Perez v. Mortgage Bankers Association

Barkan Meizlish , May 13, 2015

Under the APA, agencies must provide notice and an opportunity for interested persons to submit written comments prior to making a rule.  In Perez v. Mortgage Bankers Association, the United States Supreme Court considered whether a federal agency must use the Administrative Procedure Act’s (“APA”) “notice–and-comment” procedure before an agency significantly alters an interpretive rule.  At issue in Perez was whether the Department of Labor’s (“DOL”) “flip-flopping” of the application of the administrative exemption to the Fair Labor Standards Act violated the APA.  In 2006, the DOL had issued an opinion letter which stated that salaried mortgage loan officers (“MLOs”) fell under the administrative exemption.  The DOL reversed this position four years later in 2010 when it issued an “Administrator’s Interpretation,” declaring that MLOs did not fall under the exemption and were therefore subject to the FLSA’s minimum wage and overtime protections.  Seeking declaratory and injunctive relief, the Mortgage Bankers Association sued the DOL, claiming that the 2010 Administrator’s Interpretation violated the APA.

In reversing the D.C. Circuit’s opinion, the Supreme Court differentiated between “legislative rules,” which have the force and effect of law and are subject to the APA’s notice-and-comment procedure, and “interpretative rules,” which do not require the APA’s notice-and-comment procedure.  The Court reasoned that adhering to APA’s requirements for interpretive rules, which provide guidance on an agency’s construction of a statute, would impose greater obligations than what the APA required. This decision greatly impacts federal agency rulemaking by giving agencies more freedom and flexibility to change or clarify their interpretations of the law.

Source: Supreme Court confirms broad flexibility for Executive Branch regulatory agencies in making and changing policy (March 9, 2015)
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