author: Justice White Justice Kennedy, Justice Scalia,

text:
    LAMB’S CHAPEL et al. v. CENTER MORICHES UNION FREE SCHOOL DISTRICT et al.
    No. 91-2024.
    Argued February 24, 1993
    Decided June 7, 1993

      Jay Alan Sekulow argued the cause for petitioners. With him on the briefs were Keith A. Fournier, Mark N. Troobnick, James M. Henderson, Sr., Jordan W. Lorence, Thomas Patrick Monaghan, Walter M. Weber, and John Stepanovich.

      John W. Hoefling argued the cause for respondents. With him on the brief for respondents Center Moriches Union Free School District et al. was Ross Paine Masler. Respondent Robert Abrams, Attorney General of New York, filed a brief pro se. With him on the brief were Jerry Boone, Solicitor General, and Lillian Z. Cohen and Jeffrey I. Slonim, Assistant Attorneys General.

      Briefe of amici curias urging reversal were filed for the United States by Solicitor General Starr, Assistant Attorney General Gerson, Deputy Solicitor General Roberts, Edward C. DuMont, Anthony J. Steinmeyer, and Lowell V. Sturgill, Jr.; for the American Civil Liberties Union et al. by David H. Remes, T. Jeremy Gunn, Stevm R. Shapiro, John A Powell, and Elliot M. Mincberg; for the American Federation of Labor and Congress of Industrial Organizations by Robert M. Weinberg, Laurence Gold, and Walter A Kamiat; for the Christian Legal Society et al. by Kimberlee Wood Colby, Steven T. McFarland, Bradley P. Jacob, and Karon Owen Bowdre; for Concerned Women for America et al. by Wendell R. Bird and David J. Myers; for the National Jewish Commission on Law and Public Affairs by Nathan Lewin and Dennis Rapps; and for the Rutherford Institute by James J. Knicely and John W. Whitehead.

        Jay Worona, Pilar Sokol, and Louis Grumet filed a brief for the New York State School Boards Association et al. as amici curiae urging affirmance.

   Justice White

delivered the opinion of the Court.

New York Edue. Law §414 (McKinney 1988 and Supp. 1993) authorizes local school boards to adopt reasonable regulations for the use of school property for 10 specified purposes when the property is not in use for school purposes. Among the permitted uses is the holding of “social, civic and recreational meetings and entertainments, and other uses pertaining to the welfare of the community; but such meetings, entertainment and uses shall be non-exclusive and shall be open to the general public.” § 414(c). The list of permitted uses does not include meetings for religious purposes, and a New York appellate court in Trietley v. Board of Ed. of Buffalo, 409 N. Y. S. 2d 912, 915 (App. Div. 1978), ruled that local boards could not allow student bible clubs to meet on school property because “[r]eligious purposes are not included in the enumerated purposes for which a school may be used under section 414.” In Deeper Life Christian Fellowship, Inc. v. Sobol, 948 F. 2d 79, 88-84 (1991), the Court of Appeals for the Second Circuit accepted Trietley as an authoritative interpretation of state law. Furthermore, the Attorney General of New York supports Trietley as an appropriate approach to deciding this case.

Pursuant to §414’s empowerment of local school districts, the Board of Center Moriches Union Free School District (District) has issued rules and regulations with respect to the use of school property when not in use for school purposes. The rules allow only 2 of the 10 purposes authorized by §414: social, civic, or recreational uses (Rule 10) and use by political organizations if secured in compliance with §414 (Rule 8). Rule 7, however, consistent with the judicial interpretation of state law, provides that “[t]he school premises shall not be used by any group for religious purposes.” App. to Pet. for Cert. 57a.

The issue in this case is whether, against this background of state law, it violates the Free Speech Clause of the First Amendment, made applicable to the States by the Fourteenth Amendment, to deny a church access to school premises to exhibit for public viewing and for assertedly religious purposes, a film series dealing with family and child-rearing issues faced by parents today.

I

Petitioners (Church) are Lamb’s Chapel, an evangelical church in the community of Center Moriches, and its pastor John Steigerwald. Twice the Church applied to the District for permission to use school facilities to show a six-part film series containing lectures by Doctor James Dobson. A brochure provided on request of the District identified Dr. Dob-son as a licensed psychologist, former associate clinical professor of pediatrics at the University of Southern California, best-selling author, and radio commentator. The brochure stated that the film series would discuss Dr. Dobson’s views on the undermining influences of the media that could only be counterbalanced by returning to traditional, Christian family values instilled at an early stage. The brochure went on to describe the contents of each of the six parts of the series. The District denied the first application, saying that “[t]his film does appear to be church related and therefore your request must be refused.” App. 84. The second application for permission to use school premises for showing the film series, which described it as a “Family oriented movie — from a Christian perspective,” id., at 91, was denied using identical language.

The Church brought suit in the District Court, challenging the denial as a violation of the Freedom of Speech and Assembly Clauses, the Free Exercise Clause, and the Establishment Clause of the First Amendment, as well as the Equal Protection Clause of the Fourteenth Amendment. As to each cause of action, the Church alleged that the actions were undertaken under color of state law, in violation of 42 U. S. C. § 1983. The District Court granted summary judgment for respondents, rejecting all the Church’s claims. With respect to the free-speech claim under the First Amendment, the District Court characterized the District’s facilities as a “limited public forum.” The court noted that the enumerated purposes for which §414 allowed access to school facilities did not include religious worship or instruction, that Rule 7 explicitly proscribes using school facilities for religious purposes, and that the Church had conceded that its showing of the film series would be for religious purposes. 770 F. Supp. 91, 92, 98-99 (EDNY 1991). The District Court stated that once a limited public forum is opened to a particular type of speech, selectively denying access to other activities of the same genre is forbidden. Id., at 99. Noting that the District had not opened its facilities to organizations similar to Lamb’s Chapel for religious purposes, the District Court held that the denial in this case was viewpoint neutral and, hence, not a violation of the Freedom of Speech Clause. Ibid. The District Court also rejected the assertion by the Church that denying its application demonstrated a hostility to religion and advancement of nonreligion not justified under the Establishment of Religion Clause of the First Amendment. 736 F. Supp. 1247, 1253 (1990).

The Court of Appeals affirmed the judgment of the District Court “in all respects.” 959 F. 2d 381, 389 (CA2 1992). It held that the school property, when not in use for school purposes, was neither a traditional nor a designated public forum; rather, it was a limited public forum open only for designated purposes, a classification that “allows it to remain non-public except as to specified uses.” Id., at 386. The court observed that exclusions in such a forum need only be reasonable and viewpoint neutral, ibid., and ruled that denying access to the Church for the purpose of showing its film did not violate this standard. Because the holding below was questionable under our decisions, we granted the petition for certiorari, 506 U. S. 813 (1992), which in principal part challenged the holding below as contrary to the Free Speech Clause of the First Amendment.

II

There is no question that the District, like the private owner of property, may legally preserve the property under its control for the use to which it is dedicated. Cornelius v. NAACP Legal Defense & Ed. Fund, Inc., 473 U. S. 788, 800 (1985); Perry Ed. Assn. v. Perry Local Educators’ Assn., 460 U. S. 37, 46 (1983); Postal Service v. Council of Green- burgh Civic Assns., 453 U. S. 114, 129-130 (1981); Greer v. Spock, 424 U. S. 828, 836 (1976); Adderley v. Florida, 385 U. S. 39, 47 (1966). It is also common ground that the District need not have permitted after-hours use of its property for any of the uses permitted by N. Y. Educ. Law §414. The District, however, did open its property for 2 of the 10 uses permitted by § 414. The Church argued below that because under Rule 10 of the rules issued by the District, school property could be used for “social, civic, and recreational” purposes, the District had opened its property for such a ivide variety of communicative purposes that restrictions on communicative uses of the property were subject to the same constitutional limitations as restrictions in traditional public forums such as parks and sidewalks. Hence, its view was that subject matter or speaker exclusions on District property were required to be justified by a compelling state interest and to be narrowly drawn to achieve that end. See Perry, supra, at 45; Cornelius, supra, at 800. Both the District Court and the Court of Appeals rejected this submission, which is also presented to this Court. The argument has considerable force, for the District’s property is heavily used by a wide variety of private organizations, including some that presented a “close question,” which the Court of Appeals resolved in the District’s favor, as to whether the District had in fact already opened its property for religious uses. 959 F. 2d, at 387. We need not rule on this issue, however, for even if the courts below were correct in this respect — and we shall assume for present purposes that they were — the judgment below must be reversed.

With respect to public property that is not a designated public forum open for indiscriminate public use for communicative purposes, we have said that “[cjontrol over access to a nonpublic forum can be based on subject matter and speaker identity so long as the distinctions drawn are reasonable in light of the purpose served by the forum and are viewpoint neutral.” Cornelius, 473 U. S., at 806, citing Perry Education Assn., supra, at 49. The Court of Appeals appeared to recognize that the total ban on using District property for religious purposes could survive First Amendment challenge only if excluding this category of speech was reasonable and viewpoint neutral. The court’s conclusion in this ease was that Rule 7 met this test. We cannot agree with this holding, for Rule 7 was unconstitutionally applied in this ease.

The Court of Appeals thought that the application of Rule 7 in this ease was viewpoint neutral because it had been, and would be, applied in the same way to all uses of school property for religious purposes. That all religions, and all uses for religious purposes are treated alike under Rule 7, however, does not answer the critical question whether it discriminates on the basis of viewpoint to permit school property to be used for the presentation of all views about family issues and child rearing except those dealing with the subject matter from a religious standpoint.

There is no suggestion from the courts below or from the District or the State that a lecture or film about child rearing and family values would not be a use for social or civic purposes otherwise permitted by Rule 10. That subject matter is not one that the District has placed off limits to any and all speakers. Nor is there any indication in the record before us that the application to exhibit the particular film series involved here was, or would have been, denied for any reason other than the fact that the presentation would have been from a religious perspective. In our view, denial on that basis was plainly invalid under our holding in Cornelius, supra, at 806, that

“[although a speaker may be excluded from a nonpublic forum if he wishes to address a topic not encompassed within the purpose of the forum ... or if he is not a member of the class of speakers for whose especial benefit the forum was created ..., the government violates the First Amendment when it denies access to a speaker solely to suppress the point of view he espouses on an otherwise includible subject.”

The film series involved here no doubt dealt with a subject otherwise permissible under Rule 10, and its exhibition was denied solely because the series dealt with the subject from a religious standpoint. The principle that has emerged from our cases “is that the First Amendment forbids the government to regulate speech in ways that favor some viewpoints or ideas at the expense of others.” City Council of Los Angeles v. Taxpayers for Vincent, 466 U. S. 789, 804 (1984). That principle applies in the circumstances of this case; as Judge Posner said for the Court of Appeals for the Seventh Circuit, to discriminate “against a particular point of view ... would ... flunk the test... [of] Cornelius, provided that the defendants have no defense based on the establishment clause.” May v. Evansville-Vanderburgh School Corp., 787 F. 2d 1105, 1114 (1986).

The District, as a respondent, would save its judgment below on the ground that to permit its property to be used for religious purposes would be an establishment of religion forbidden by the First Amendment. This Court suggested in Widmar v. Vincent, 454 U. S. 263, 271 (1981), that the interest of the State in avoiding an Establishment Clause violation “may be [a] compelling” one justifying an abridgment of free speech otherwise protected by the First Amendment; but the Court went on to hold that permitting use of university property for religious purposes under the open access policy involved there would not be incompatible with the Court’s Establishment Clause eases.

We have no more trouble than did the Widmar Court in disposing of the claimed defense on the ground that the posited fears of an Establishment Clause violation are unfounded. The showing of this film series would not have been during school hours, would not have been sponsored by the school, and would have been open to the public, not just to church members. The District property had repeatedly been used by a wide variety of private organizations. Under these circumstances, as in Widmar, there would have been no realistic danger that the community would think that the District was endorsing religion or any particular creed, and any benefit to religion or to the Church would have been no more than incidental. As in Widmar, supra, at 271-272, permitting District property to be used to exhibit the film series involved in this case would not have been an establishment of religion under the three-part test articulated in Lemon v. Kurtzman, 403 U. S. 602 (1971): The challenged governmental action has a secular purpose, dóes not have the principal or primary effect of advancing or inhibiting religion, and does not foster an excessive entanglement with religion.

The District also submits that it justifiably denied use of its property to a “radical” church for the purpose of proselytizing, since to do so would lead to threats of public unrest and even violence. Brief for Respondent Center Moriches Union Free School District et al. 4-5, 11-12, 24. There is nothing in the record to support such a justification, which in any event would be difficult to defend as a reason to deny the presentation of a religious point of view about a subject the District otherwise opens to discussion on District property.

We note that the New York State Attorney General, a respondent here, does not rely on either the Establishment Clause or possible danger to the public peace in supporting the judgment below. Rather, he submits that the exclusion is justified because the purpose of the access rules is to promote the interests of the public in general rather than sectarian or other private interests. In light of the variety of the uses of District property that have been permitted under Rule 10, this approach has its difficulties. This is particularly so since Rule 10 states that District property may be used for social, civic, or recreational use “only if it can be non-exclusive and open to all residents of the school district that form á homogeneous group deemed relevant to the event.” App. to Pet. for Cert. 57a. At least arguably, the Rule does not require that permitted uses need be open to the public at large. However that may be, this was not the basis of the judgment that we are reviewing. The Court of Appeals, as we understand it, ruled that because the District had the power to permit or exclude certain subject matters, it was entitled to deny use for any religious purpose, including the purpose in this case. The Attorney General also defends this as a permissible subject-matter exclusion rather than a denial based on viewpoint, a submission that we have already rejected.

The Attorney General also argues that there is no express finding below that the Church’s application would have been granted absent the religious connection. This fact is beside the point for the purposes of this opinion, which is concerned with the validity of the stated reason for denying the Church’s application, namely, that the film series sought to be shown “appeared to be church related.”

For the reasons stated in this opinion, the judgment of the Court of Appeals is

Reversed.

Justice Kennedy,

concurring in part and concurring in the judgment.

Given the issues presented as well as the apparent unanimity of our conclusion that this overt, viewpoint-based discrimination contradicts the Free Speech Clause of the First Amendment and that there has been no substantial showing of a potential Establishment Clause violation, I agree with Justice Scalia that the Court’s citation of Lemon v. Kurtzman, 403 U. S. 602 (1971), is unsettling and unnecessary. The same can be said of the Court’s use of the phrase “endorsing religion,” see ante, at 395, which, as I have indicated elsewhere, cannot suffice as a rule of decision consistent with our precedents and our traditions in this part of our jurisprudence. See Allegheny County v. American Civil Liberties Union, Greater Pittsburgh Chapter, 492 U. S. 573, 655 (1989) (opinion concurring in judgment in part and dissenting in part). With these observations, I concur in part and concur in the judgment.

Justice Scalia,

with whom

Justice Thomas joins, concurring in the judgment.

I join the Court’s conclusion that the District’s refusal to allow use of school facilities for petitioners’ film viewing, while generally opening the schools for community activities, violates petitioners’ First Amendment free-speech rights (as does N. Y. Educ. Law §414 (McKinney 1988 and Supp. 1993), to the extent it compelled the District’s denial, see ante, at 386-387). I also agree with the Court that allowing Lamb’s Chapel to use school facilities poses “no realistic danger” of a violation of the Establishment Clause, ante, at 395, but I cannot accept most of its reasoning in this regard. The Court explains that the showing of petitioners’ film on school property after school hours would not cause the community to “think that the District was endorsing religion or any particular creed,” and further notes that access to school property would not violate the three-part test articulated in Lemon v. Kurtzman, 403 U. S. 602 (1971). Ante, at 395.

As to the Court’s invocation of the Lemon test: Like some ghoul in a late-night horror movie that repeatedly sits up in its grave and shuffles abroad, after being repeatedly killed and buried, Lemon stalks our Establishment Clause jurisprudence once again, frightening the little children and school attorneys of Center Moriches Union Free School District. Its most recent burial, only last Term, was, to be sure, not fully six feet under: Our decision in Lee v. Weisman, 505 U. S. 577, 586-587 (1992), conspicuously avoided using the supposed “test” but also declined the invitation to repudiate it. Over the years, however, no fewer than five of the currently sitting Justices have, in their own opinions, personally driven pencils through the creature’s heart (the author of today’s opinion repeatedly), and a sixth has joined an opinion doing so. See, e.g., Weisman, supra, at 644 (Scalia, J., joined by, inter alios, Thomas, J., dissenting); Allegheny County v. American Civil Liberties Union, Greater Pittsburgh Chapter, 492 U. S. 573, 655-657 (1989) (Kennedy, J., concurring in judgment in part and dissenting in part); Corporation of Presiding Bishop of Church of Jesus Christ of Latter-day Saints v. Amos, 483 U. S. 327, 346-349 (1987) (O’Connor, J., concurring in judgment); Wallace v. Jaffree, 472 U. S. 38, 107-113 (1985) (Rehnquist, J., dissenting); id., at 90-91 (White, J., dissenting); School Dist. of Grand Rapids v. Ball, 473 U.S. 373, 400 (1985) (White, J., dissenting); Widmar v. Vincent, 454 U. S. 263, 282 (1981) (White, J., dissenting); New York v. Cathedral Academy, 434 U. S. 125, 134-135 (1977) (White, J., dissenting); Roemer v. Board of Pub. Works of Md., 426 U. S. 736, 768 (1976) (White, J., concurring in judgment); Committee for Public Ed. & Religious Liberty v. Nyquist, 413 U. S. 756, 820 (1973) (White, J., dissenting).

The secret of the Lemon test’s survival, I think, is that it is so easy to kill. It is there to scare us (and our audience) when we wish it to do so, but we can command it to return to the tomb at will. See, e. g., Lynch v. Donnelly, 465 U. S. 668, 679 (1984) (noting instances in which Court has not applied Lemon test). When we wish to strike down a practice it forbids, we invoke it, see, e. g., Aguilar v. Felton, 473 U. S. 402 (1985) (striking down state remedial education program administered in part in parochial schools); when we wish to uphold a practice it forbids, we ignore it entirely, see Marsh v. Chambers, 463 U. S. 783 (1983) (upholding state legislative chaplains). Sometimes, we take a middle course, calling its three prongs “no more than helpful signposts,” Hunt v. McNair, 413 U. S. 734, 741 (1973). Such a docile and useful monster is worth keeping around, at least in a somnolent state; one never knows when one might need him.

For my part, I agree with the long list of constitutional scholars who have criticized Lemon and bemoaned the strange Establishment Clause geometry of crooked lines and wavering shapes its intermittent use has produced. See, e.g., Choper, The Establishment Clause and Aid to Parochial Schools — An Update, 75 Calif. L. Rev. 5 (1987); Marshall, “We Know It When We See It”: The Supreme Court and Establishment, 59 S. Cal. L. Rev. 495 (1986); McConnell, Accommodation of Religion, 1985 S. Ct. Rev. 1; Kurland, The Religion Clauses and the Burger Court, 34 Cath. U. L. Rev. 1 (1984); R. Cord, Separation of Church and State (1982); Choper, The Religion Clauses of the First Amendment: Reconciling the Conflict, 41 U. Pitt. L. Rev. 673 (1980). I will decline to apply Lemon — whether it validates or invalidates the government action in question — and therefore cannot join the opinion of the Court today.

I cannot join for yet another reason: the Court’s statement that the proposed use of the school’s facilities is constitutional because (among other things) it would not signal endorsement of religion in general. Ante, at 395. What a strange notion, that a Constitution which itself gives “religion in general” preferential treatment (I refer to the Free Exercise Clause) forbids endorsement of religion in general. The attorney general of New York not only agrees with that strange notion, he has an explanation for it: “Religious advocacy,” he writes, “serves the community only in the eyes of its adherents and yields a benefit only to those who already believe.” Brief for Respondent Attorney General 24. That was not the view of those who adopted our Constitution, who believed that the public virtues inculcated by religion are a public good. It suffices to point out that during the summer of 1789, when it was in the process of drafting the First Amendment, Congress enacted the Northwest Territory Ordinance that the Confederation Congress had adopted in 1787 — Article III of which provides: “Religion, morality, and knowledge, being necessary to good government and the happiness of mankind, schools and the means of education shall forever be encouraged.” Unsurprisingly, then, indifference to “religion in general” is not what our eases, both old and recent, demand. See, e. g., Zorach v. Clauson, 343 U. S. 306, 313-314 (1952) (“When the state encourages religious instruction or cooperates with religious authorities by-adjusting the schedule of public events to sectarian needs, it follows the best of our traditions”); Walz v. Tax Comm’n of New York City, 397 U. S. 664 (1970) (upholding property tax exemption for church property); Lynch, 465 U. S., at 673 (the Constitution “affirmatively mandates accommodation, not merely tolerance, of all religions .... Anything less would require the 'callous indifference’ we have said was never intended” (citations omitted)); id., at 683 (“[0]ur precedents plainly contemplate that on occasion some advancement of religion will result from governmental action”); Marsh, supra; Corporation of Presiding Bishop of Church of Jesus Christ of Latter-day Saints v. Amos, 483 U. S. 327 (1987) (exemption for religious organizations from certain provisions of Civil Rights Act).

* * *

For the reasons given by the Court, I agree that the Free Speech Clause of the First Amendment forbids what respondents have done here. As for the asserted Establishment Clause justification, I would hold, simply and clearly, that giving Lamb’s Chapel nondiscriminatory access to school facilities cannot violate that provision because it does not signify state or local embrace of a particular religious sect.

       Section 414(e) authorizes the use of school property “[flor polling places for holding primaries and elections and for the registration of voters and for holding political meetings. But no meetings sponsored by political organizations shall be permitted unless authorized by a vote of a district meeting, held as provided by law, or, in cities by the board of education thereof”

       Shortly before the first of these requests, the Church had applied for permission to use school rooms for its Sunday morning services and for Sunday School. The hours specified were 9 a.m. to 1 p.m. and the time period one year beginning in the next month. 959 F. 2d 381, 383 (CA2 1992). Within a few days the District wrote petitioners that the application “requesting use of the high school for your Sunday services” was denied, citing both N. Y. Educ. Law §414 and the District’s Rule 7 barring uses for religious purposes. The Church did not challenge this denial in the courts and the validity of this denial is not before us.

        “Turn Your Heart Toward Home is available now in a series of six discussion-provoking films:
      “1) A FATHER LOOKS BACK emphasizes how swiftly time passes and appeals to all parents to ‘turn their hearts toward home’ during the all-important child-rearing years. (60 minutes.)

      “2) POWER IN PARENTING: THE YOUNG CHILD begins by exploring the inherent nature of power, and offers many practical helps for facing the battlegrounds in child-rearing — bedtime, mealtime and other confrontations so familiar to parents. Dr. Dobson also takes a look at areas of conflict in marriage and other adult relationships. (60 minutes.)

      “3) POWER IN PARENTING: THE ADOLESCENT discusses father/ daughter and mother/son relationships, and the importance of allowing children to grow to develop as individuals. Dr. Dobson also encourages parents to free themselves of undeserved guilt when their teenagers choose to rebel. (45 minutes.)

      “4) THE FAMILY UNDER FIRE views the family in the context of today’s society, where a “civil war of values” is being waged. Dr. Dobson urges parents to look at the effects of governmental interference, abortion and pornography, and to get involved. To preserve what they care about most — their own families! (52 minutes.)

        Note: This film contains explicit information regarding the pornography industry. Not recommended for young audiences.

      “5) OVERCOMING A PAINFUL CHILDHOOD includes Shirley Dobson’s intimate memories of a difficult childhood with her alcoholic father. Mrs. Dobson recalls the influences which brought her to a loving God who saw her personal circumstances and heard her cries for help. (U0 minutes.)

      “6) THE HERITAGE presents Dr. Dobson's powerful closing remarks. Here he speaks clearly and convincingly of our traditional values which, if properly employed and defended, can assure happy, healthy, strengthened homes and family relationships in the years to come. (60 minutes.)”' App. 87-88.

       The petition also presses the claim by the Church, rejected by both courts below, that the rejection of its application to exhibit its film series violated the Establishment Clause because it and Rule 7’s categorical refusal to permit District property to be used for religious purposes demonstrate hostility to religion. Because we reverse on another ground, we need not decide what merit this submission might have.

       In support of its case in the District Court, the Church presented the following sampling of the uses that had been permitted under Rule 10 in 1987 and 1988:

        “A New Age religious group known as the “Mind Center’
      Southern Harmonize Gospel Singers
      Salvation Army Youth Band
      Hampton Council of Churches’ Billy Taylor Concert
      Center Moriches Co-op Nursery School’s Quilting Bee
      Manorville Humane Society’s Chinese Auction
      Moriches Bay Power Squadron Unkechaug Dance Group
      Paul Gibson’s Baseball Clinic
      Moriches Bay Civic Association
      Moriches Chamber of Commerce’s Town Fair Day
      Center Moriches Drama Club
      Center Moriches Music Award Associations’ ‘Amahl & the Night Visitors’
      Saint John’s Track and Field Program
      Girl Scouts of Suffolk [C]ounty
      Cub Scouts Pack 23
      Boy Scout Troop #414.” 770 F. Supp. 91, 93, n. 4 (EDNY 1991).
      The Church claimed that the first three uses listed above demonstrated that Rule 10 actually permitted the District property to be used for religious purposes as well as a great assortment of other uses. The first item listed is particularly interesting and relevant to the issue before us. The District Court referred to this item as “a lecture series by the Mind Center, purportedly a New Age religious group.” Id., at 93. The Court of Appeals described it as follows:
      “The lecture series, ‘Psychology and The Unknown,’ by Jerry Huck, was sponsored by the Center Moriches Free Public Library. The library’s newsletter characterized Mr. Huck as a psychotherapist who would discuss such topics as parapsychology, transpersonal psychology, physics and metaphysics in his 4-night series of lectures. Mr. Huek testified that he lectured principally on parapsychology, which he defined by ‘reference to the human unconscious, the mind, the unconscious emotional system or the body system.’ When asked whether his lecture involved matters of both a spiritual and a scientific ñatee, Mr. Huck responded: ‘It was all science. Anything I speak on based on parapsychology, analytic, quantum physicists [sic].’ Although some incidental reference to religious matters apparently was made in the lectures, Mr. Huck himself characterized such matters as ‘a fascinating sideline’ and ‘not the purpose of the [lecture].’” 959 F. 2d, at 388.

       Although the Court of Appeals apparently held that Rule 7 was reasonable as well as viewpoint neutral, the court uttered not a word in support of its reasonableness holding. If Rule 7 were to be held unreasonable, it could be held facially invalid, that is, it might be held that the rule could in no circumstances be applied to religious speech or religious communicative conduct. In view of our disposition of this case, we need not pursue this issue.

       While we are somewhat diverted by Justice Scalia’s evening at the cinema, post, at 398-399, we return to the reality that there is a proper way to inter an established decision and Lemon, however frightening it might be to some, has not been overruled. This case, like Corporation of Presiding Bishop of Church of Jesus Christ of Latter-day Saints v. Amos, 483 U. S. 327 (1987), presents no occasion to do so. Justice Scalia apparently was less haunted by the ghosts of the living when he joined the opinion of the Court in that case.

      The Court correctly notes, ante, at 396, n. 7, that I joined the opinion in Corporation of Presiding Bishop of Church of Jesus Christ of Latter-day Saints v. Amos, 483 U. S. 327 (1987), which considered the Lemon test. Lacking a majority at that time to abandon Lemon, we necessarily focused on that test, which had been the exclusive basis for the lower court’s judgment. Here, of course, the lower court did not mention Lemon, and indeed did not even address any Establishment Clause argument on behalf of respondents. Thus, the Court is ultimately correct that Presiding Bishop provides a useful comparison: It was as impossible to avoid Lemon there, as it is unnecessary to inject Lemon here.


source: Caselaw Access Project

author: Justice White Justice Souter,

license: Public Domain

text:
    GOOD SAMARITAN HOSPITAL et al. v. SHALALA, SECRETARY OF HEALTH AND HUMAN SERVICES
    No. 91-2079.
    Argued March 22, 1993
    Decided June 7, 1993

      Carel T Hedlund argued the cause for petitioners. With her on the briefs was Leonard C. Homer.

      Edward C. DuMont argued the cause for respondent. With him on the brief were Solicitor General Starr, Assistant Attorney General Gerson, Edwin S. Kneedler, Anthony J. Steinmeyer, John P. Schnitker, Susan K. Zagame, Darrel J. Grinstead, and Henry B. Goldberg.

        Joel M. Hamme filed a brief for the American Health Care Association as amicus curiae urging reversal.

   Justice White

delivered the opinion of the Court.

As a means of providing health care to the aged and disabled, Congress enacted the Medicare program in 1965. See Title XVIII of the Social Security Act, 79 Stat. 291, as amended, 42 U. S. C. § 1395 et seq. Under the program, providers of health care services can enter into agreements with the Secretary of Health and Human Services pursuant to which they are reimbursed for certain costs associated with the treatment of Medicare beneficiaries. To operate the program, the Secretary issued regulations imposing limits on the amount of repayment based on a range of factors designed to approximate the cost of providing general routine patient service. The question before us is whether the Secretary must afford the six petitioning hospitals an opportunity to establish that they are entitled to reimbursement for costs in excess of such limits.

I

A

A complex statutory and regulatory regime governs reimbursement, rough description of which is necessary background to this case. To begin, Congress has required the Secretary to repay the lesser of the “reasonable cost” or “customary charg[e].” See 42 U. S. C. § 1395f(b)(l). Rather than attempt to define “reasonable cost” with precision, Congress empowered the Secretary to issue appropriate regulations setting forth the methods to be used in computing such costs. See § ISDSxCvXlXA).

Prior to 1972, the Secretary’s regulations contemplated reimbursement of the entirety of a provider’s services to Medicare patients unless its costs were found to be “substantially out of line” with those of similar institutions. See, e. g., 20 CFR § 405.451(c) (1967). In 1972, apparently fueled by concern that providers were passing on inefficient and excessive expenses, see H. R. Rep. No. 92-231, pp. 82-85 (1971); S. Rep. No. 92-1230, pp. 188-189 (1972), Congress amended the statute to specify that “reasonable costs” meant only those “actually incurred, excluding therefrom any part of incurred cost[s] found to be unnecessary in the efficient delivery of needed health services,” 42 U. S. C. § 1395x(v)(l)(A), and to authorize the Secretary — as part of the “methods” of determining costs — to establish appropriate cost limits, see ibid.

Accordingly, the Secretary promulgated regulations, updated yearly and establishing routine cost limits based on factors such as the type of health care provider (hospital, skilled nursing facility, etc.), type of services it rendered, its geographical location, size, and mix of patients treated. See 20 CFR §405.460 (1975). Hospitals are divided in terms of bed size, and of whether they are urban — i. e., located in a Standard Metropolitan Statistical Area (SMSA) — or rural. As of 1979, the labor-related component of provider costs was to be determined by a wage index keyed to the hospital’s location. See, e. g,, 46 Fed. Reg. 33637 (1981).

The regulations generally provide that reimbursable costs must be within the cost limits. The regulations also allow for adjustments to the limits as applied to a provider’s particular claim. A provider classified as a rural hospital can apply for reclassification as an urban one. 42 CFR § 413.30(d) (1992). An exemption from the applicable cost limits can be obtained under certain specified situations— e. g., when excess expenses are due to “extraordinary circumstances,” or when the provider is the sole hospital in a community, a new provider, or a rural hospital with fewer than 50 beds. § 413.30(e). In addition, exceptions are available for, inter alia, “atypical services,” extraordinary circumstances beyond the provider’s control, unusual labor costs, or essential community services. § 413.30(f).

Two statutory provisions are of central importance to this litigation. First, apparently to protect providers’ liquidity, the statute contemplates a system of interim, advance payments during the year. Specifically, the Secretary “shall periodically determine the amount which should be paid . . . and the provider of services shall be paid, at such time or times as the Secretary believes appropriate (but not less often than monthly) . . . the amounts so determined, with necessary adjustments on account of previously made overpayments or underpayments.” 42 U. S. C. §1395g(a). These interim payments by definition are only approximate ones, based on the provider’s preaudit, estimated costs of anticipated services. See 42 CFR §§ 413.64(e), (f) (1992). Second, the regulations were required to “provide for the making of suitable retroactive corrective adjustments where, for a provider of services for any fiscal period, the aggregate reimbursement produced by the methods of determining costs proves to be either inadequate or excessive.” 42 U. S. C. § 1395x(v)(l)(A)(ii) (clause (ii)).

B

Petitioners are six Nebraska hospitals certified as “providers” of health care services and classified as “rural” for Medicare purposes. Between 1980 and 1984, their costs exceeded the corresponding cost limits. Pursuant to 42 U. S. C. § 1395oo, they filed an appeal to the Provider Reimbursement Review Board (PRRB) in which they challenged the validity of the applicable cost limits on two grounds. First, they claimed that the wage index that was used to calculate reasonable cost of labor did not account for the use of part-time employees. Because petitioners used a greater proportion of part-time employees than the national average, this had the effect of artificially lowering their index values. In support of their claim, they pointed to Congress’ decision in 1983 ordering the Secretary to conduct a wage index study to consider the distortion due to part-time employment, Medicare and Medicaid Budget Reconciliation Amendments of 1984, Pub. L. 98-369, § 2316(a), 98 Stat. 1081, followed by the Secretary’s own revision of the wage index in 1986 which accounted for part-time employees, 51 Fed. Reg. 16772 (1986), and to Congress’ directive that the revised index be applied to discharges occurring after May 1,1986, Medicare and Medicaid Budget Reconciliation Amendments of 1985, Pub. L. 99-272, § 9103(a), 100 Stat. 156. Second, they asserted that under the cost limits a rural hospital could not show that it incurred the same wage costs as its urban counterparts when in fact its location next to urban hospitals forced it to compete for employees by offering equivalent compensation. Petitioners also complained that the cost limits were applied conclusively rather than presumptively. Invoking clause (ii), which provides for “suitable retroactive corrective adjustments,” they argued that they were entitled to reimbursement of all costs they eould show to be reasonable, even if they were in excess of the applicable cost limit.

Because the PRRB believed that it lacked the authority to award the desired relief, it granted petitioners’ request for expeditedjudicialreview. See42U. S. C. § 1395oo(f )(1). Adhering to the Eighth Circuit’s decision in St. Paul-Ramsey Medical Center v. Bowen, 816 F. 2d 417 (1987), the District Court ruled for petitioners, holding that clause (ii) compelled the Secretary to reimburse all costs shown to be reasonable, regardless of whether they surpassed the amount calculated under the cost limit schedule.

The United States Court of Appeals for the Eighth Circuit reversed. Good Samaritan Hospital v. Sullivan, 952 F. 2d 1017 (1991). The court relied on our decision in Bowen v. Georgetown Univ. Hospital, 488 U. S. 204 (1988), in which we held that clause (ii) does not permit retroactive rule-making. 952 F. 2d, at 1023. It reasoned that petitioners’ request for adjustments to correct “inequalities in the system ... would amount to a retroactive change in the methods used to compute costs that, after Georgetown, is invalid.” Id., at 1024. Instead, the Court of Appeals adopted the Secretary’s more modest view of clause (ii) as permitting only a “year-end book balancing of the monthly installments” with the amount determined to be “reasonable” under the applicable regulations. Ibid. Under this approach, clause (ii) establishes the mechanism through which the total of the interim payments extended pursuant to § 1395g (which merely purport to be estimates of actual costs) are reconciled with the postaudit amounts determined at year’s end to be owed under the methods determining allowable costs. We granted certiorari to resolve a conflict among the Courts of Appeals. 506 U. S. 914 (1992).

II

A

The starting point in interpreting a statute is its language, for “[i]f the intent of Congress is clear, that is the end of the matter.” Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842 (1984). See also NLRB v. Food & Commercial Workers, 484 U. S. 112, 123 (1987). Clause (ii) instructs the Secretary to “provide for the making of suitable retroactive corrective adjustments where, for a provider of services for any fiscal period, the aggregate reimbursement produced by the methods of determining costs proves to be either inadequate or excessive.” Petitioners argue that the mandate is clear: The methods for determining reasonable costs having been determined pursuant to § 1395x(v)(l)(A), clause (ii) must be read to mean that such methods nonetheless might yield “inadequate or excessive” amounts in any particular instance. Where such is the case, it is submitted, the clause mandates a correction that will provide full reimbursement for reasonable costs.

In contrast, the Secretary asserts that the “aggregate reimbursement” refers to the sum total of the interim payments made pursuant to §1395g. These payments are, of course, based on the methods chosen by the Secretary to determine reasonable costs, but they are only anticipatory estimates of what the providers’ reimbursable costs will be, made before all relevant data are available. At year’s end, when the provider’s reimbursable costs for services actually provided during that year are on hand, the preaudit “aggregate” of the interim payments can be compared to the post-audit amounts due under the methods. Because the interim payments might have been erroneously calculated, their total might not match amounts owed, and adjustments must be performed to reconcile the two. See 42 CFR §§ 413.64(e), (f) (1992).

In our view, the language of clause (ii) does not itself clearly settle the issue before us. The clause is ambiguous in two respects. First, the “aggregate reimbursement produced by the methods of determining costs” could mean either (in petitioners’ view) the amount due given proper application of the Secretary’s regulations, or (in the Secretary’s view) the total of the interim payments, themselves derived from application of the methods to rough, incomplete data. Second, the clause refers to “inadequate” and “excessive” reimbursements, but without at any point stating the standard against which inadequacy or excessiveness is to be measured. Petitioners contend that the implicit referent must be the reasonable costs as established by the providers, without regard to the methods; the Secretary concludes that it must be the reasonable costs as determined by the agency applying the methods.

Each of the conflicting constructions is plausible but each has its difficulty. Petitioners contend that although the interim reimbursements might lead to inaccurate repayments, they are not part of the methods of determining costs to which § 1395x(v)(l)(A) refers, but rather are payment methods governed by § 1395g. Moreover, the book-balancing role the Secretary would have us assign to clause (ii) arguably is already performed by §1395g, which mandates periodic reimbursement “prior to audit or settlement by the General Accounting Office... with necessary adjustments on account of previously made overpayments or underpayments.” The Secretary counters that, while clause (ii) is directed at year-end adjustments and designed to ensure that providers are reimbursed their reasonable costs, § 1395g addresses periodic adjustments to be made during the course of the fiscal year; § 1395g thus has its own role to play and is not surplusage.

The Secretary also argues that words such as “corrective” and “adjustments” more readily evoke the simple mathematical rectifications that she contemplates than the complex process of revisiting applicable methods and comparing the amounts paid with an ill-defined standard of “reasonable” costs that is called for by petitioners’ approach. It is true that § 1395x(v)(l)(A) defines reasonable cost as “the cost actually incurred, excluding therefrom any part of incurred cost found to be unnecessary in the efficient delivery of needed health services,” and petitioners contend that this is the yardstick against which reimbursements must be measured. But the statute proceeds to explain that reasonable cost “shall be determined in accordance with regulations establishing the method or methods to be used.” In similar fashion, the 1972 amendments allow for the provision of “limits on the direct or indirect overall incurred costs or incurred costs of specific items or services or groups of items or services to be recognized as reasonable.” Ibid, (emphasis added). In short, aside from the implementing agency’s determination pursuant to its regulations, as to which Congress granted broad discretion, there is no available standard of reasonableness that could form a ready basis for “correct[ion]” or “adjustment].”

B

Because both the parties and the Court of Appeals are of the view that Georgetown is controlling, we turn our attention for a moment to our decision in that case. In 1983, a District Court struck down the Secretary’s 1981 new cost rule for failure .to comply with notice and comment requirements. After following proper procedures, the Secretary promulgated the same rule in 1984 and sought to apply the method retroactively for the time it had been held invalid. 488 U. S., at 206-207. Drawing on the authority of clause (ii), the Secretary thus began to recoup “overpayments” claimed to have been made to hospitals as a result of the District Court’s decision. The precise question we faced was whether clause (ii) permitted such retroactive rule-making. We held that it did not. As we explained, although clause (ii) “permits some form of retroactive action [it does not] provid[e] authority for the retroactive promulgation of cost-limit rules.” Id., at 209. Rather,

“clause (ii) directs the Secretary to establish a procedure for making case-by-case adjustment to reimbursement payments where the regulations prescribing computation methods do not reach the correct result in individual cases. The structure and language of the statute require the conclusion that the retroactivity provision applies only to case-by-ease adjudication, not to rule-making.” Ibid, (footnote omitted).

As we further stated: “[N]othing in clause (ii) suggests that it permits changes in the methods used to compute costs; rather, it expressly contemplates corrective adjustments to the aggregate amounts or reimbursement produced pursuant to those methods.” Id., at 211 (emphasis in original).

But while Georgetown eliminated across-the-board, retroactive rulemaking from the scope of clause (ii), it did not foreclose either of the two interpretations urged in this case: case-by-case adjustments based on a comparison of interim payments with “reasonable” costs as determined by the Secretary; and case-by-ease adjustments based on a comparison of amounts due under the regulations with “reasonable” costs as demonstrated by the provider. Cf. id., at 209, n. 1.

Ill

A

Confronted with an ambiguous statutory provision, we generally will defer to a permissible interpretation espoused by the agency entrusted with its implementation. See National Railroad Passenger Corporation v. Boston & Maine Corp., 503 U. S. 407, 417 (1992); Department of Treasury, IRS v. FLRA, 494 U. S. 922, 933 (1990); K mart Corp. v. Cartier, Inc., 486 U. S. 281, 291-292 (1988). Of particular relevance is the agency’s contemporaneous construction which “we have allowed ... to carry the day against doubts that might exist from a reading of the bare words of a statute.” FHA v. The Darlington, Inc., 358 U. S. 84, 90 (1958). See also Aluminum Co. of America v. Central Lincoln Peoples’ Utility Dist., 467 U. S. 380, 390 (1984).

In this case, the regulatory framework put in place by the agency in furtherance of the Medicare program supports the book-balancing approach to clause (ii). Nowhere in the regulations was there mention of a mechanism for implementing the kind of substantive recalculation and deviation from approved methods suggested by petitioners. On the other hand, the regulations provided on more than one occasion for the year-end book-balancing adjustment that, in the Secretary’s opinion, is mandated by clause (ii). For instance, 20 CFR § 405.451(b)(1) (1967) stated:

“These regulations also provide for the making of suitable retroactive adjustments after the provider has submitted fiscal and statistical reports. The retroactive adjustment will represent the difference between the amount received by the provider during the year . . . and the amount determined in accordance with an accepted method of cost apportionment to be the actual cost of services rendered to beneficiaries during the year.”

Use of the words “suitable retroactive adjustment,” borrowed from clause (ii), demonstrates the agency’s understanding. As we wrote in Georgetown: “It is clear from the language of these provisions that they are intended to implement the Secretary’s authority under clause (ii).” 488 U. S., at 211, n. 2 (emphasis added). What is more, “[tjhese are the only regulations that expressly contemplate the making of retroactive corrective adjustments.” Id., at 212 (emphasis added). From the outset, then, the agency viewed clause (ii) as a directive for retroactive adjustment of payments for allowable costs, as determined by the methods.

In the aftermath of the 1972 amendments adding the cost limit provision, the agency appears to have ascribed the same role to clause (ii), namely to retroactively correct the difference between interim payments and reasonable costs— only, as a result of the amendments, the adjustment would now be based on the new definition of reasonable costs, which includes the cost limits that as a general rule were not to be exceeded. As previously described, however, the regulations promulgated by the Secretary permitted various exceptions, exemptions, and adjustments to the limits. See 20 CFR § 405.460(f) (1975); supra, at 406. A provider could obtain a reclassification “on the basis of evidence that [its] classification is at variance with the criteria specified in promulgating limits.” 20 CFR § 405.460(f)(1) (1975). Exemptions for sole community hospitals have expanded to include new providers, rural hospitals with less than 50 beds; exceptions now extend to atypical services, circumstances such as strikes or floods, educational services, essential community services, unusual labor costs. See 42 CFR §413.80 (1992). The agency’s development — and continued augmentation — of a list of situations in which the cost limits would be waived is difficult to harmonize with an interpretation of clause (ii) that would give a provider the right to contest the application of any particular and statutorily authorized method to its own circumstances. Rather, it is consistent with a view that the cost limits by definition entailed generalizations that would benefit some providers while harming others, and with a desire to refine these approximations through the Secretary’s creation of exceptions and exemptions.

B

Petitioners argue that any deference to the agency’s current position is unwarranted in light of its shifting views on the matter. It is true that over the years the agency has embraced a variety of approaches. Compare, e. g., Regents of Univ. of California v. Heckler, 771 F. 2d 1182 (CA9 1985) (agency contends that clause (ii) permits only book balancing); Whitecliff v. United States, 210 Ct. Cl. 53, 536 F. 2d 347 (1976) (same), with Georgetown, supra (agency argues that clause (ii) allows retroactive rulemaking). In response, the Secretary attributes such inconsistency to the lower courts’ erroneous interpretations of clause (ii). If providers could obtain substantive retroactive adjustments in the event of alleged underpayment, the argument goes, then so, in the face of alleged underpayment, would the agency. However, in the aftermath of Georgetown, she notes that the agency returned to its earlier position.

The Secretary is not estopped from changing a view she believes to have been grounded upon a mistaken legal interpretation. See Automobile Club of Mich. v. Commissioner, 353 U. S. 180, 180-183 (1957). Indeed, “[a]n administrative agency is not disqualified from changing its mind; and when it does, the courts still sit in review of the administrative decision and should not approach the statutory construction issue de novo and without regard to the administrative understanding of the statutes.” NLRB v. Iron Workers, 434 U. S. 335, 351 (1978). See also NLRB v. Curtin Matheson Scientific, Inc., 494 U. S. 775, 787 (1990); NLRB v. J. Weingarten, Inc., 420 U. S. 251, 265-266 (1975). On the other hand, the consistency of an agency’s position is a factor in assessing the weight that position is due. As we have stated: “An agency interpretation of a relevant provision which conflicts with the agency’s earlier interpretation is ‘entitled to considerably less deference’ than a consistently held agency view.” INS v. Cardoza-Fonseca, 480 U. S. 421, 446, n. 30 (1987) (quoting Watt v. Alaska, 451 U. S. 259, 273 (1981)). How much weight should be given to the agency’s views in such a situation, and in particular where its shifts might have resulted from intervening and possibly erroneous judicial decisions and its current position from one of our own rulings, will depend on the facts of individual eases. Cf. Federal Election Comm’n v. Democratic Senatorial Campaign Comm., 454 U. S. 27, 37 (1981).

C

In the circumstances of this ease, where the agency’s interpretation of a statute is at least as plausible as competing ones, there is little, if any, reason not to defer to its construction. We should be especially reluctant to reject the agency’s current view which, as we see it, so closely fits “the design of the statute as a whole and... its object and policy.” Crandon v. United States, 494 U. S. 152, 158 (1990).

Section 1395 explicitly delegates to the Secretary the authority to develop regulatory methods for the estimation of reasonable costs. See 42 U. S. C. § 1395x(v)(l)(A). To be sure, by virtue of their being generalizations, they necessarily will fail to yield exact numbers — to the detriment of health care providers at times, to their benefit at other times. Presumably, the methods could use a more exact mode of calculating depreciation, cf. Daughters of Miriam Center for the Aged v. Mathews, 590 F. 2d 1250 (CA3 1978), or to account for proximity to a college or university because it can distort the wage index, cf. Austin, Texas, Brackenridge Hospital v. Heckler, 753 F. 2d 1307, 1316 (CA5 1985), or to a high-crime zone in which heightened, and expensive, security is called for. All of these variables, and many others, affect actual costs; factoring them in the methods undoubtedly would improve their accuracy. But “[w]here, as here, the statute expressly entrusts the Secretary with the responsibility for implementing a provision by regulation, our review is limited to determining whether the regulations promulgated exceeded the Secretary’s statutory authority and whether they are arbitrary and capricious.” Heckler v. Campbell, 461 U. S. 458, 466 (1983) (footnote and citations omitted).

Besides being textually defensible, the Secretary’s restrictive reading of clause (ii) comports with this broad delegation of authority. Congress saw fit to empower the agency to devise methods to estimate actual costs, and the agency has opted for the use of certain generalizations, with additional fine-tuning by way of exceptions, exemptions, reclassifications, and by making allowances for possible variations in costs consistent with efficiency. See supra, at 406, n. 3. What the agency forbids is the kind of wide-range, ad hoc reassessments of the accuracy of the chosen methods implicit in petitioners’ interpretation. Indeed, and for all practical purposes, petitioners’ contention is that the methods chosen by the agency did not take into account sufficient variables, namely, the proportion of part-time workers and proximity to urban centers. It is, in all but name, a challenge to the validity of the methods — albeit in an individual case — including the cost limits, the exceptions and the exemptions, and to their adequacy as gauges of reasonable costs. The Secretary has construed the statute to allow such attacks, not via clause (ii), but rather, in keeping with the broad authority with which she is possessed, by way of the arbitrary and capricious provision of the Administrative Procedure Act, 5 U. S. C. § 706.

IV

The issue is not without its difficulties whichever way we turn. Though not the sole permissible one, the agency’s interpretation of clause (ii), manifested in regulations promulgated soon after enactment and expressed today, “give[s] reasonable content to the statute’s textual ambiguities. ” Department of Treasury, IRS v. FLRA, 494 U. S., at 938. The judgment of the Court of Appeals is

Affirmed.

Justice Souter,

with whom

Justice Stevens and Justice Scalia join, dissenting.

In the Court’s view, the contrasting interpretations of clause (ii) proffered by the petitioners and the Secretary are in such equipoise that even slight deference to the Secretary is enough to tip the balance her way. As I read it, however, the language of clause (ii) plainly favors the petitioners.

The Court focuses on two portions of clause (ii). First, it says, the phrase “aggregate reimbursement produced by the methods of determining costs” may be understood, not only as the petitioners would read it, but as the Secretary does: “the total of the interim payments ... derived from application of the methods [of determining costs] to rough, incompíete data.” Ante, at 410. Second, the Court finds that “inadequate or excessive” may well mean, as the Secretary suggests, inadequate or excessive as measured against “the reasonable costs as determined by the [Secretary] applying the methods [of determining costs].” Ante, at 411. I think the language of clause (ii) precludes these readings.

Clause (ii) identifies its subject, “aggregate reimbursement,” as the figure “produced by the methods of determining costs.” Thus, once we know what “the methods of determining costs” are, we should be able to discover the nature of the “aggregate reimbursement” that is “produced by” those methods. Section 1395x(v)(l)(A) makes it clear that “methods” refers to the regulations implementing the statutory mandate to pay providers of services “the cost actually incurred, excluding therefrom any part of incurred cost found to be unnecessary in the efficient delivery of needed health services.” The first sentence of §1395x(v) (1)(A), which together with § 1395hh authorizes the Secretary to issue such regulations, identifies them as “regulations establishing the ... methods to be used ... in determining ... costs.” And clause (i) of § 1395x(v)(l)(A) uses the exact same phrase as clause (ii): the regulations shall take into account both direct and indirect costs, it says, so that “under the methods of determining costs,” patients who are not Medicare beneficiaries will not subsidize beneficiaries, nor will beneficiaries subsidize nonbenefieiaries. Thus, “the methods of determining costs” are not procedures for estimating costs to make interim payments; rather, they are the means for figuring the actual “reasonable cost of . . . services.”

The Secretary appears not to dispute this, but contends, in the Court’s words, that the phrase “produced by the methods of determining costs” actually means “derived from application of the methods to rough, incomplete data.” Ante, at 410. In other words, as the Secretary asserted at oral argument, “what you’re really doing is taking estimated data but running them through the same methods that you’re eventually going to run the final data through in order to get a result.” Tr. of Oral Arg. 31-32. There is, however, an obvious difficulty with this proposed interpretation: the complete lack of any reference to “incomplete” or “estimated” data in clause (ii). Two less obvious difficulties are even more telling.

First, nothing in Title XVIII of the Social Security Act specifies that interim payments should be calculated by applying to estimated data the complete, detailed methodology for reaching a final reasonable cost figure; the Secretary’s own regulations, indeed, suggest just the opposite. “The interim payment,” states the relevant regulation, “may be related to the last year’s average per diem, or to charges, or to any other ready basis of approximating costs.” 42 CFR § 413.60(a) (1992). And for purposes of devising preliminary estimates, this makes perfect sense; working through a permissible method for determining costs in all its detail may not improve the quality of an estimate if the raw figures used are mostly guesswork. But this divergence of methods for calculating interim payments and methods for determining reasonable cost casts doubt on the Secretary’s proffered interpretation of “produced by the methods of determining costs.” If interim, estimated payments may in fact be calculated without strict adherence to the methods of determining costs, it is hard to see why Congress would choose to identify a series of interim payments as “the aggregate reimbursement produced by the methods of determining costs.”

Second, the Secretary’s interpretation assumes that “the methods of determining costs” are no more than a series of equations, which can be applied as readily to final, audited cost figures as to mere projections. But the statute suggests that the term “methods” is not to be understood so narrowly. In the words of the statute, for example, the regulations establishing the methods may not only “provide for determination of the costs of services on a per diem, per unit, per capita, or other basis”; they may also “provide for the use of estimates of costs of particular items or services.” § 1395x(v)(l)(A). Thus, as the statute conceives of them, the methods encompass not only a set of equations, but a set of determinations about whether to use actual costs or cost estimates for particular items or services. This set of determinations is relevant, of course, not to reckoning interim payments, but to calculating the final reimbursement due the provider of health services. Accordingly, a figure that is “produced by the methods of determining costs” should, absent some contrary indication, be the final figure.

The Court asserts that a contrary indication may be found in the use of the adjective “aggregate” to modify “reimbursement.” “ ‘Aggregate/ ” says the Court, “signifies ‘sum total’ and its use therefore might suggest that Congress had in mind the outcome of adding up the interim payments.” Ante, at 411, n. 9 (citation omitted). I find no such suggestion in the statute’s use of that term, for “aggregate,” unlike, say, “cumulative,” carries no necessary connotation of addition over time. More importantly, there is a far better explanation for the use of the term “aggregate.” A health care provider will, over the course of a fiscal year, provide many different kinds of services to Medicare beneficiaries. Part A Medicare benefits, for example, cover, among other things, “inpatient hospital services,” see 42 CPR §409.5 (1992), a term that encompasses everything from bed and board, nursing services, and use of hospital facilities to medical social services, drugs, biologicals, supplies, appliances and equipment, certain other diagnostic and therapeutic services, and medical or surgical services provided by certain interns or residents-in-training. § 409.10(a). The statute plainly contemplates the use of different methods to determine the costs of these various services, see 42 U. S. C. §1395x(v) (1)(A) (stating that the regulations “may provide for using different methods in different circumstances”), and the Secretary has indeed provided for a number of different methods. For instance, under the Secretary’s “[departmental method” for apportioning costs, the provider’s cost of “routine services” is apportioned between Medicare and nonMedieare patients on an average cost per diem basis, whereas the cost of “ancillary” services is apportioned on the basis of the ratio of Medicare beneficiary charges to total patient charges in each department. See 42 CFR § 413.53(a)(1) (1992). The combined reimbursement for all of the different services performed by a health care provider, as calculated under all of the different methods allowed by the statute and specified in the regulations and other materials published by the Secretary, may aptly be labeled the “aggregate reimbursement.”

As I thus read the statute, the term “aggregate” is important in making it clear not only that the “reimbursement” considered in clause (ii) is the total amount received by a provider for all of the services it has rendered to Medicare beneficiaries, but that the amount received should be considered only as a whole. This focus on the total amount received means that a provider who shows that a method results in an understating of the reasonable cost of a particular service will not necessarily be entitled to a “retroactive corrective adjustment]” to recover that particular cost, for the Government may be able to show that the same method, or another method used by the provider, has overstated other costs. (By the same token, of course, the Government will not always deserve an adjustment when it shows that a method has overstated a particular cost.) The text’s direction to look only at the total reimbursement also means that the provider will not be entitled to the prospective application of a more accurate method of its own devising, an insight into the statute that is hardly new; as the Court acknowledges, see ante, at 413, we recognized in Bowen v. Georgetown Univ. Hospital, 488 U. S. 204, 211 (1988) (emphasis in original), that “nothing in clause (ii) suggests that it permits changes in the methods used to compute costs; rather, it expressly contemplates corrective adjustments to the aggregate amounts of reimbursement produced pursuant to those methods.”

This emphasis on the total, aggregate reimbursement received by' the health care provider makes sense in light of the broader goals of the Medicare program, addressing as it does Congress’s concern that Medicare neither subsidize, nor be subsidized by, non-Medicare patients. See § 1395x(v)(l)(A)(i). As long as the aggregate Medicare reimbursement to a health care provider equals its total reasonable costs of providing services to Medicare beneficiaries, that goal has been attained; the details of the methods used do not matter. Thus, I can find no ambiguity in the phrase “aggregate reimbursement produced by the methods of determining costs”; it refers univocally to the total, final amount due to a provider for services rendered to Medicare beneficiaries under the regulations promulgated by the Secretary.

The Court also finds ambiguity in the direction stated in clause (ii) to provide for an adjustment if the reimbursement proves to be “inadequate or excessive.” While I agree with the Court that clause (ii) does not itself “at any point stat[e] the standard against which inadequacy or exeessiveness is to be measured,” ante, at 410-411, the absence of an explicit reference to a standard in clause (ii) does not keep us from looking for other textual clues about that standard. In this case, the strongest textual clue is found in the immediate neighbor of clause (ii), clause (i). Together, clauses (i) and (ii) form the fourth and last sentence of § 1395x(v)(l)(A). Whereas the third sentence of § 1395x(v)(l)(A) is permissive, the fourth sentence is mandatory; it concerns those things that the Secretary’s regulations “shall” take into account or for which they “shall” provide. Clause (i) requires the regulations to take into account “both direct and indirect costs of providers of services” so that “the necessary costs of efficiently delivering covered services to individuals covered by the insurance programs established by this subchapter will not be borne by individuals not so covered, and the costs with respect to individuals not so covered will not be borne by such insurance programs.” § 1395x(v)(l)(A)(i). The first of these two undesired results, it will be noted, would occur if the aggregate reimbursement to the provider were inadequate, in the sense of failing to cover all reasonable costs; the second, if that reimbursement were excessive.

Clause (ii) does not contain as exhaustive a description of its goal as clause (i); it simply requires the regulations to provide for suitable corrective adjustments where the methods of determining costs produce a reimbursement that “proves to be either inadequate or excessive.” § 1395x(v)(l) (A)(ii). Reading the two clauses together, however, I think it most reasonable to take clause (ii)’s “inadequate or excessive” as shorthand for the two consequences that were just described in the same order, but more fully, in clause (i). This construction has the further virtue, of course, of support in my reading of the phrase “aggregate reimbursement produced by the methods of determining costs.” For if that phrase, as I contend, refers to the amount ultimately due the provider as calculated under the Secretary’s regulations (that is, according to the Secretary’s “methods”), then the standard against which that amount is measured as “inadequate or excessive” must refer to some other figure (that is, a figure produced by some different method); no amount can be “inadequate or excessive” in relation to itself. Thus, in context, the phrase “inadequate or excessive” is not equivocal.

Broadening the context to all of Title XVIII only confirms the view that clause (ii) requires regulations providing for case-by-case exceptions to the methods for determining costs. Section 1395x(v)(l)(A), where clause (ii) is located, is a definitional, rather than an operative, provision; § 1395x(v) defines “Reasonable costs.” The chief operative provision to which §1395x(v) relates is §1395f(b), which is titled “Amount paid to provider of services”; § 1395f(b)(l) provides that under the Medicare program, providers of services are generally to be paid “the lesser of (A) the reasonable cost of such services, as determined under section 1395x(v) of this title ... or (B) the customary charges with respect to such services.” “Payments to providers of services” are covered under another section, 1395g. That section requires the Secretary “periodically [to] determine the amount which should be paid... to each provider of services,” and requires “the provider of services [to] be paid, at such time or times as the Secretary believes appropriate (but not less often than monthly) . . . the amounts so determined, with necessary adjustments on account of previously made overpayments or underpayments.” § 1395g(a). As the Court notes, ante, at 411, the petitioners argue that this section’s provision for “necessary adjustments on account of previously made over-payments or underpayments” provides for the very book-balancing operation that the Secretary advances as the function of clause (ii), and thus renders clause (ii), as interpreted by the Secretary, entirely superfluous. The Court nonetheless appears to accept the Secretary’s explanation that § 1395g deals with periodic adjustments to be made during the course of the fiscal year, whereas clause (ii) is directed at year-end adjustments. Ibid. Two circumstances keep me from doing the same.

First, nothing in the language of § 1395g excludes “year-end adjustments” from its purview, or draws any distinction at all between periodic and year-end adjustments. All payments to providers for services to Medicare beneficiaries are made under the authority of § 1395g, since it is the only section in Title XVIII of the Social Security Act to deal with that subject; and § 1395g thus authorizes all payments to be “adjusted] on account of previously made overpayments or underpayments.” It is doubtless this breadth which leads the Secretary to concede that had clause (ii) never been enacted, “the authority for some similar year-end mechanism might have been inferred under the Act as a whole, including 42 U. S. C. 1395g.” Brief for Respondent 27, n. 16.

Second, the Secretary’s proposed distinction between year-end and periodic adjustments fails to explain why Title XVIII would describe year-end, but not periodic, adjustments as “retroactive.” The Secretary interprets “retroactive,” as it appears in clause (ii), to mean only relating to a period for which some payment has already been made, thus rejecting the more common, stricter legal sense of the word, which implies the upsetting of some prior settled expectation or transaction. In this weak sense employed by the Secretary, however, the adjustments authorized by §1895g are just as “retroactive” as those authorized under the Secretary’s interpretation of clause (ii); they too relate to “previously made overpayments or underpayments.” This leaves the Secretary with no way to explain why Congress, in passing the Social Security Amendments of 1965 (which established the Medicare program, and contained both passages, see 79 Stat. 297, 323), chose to distinguish §1395g “adjustments” from § 1395x(v)(l)(A)(ii) “retroactive corrective adjustments.”

For all of these reasons, I believe the text of the statute unambiguously requires the promulgation of regulations allowing providers (and the Secretary) to seek adjustments on the grounds that, as calculated under the methods of determining costs, the total .reimbursement for a fiscal period is lower than (or higher than) the actual reasonable cost of providing services to Medicare beneficiaries. I respectfully dissent from the Court’s opposite conclusion.

       Section 1395x(v)(1)(A) provides in pertinent part that the Secretary “shall” determine reasonable costs “in accordance with regulations establishing the method or methods to be used, and the items to be included, in determining such costs for various types or classes of institutions, agencies, and services.”

       Regulations regarding the determination of reimbursable costs were originally codified at 20 CFR §§405.401-405.454 (1967). They have twice been redesignated, first in 1977, at 42 CFR pt. 405, see 42 Fed. Reg. 52826 (1977), and then in 1986, at 42 CFR pt. 413, see 51 Fed. Reg. 34790 (1986). Unless reference to a particular date is appropriate, the 1986 designation will be used in this opinion.

       Congress substantially modified the payment system by instituting the Prospective Payment System (PPS), effective October 1, 1983. Under this new system, providers are reimbursed a fixed amount for each discharge, based on the patient’s diagnosis, and regardless of actual cost. See 42 U. S. C. § 1395ww(d). Because the providers’ claims in this litigation involve costs incurred from 1980 to 1983, PPS is not at issue. Moreover, PPS does not apply to skilled nursing facilities or home health agencies, nor does it apply to all hospitals. See §§1395ww(d), (b); 42 CFR §§412.22-412.23 (1992).

       Petitioners concede that they do not qualify for any of the exceptions or exemptions provided in the regulations. Brief for Petitioners 22, n. 19.

       The court did not rule on the hospitals’ claim that the wage index and rural/urban classifications were arbitrary and capricious in violation of the Administrative Procedure Act, 5 U. S. C. §706.

       In addition, the Court of Appeals held that failure to account for part-time employment and for proximity to urban hospitals in the cost limits was not arbitrary and capricious, since “[b]oth the wage index and the rural/urban distinction were based on objective data and regulations.” 952 F. 2d, at 1025.

       Compare Good, Samaritan Hospital v. Sullivan, 952 F. 2d 1017 (CA8 1991) (ease below) (construing clause (ii) to provide merely for year-end book balancing); Sierra Medical Center v. Sullivan, 902 F. 2d 388 (CA5 1990) (same); Hennepin County v. Sullivan, 280 U. S. App. D. C. 13, 883 F. 2d 85 (1989) (same), cert. denied, 493 U. S. 1043 (1990); Daughters of Miriam Center for the Aged v. Mathews, 590 F. 2d 1250 (CA3 1978) (same), with Mt. Diablo Hospital v. Sullivan, 963 F. 2d 1175 (CA9 1992) (construing clause (ii) to require Secretary to reimburse all “reasonable costs,” including those in excess of the cost limits), cert. pending, No. 92-720; Medical Center Hospital v. Bowen, 839 F. 2d 1504 (CA11 1988) (same); Fairfax Nursing Center, Inc. v. Califano, 590 F. 2d 1297 (CA4 1979) (same); Springdale Convalescent Center v. Mathews, 545 F. 2d 943 (CA5 1977) (same); Whitecliff, Inc. v. United States, 210 Ct. Cl. 53, 536 F. 2d 347 (1976) (same); Kingsbrook Jewish Medical Center v. Richardson, 486 F. 2d 663 (CA2 1973) (same).

       The Secretary observes, however, that had clause (ii) not been enacted, “the authority for some similar year-end mechanism might have been inferred under the Act as a whole, including 42 U. S. C. [§]1395g.” Brief for Respondent 27, n. 16.

       Also of potential significance is Congress’ reference to “aggregate reimbursement” as opposed to mere “reimbursement.” “Aggregate” signifies “sum total,” see Webster’s Collegiate Dictionary 64 (9th ed. 1983), and its use therefore might suggest that Congress had in mind the outcome of adding up the interim payments.

       While both parties invoke legislative history, in this case it is of little, if any, assistance. Petitioners point to a comment in the Committee Reports explaining that the cost limits were merely “presumptive” and that “[plroviders would, of course, have the right to obtain reconsideration of their classification for purposes of cost limits applied to them and to obtain relief from the effect of the cost limits on the basis of evidence of the need for such an exception.” S. Rep. No. 92-1230, pp. 188-189 (1972). As the Secretary notes, it is entirely possible that by providing for exceptions, exemptions, and reclassifications, the agency satisfied this demand. Indeed, the only specific exemption mentioned in the Committee Reports— sole community hospitals — was put into effect by the agency. See id., at 188; 42 CFR § 413.30(e)(1) (1992). The legislative history adduced by the Secretary is no more persuasive.

       Other regulations, by comparison, appeared to be directed at the periodic preaudit adjustments to be made during the course of the year as expressly required by § 1395g. See, e. g., 20 CFR § 405.454(e) (1967).

       The agency’s explanation of how it was computing cost limits in 1981 further illustrates this basic understanding: “The revised limits, like the current limits, are set at 112 percent of the mean labor-related costs and mean non-labor costs of each comparison group. The 12 percent allowance above the mean is intended to account for variations in costs that are consistent with efficiency but are not explicitly accounted for under our methodology for deriving and adjusting the limits, or by the exceptions or exemptions provided by our regulations.” 46 Fed. Reg. 33639 (1981) (emphasis added). Like the exceptions and exemptions themselves, such an allowance cannot easily be reconciled with the notion that clause (ii) permits adjustments whenever costs consistent with efficiency are unaccounted for.

       Such a delegation of authority is not atypical in the context of the Social Security Act. Indeed, we noted that “Congress has ‘conferred on the Secretary exceptionally broad authority to prescribe standards for applying certain sections of the Act.’” Heckler v. Campbell, 461 U. S. 458, 466 (1983) (quoting Schweiker v. Gray Panthers, 453 U. S. 34, 43 (1981)).

       There is no doubt that under petitioners’ expansive reading of clause (ii) nothing would prevent the Secretary from demanding reimbursement where she could show that application of the methods resulted in overpayment. For instance, the modified wage index, whose generalized retroactive application we rejected in Georgetown, arguably could be imposed on a hospital-by-hospital basis. Such an outcome, by undermining providers’ ability to predict costs, runs counter to one of Congress’ apparent motivations in authorizing cost limits. See S. Rep. No. 92-1230, at 188 (because limits on costs recognized as reasonable would be set prospectively, “the provider would know in advance the limits to Government recognition of incurred costs and have the opportunity to act to avoid having costs that are not reimbursable”).

       Moreover, we note that in its 1981 amendment to § 1395x(v), Congress explicitly endorsed the agency’s method of implementing the statute by providing that
      “[t]he Secretary, in determining the amount of the payments that may be made . . . may not recognize as reasonable (in the efficient delivery of health services) routine operating costs for the provision of general inpatient hospital services by a hospital to the extent these costs exceed 108 percent of the mean of such routine operating costs per diem for hospitals, or, in the judgment of the Secretary, such lower percentage or such comparable or lower limit as the Secretary may determine. The Secretary may provide for such exemptions and exceptions to such limitation as he deems appropriate.” 42 U. S. C. § 1395x(v)(l)(L)(i) (1976 ed., Supp. V), repealed, Pub. L. 97-248, § 101(a)(2), 96 Stat. 335.
      See also H. R. Rep. No. 97-158, pp. 326-327 (1981).
      As remarked earlier, see n. 12, swpm, the thrust of this scheme (imposing a firm ceiling set above the mean, purportedly to account for possible inaccuracies in the methods, and allowing the Secretary to provide for appropriate waivers) is at least at some variance with the notion that a dissatisfied provider can exceed the imposed limits and invoke its own waivers for any reason the Secretary has failed to take into account.

       In fact, petitioners invoked this provision below, see App. 13-14, but the Court of Appeals rejected their APA claims, and they were not renewed in this Court.