retain an attorney but could not pay the attorney more than "$ 100.00 per day without the express written approval of the responsible HHS official." 45 C.F.R. § 1303.3(a) (1990). The amended rules allow a grantee to charge a maximum of $ 250.00 per day against its grant to retain an attorney. 45 C.F.R. § 1303.3(a)(1) (1994). This cap on attorney's fees is adjusted annually to reflect cost-of-living increases. Id. In contrast to the pre-amendment rule, however, the new cap cannot be waived upon written approval of an HHS official. The amendments also purport to clarify the prior regulations by explicitly stating that the grantee may not charge the fees of more than one attorney to the program grant. Id.
Plaintiffs argue that by rescinding the rule that permitted HHS to waive the $ 100.00 per day attorney's fee limit HHS changed its settled course of behavior. Plaintiffs have offered several examples of HHS' granting waivers upon request. See MCAA's Mot. at Exs. 6, 7, 7a, and 8-8b; see also, Deposition of Robert A. Dublin ("Dublin Dep.") at 6-15. Plaintiffs argue that their evidence demonstrates that HHS had a long-standing policy to routinely grant such waivers.
Defendant responds that no consistent, agency-wide policy with respect to waivers existed under the prior regulations. She asserts that requests were handled in varying manners by HHS regional offices rather than on a consistent basis by HHS headquarters. For example, there were regional variations in the amount of fees that could be charged to the program grant pursuant to a waiver. See Dublin Dep. at 6-15. Furthermore, she asserts that many grantees did not request waivers of the fee limit. Id. On the other hand, counsel for defendant conceded in open court that, at least in recent years, whenever a waiver was requested, it was granted.
Where an agency changes a settled course of behavior "by rescinding a rule[, it] 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 of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42, 77 L. Ed. 2d 443, 103 S. Ct. 2856 (1983). There is a presumption "against changes in current policy that are not justified by the rulemaking record." Id. To make out their claimed APA violations, plaintiffs therefore must prove that there was a settled course of behavior, that there has been a change in the settled course of behavior, and that the change was not sufficiently justified in the record.
The Court does not believe that defendant has sufficiently rebutted plaintiffs' evidence that HHS consistently granted waivers upon request. The Court therefore concludes that the existence of the waiver rule and the consistent practice of permitting waivers upon request establishes a settled course of conduct by HHS. Because the new regulations do not permit a waiver of the maximum attorneys' fees, they change this settled course of conduct. The Court nevertheless agrees with defendant that even though HHS changed a settled course of behavior, HHS gave rational reasons for the policy change in both the Notice of Proposed Rulemaking and in the preamble to the Final Rule, and that the policy change is justified by the rulemaking record. Motor Vehicles Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. at 42. The Court is satisfied that the Department has articulated permissible reasons for its change of position, and that the new position is consistent with the law. Public Citizen v. Steed, 236 U.S. App. D.C. 1, 733 F.2d 93, 99 (D.C. Cir. 1984) (quoting NAACP v. FCC, 221 U.S. App. D.C. 44, 682 F.2d 993, 998 (D.C. Cir. 1982)).
In its Notice of Proposed Rulemaking, HHS clearly stated that it was proposing to eliminate the waiver provision and articulated reasons for the proposed change:
We are proposing to remove the existing authority to waive the fee limitation because it has generated excessive disputes. It is believed that limiting the fees to the usual and customary charges, not to exceed $ 250.00 per day, and indexing that limitation to the national inflation index, or CPI, is reasonable. Moreover, this will result in a uniform and equitable application of the provision throughout the country.