Shalala

The Department of Health and Human Services (HHS or the Agency) issued a rule that terminated federal matching funds for state juvenile justice programs. Appellants, County of Santa Barbara (County or Santa Barbara) and Chief Probation Officers of various California Counties (Officers), contend that this rule is void for failing to comply with the Administrative Procedure Act’s (APA) procedural “notice and comment” requirement. We hold that the directive is an “interpretive” rule exempt from the APA’s notice and comment mandate.

I. BACKGROUND

This case is situated at the intersection of two statutes, one procedural and one substantive. The procedural statute is the APA, which requires agencies—when adopting, repealing, or amending rules—to issue in the Federal Register a “notice of proposed rule making” advising the public of the terms or substance of the proposed rule and a description of the subjects and issues involved. See 5 U.S.C. § 553 (b). This requirement is designed to persons, through written submissions and oral presentations, an opportunity to participate in the rulemaking process. See 5 U.S.C. § 553 (c). The notice and comment requirement does not apply, however, to…