terms bars retroactive rules granted certiorari affirm ii axiomatic administrative agency power promulgate legislative regulations limited authority delegated congress determining validity secretary retroactive rule threshold question whether medicare act authorizes retroactive rulemaking retroactivity favored law thus congressional enactments administrative rules construed retroactive effect unless language requires result greene claridge apartments commissioner miller magnolia petroleum principle statutory grant legislative rulemaking authority general matter understood encompass power promulgate retroactive rules unless power conveyed congress express terms see brimstone power require readjustments past drastic extended permit unreasonably harsh action without plain words even substantial justification retroactive rulemaking presented courts reluctant find authority absent express statutory grant secretary contends medicare act provides necessary authority promulgate retroactive rules unusual circumstances case rests alternative grounds first specific grant authority promulgate regulations provide making suitable retroactive corrective adjustments ii second general grant authority promulgate cost limit rules consider alternatives turn authority promulgate regulations set forth subparagraph also provides regulations shall ii provide making suitable retroactive corrective adjustments provider services fiscal period aggregate reimbursement produced methods determining costs proves either inadequate excessive ibid section clause ii part directs secretary promulgate regulations including rules establishing methods used determining reasonable costs institutions providers participate medicare program clause requires regulations take account direct indirect costs incurred providers clause ii mandates regulations include mechanism making retroactive corrective adjustments adjustments required provider aggregate reimbursement produced methods determining costs low high terms clause ii contemplates mechanism adjusting reimbursement received provider remainder speaks exclusively plural distinction suggests clause ii rather permitting modifications rules general formulation intended authorize inquiry accuracy reimbursement determinations individual providers indeed difficult see corrective adjustment made aggregate reimbursement paid provider without performing individual examination provider expenditures retrospect conclusion buttressed statute use term adjustments clause ii regulations shall provide making adjustments order derive language authority promulgate rules adjustments regulations must provide making additional regulations congress intended secretary promulgate regulations providing issuance amendatory regulations think intent made explicit also significant clause ii speaks terms adjusting aggregate reimbursement amount computed one methods determining costs secretary concedes rules one methods determining costs retroactive rule therefore attempt change one methods yet nothing clause ii suggests permits changes methods used compute costs rather expressly contemplates corrective adjustments aggregate amounts reimbursement produced pursuant methods find language clause ii independent grant authority promulgate regulations establishing methods determining costs interpretation clause ii consistent secretary past implementation provision regulations promulgated immediately enactment medicare act established mechanism making retroactive corrective adjustments remained essentially unchanged throughout periods relevant case compare cfr cfr regulations provide adjusting amount interim payments received provider bring aggregate reimbursement line provider actual reasonable costs regulations expressly contemplate making retroactive corrective adjustments reissuance rule purport provision indeed context litigation secretary expressed intent characterize rule retroactive corrective adjustment clause ii despite novelty interpretation secretary contends entitled deference young community nutrition institute chemical mfrs assn natural resources defense council chevron natural resources defense council never applied principle cases agency litigating positions wholly unsupported regulations rulings administrative practice contrary declined give deference agency counsel interpretation statute agency articulated position question ground congress delegated administrative official appellate counsel responsibility elaborating enforcing statutory commands investment company institute camp cf burlington truck lines courts may accept appellate counsel post hoc rationalizations agency orders even sanction departure principle cases far reasoned consistent view scope clause ii secretary current interpretation clause ii contrary narrow view provision advocated past cases secretary argued clause ii merely contemplates balancing monthly installments received provider aggregate due year regents university california heckler see also whitecliff cl cert denied deference appears nothing agency convenient litigating position entirely inappropriate accordingly retroactive rule upheld exercise secretary authority make retroactive corrective adjustments statutory provisions establishing secretary general rulemaking power contain express authorization retroactive rulemaking light might shed matter suggestions legislative intent also indicates authority contemplated first place congress intended grant secretary authority act retroactively made intent explicit discussed ii directs secretary establish procedures making retroactive corrective adjustments view indication congress considered need retroactive agency action absence express authorization retroactive rules weighs heavily secretary position legislative history provision directly addresses issue retroactivity discussing authority granted amendments house senate committee reports expressed desire forbid retroactive rules proposed new authority set limits costs exercised prospective rather retrospective basis provider know advance limits government recognition incurred costs opportunity act avoid costs reimbursable see secretary past administrative practice consistent interpretation statute first regulations promulgated provided hese limits imposed prospectively cfr although language dropped subsection regulation revised revised regulation continued refer prospective periods limits applied required notice future cost limits published federal register rior beginning cost period limits applied cfr finally regulations amended secretary reinserted requirement limits applied prospective effect noting language inadvertently omitted previous amendment reinsertion effect way develop apply limits fed reg see cfr examples similar statements agency abound every schedule promulgated secretary example included statement permits secretary establish prospective limits costs reimbursed medicare secretary administrative rulings also expressed understanding see beth israel hospital blue cross shield massachusetts cch medicare medicaid guide secretary nonetheless suggests whatever limits power promulgate retroactive regulations normal course events judicial invalidation prospective rule unique occurrence creates heightened need thus justification retroactive curative rulemaking secretary warns congressional intent important administrative goals may frustrated unless invalidated rule cured defect made applicable past time periods argument advanced countervailing reliance interests less compelling usual case retroactive rulemaking original invalidated rule provided least notice individuals entities subject provisions whatever weight secretary contentions might contexts need addressed case us resolved particular statutory scheme question interpretation medicare act compels conclusion secretary authority promulgate retroactive rules reinstatement rule invalid judgment appeals affirmed footnotes clear language provisions intended implement secretary authority clause ii regulations also provide making suitable retroactive adjustments provider submitted fiscal statistical reports retroactive adjustment represent difference amount received provider year covered services medicare program beneficiaries amount determined accordance accepted method cost apportionment actual cost services rendered beneficiaries year cfr cfr section amendments amended medicare act state secretary regulations computing reasonable costs may provide establishment limits direct indirect overall incurred costs incurred costs specific items services groups items services recognized reasonable based estimates costs necessary efficient delivery needed health services individuals covered insurance programs established subchapter section provides secretary shall prescribe regulations may necessary carry administration insurance programs subchapter finally incorporates provides secretary shall full power authority make rules regulations inconsistent provisions subchapter necessary appropriate carry provisions see fed reg fed reg fed reg fed reg fed reg fed reg fed reg fed reg see also fed reg notice invalidation schedule even notice proposed rulemaking concerning reissuance schedule contained statement authorizes secretary set prospective limits costs reimbursed medicare fed reg interestingly statement appear final notice announcing reissuance schedule justice scalia concurring agree general principles administrative law suggest medicare act permit retroactive application secretary health human service rule write separately find incomplete discuss general principles administrative law without reference basic structural legislation embodiment principles administrative procedure act apa agree district columbia circuit apa independently confirms judgment reached first part apa definition rule rule means whole part agency statement general particular applicability future effect designed implement interpret prescribe law policy describing organization procedure practice requirements agency emphasis added future effect definition mean merely taking effect future future effective date even though effective altering law applied past reading urged secretary health human services secretary produces definition rule meaningless since obviously agency statements future effect sense take effect made one might argue suppose future effect excludes agency statements take effect immediately opposed one second promulgation apart facial silliness making central distinction rulemaking adjudication hang upon thread incompatible makes clear certain requirements complied rule effective immediately thus reading like one causes fail central objective distinguish rules orders orders future effect sense effective promulgated short really alternative except obvious meaning rule statement legal consequences future first part definition left doubt however surely eliminated second part secretary brief regrettably submerges ellipsis portion set forth definition continues rule includes approval prescription future rates wages corporate financial structures reorganizations thereof prices facilities appliances services allowances therefor valuations costs accounting practices bearing foregoing emphasis added position secretary takes litigation accord government authoritative interpretation apa attorney general manual administrative procedure act ag manual repeatedly given great weight see steadman sec chrysler brown vermont yankee nuclear power natural resources defense council document prepared office assistant solicitor general advised congress latter stages enacting apa originally issued guide agencies adjusting procedures requirements act ag manual analysis plainly accord secretary position particular importance fact rule includes agency statements general applicability also particular applicability applying either class single person either case must future effect implementing prescribing future law entire act based upon dichotomy rule making adjudication rule making agency action regulates future conduct either groups persons single person essentially legislative nature operates future also primarily concerned policy considerations conversely adjudication concerned determination past present rights liabilities rule unreasonable secondary retroactivity example altering future regulation manner makes worthless substantial past investment incurred reliance upon prior rule may reason arbitrary capricious see thus invalid reference situations found many cases statements effect rule retroactive effects may nonetheless sustained spite retroactivity reasonable general telephone southwest see also national assn independent television producers distributors fcc implication fcc may consider reasonableness retroactive effect rule clearly wrong erroneous however extend reasonableness inquiry purported rules merely affect past transactions change law past quite simply rule agency statement future effect future effect reasonable past effect profound confusion characterizing secretary approach case exemplified reliance upon opinion sec chenery even apart fact case decided apa nothing issue us since involved adjudication rather rulemaking thus though true opinion permitted secretary correction procedural error caused initial reversal see sec chenery reach substantive result retroactive effect utterly crucial distinction chenery involved form administrative action retroactivity permissible standard adjudication deals law rulemaking deals law said chenery since commission unlike ability make new law prospectively exercise powers less reason rely upon ad hoc adjudication formulate new standards conduct function filling interstices act performed much possible promulgation rules applied future emphasis added although apa enacted years ago never directly confronted whether statute authorizes retroactive rules casts doubt secretary position obviously useful instrument available agencies one expect previously occasion review exercise case government cites however case addison holly hill fruit products case stand general authority issue retroactive rules apa enacted much less authority face addison involved promulgation definition area production administrator wage hour division purposes exemption fair labor standards act stat amended et seq found definition unlawful instead directing entry judgment employees claiming higher wages remanded case district instructions hold administrator making valid determination area deliberate speed acts within authority given congress entirely clear required determination made regulation rather declaratory order applicable case hand interpretive rule held invalid rule superseded obviously available agency make law retroactively adjudication courts routinely indicated secretary agriculture done morgan perhaps addison stands arguably however administrator obliged act regulation rather adjudication since statutory exemption question referred area production defined administrator see parenthetical effect requiring specification rule rather adjudication authorizing retroactive regulation situation one two legal commands superseded circumstances either administrator contravene normal law promulgating retroactive regulation else administrator inaction totally eliminated congressionally prescribed area production exemption something yield case involves retroactive rulemaking stand government asserted principle general permissibility retroactive rules long reasonable rather much narrower unexceptional proposition particular statute may circumstances implicitly authorize retroactive rulemaking case disposed secretary suggests simply noting retroactive rulemaking similar retroactive legislation latter long upheld constitutional attack reasonable see pension benefit guaranty gray baltimore susquehanna nesbit see generally hochman constitutionality retroactive legislation harv rev issue constitutionality rather whether good reason doubt apa means says purposes resolving question follow since congress possesses power retroactively change laws must meant agencies possess power retroactively change regulations retroactive legislation always looked upon disfavor see smead rule retroactive legislation basic principle jurisprudence rev story commentaries constitution ed even constitutionality conditioned upon rationality requirement beyond applied legislation see pension benefit guaranty supra usery turner elkhorn mining entirely unsurprising therefore even though congress wields power unwilling confer upon agencies given traditional attitude towards retroactive legislation regime established apa entirely reasonable one action required agency act retroactive effect without special congressional authorization apa says reason think congress mean dire consequences secretary predicts ensue reading apa written justice department originally interpreted credible years jurisprudence since apa effect secretary cites one holding one alternative holding set forth sustaining retroactive regulations see citizens save spencer county epa app national helium fea temp emerg app evidently device indispensable efficient government important note retroactivity limitation applies rulemaking thus legal consequences hinge upon interpretation statutory requirements interpretive rule construing requirements effect nothing prevents agency acting retroactively adjudication see nlrb bell aerospace sec chenery moreover agency believes extraordinary step retroactive rulemaking crucial need persuade congress fact obtain necessary ad hoc authorization may even implicit authorization particular retroactive rulemaking found existing legislation example statute prescribes deadline particular rules must effect agency misses deadline statute may interpreted authorize reasonable retroactive rule despite limitation apa situation bear similarity addison need discuss exceptions basis law may permit agency issue retroactive rule exception suggested secretary cover present case basis law secretary contends evils generally associated retroactivity apply reasonable curative rulemaking correction mistake earlier rulemaking proceeding invalidated rule furnished respondents ample notice standard applied secretary asserts unfair apply identical rule retroactively shall assume invalidated rule provided ample notice though clear makes difference issue whether retroactive rulemaking fair undoubtedly may may prospective adjudication issue whether permissible form agency action particular structure established apa secretary provides nothing bring within structure might add even felt free construct model desirable administrative procedure assuredly sanction curative retroactivity fully agree district columbia circuit acceptance secretary position make mockery apa since agencies free violate rulemaking requirements apa impunity upon invalidation rule free reissue rule retroactive basis app reasons addition stated agree judgment district columbia circuit must affirmed