Perez v. Mortgage Bankers Association

Supreme Court of the United States · 2015 · Administrative Law

Administrative LawAPA rulemakinginterpretive rulesnotice-and-commentAdministrative Procedure Act5 U.S.C. § 553interpretive ruleslegislative rules

Facts

The Department of Labor's 2004 FLSA regulations, adopted through notice-and-comment, included an example concerning employees in the financial services industry and stated that an employee whose primary duty is selling financial products does not qualify for the administrative exemption. After earlier opinion letters in 1999 and 2001 said mortgage-loan officers were not exempt, the Department issued a 2006 opinion letter concluding that mortgage-loan officers were exempt under the 2004 regulations. In 2010, the Wage and Hour Division issued an Administrator's Interpretation reversing course, concluding that mortgage-loan officers generally do not qualify for the administrative exemption and withdrawing the 2006 letter. The 2010 interpretation was issued without notice and comment, and MBA argued that under the D.C. Circuit's Paralyzed Veterans doctrine the agency had to use notice-and-comment procedures before making that significant interpretive change.

Issue

Does the Administrative Procedure Act require an agency to use notice-and-comment procedures before issuing a new interpretive rule that significantly revises a prior definitive interpretation of the agency's regulation? More specifically, is the D.C. Circuit's Paralyzed Veterans doctrine consistent with the APA?

Rule

Under 5 U.S.C. § 553(b)(A), interpretive rules are categorically exempt from the APA's notice-and-comment requirements unless another statute requires notice or hearing. Because an agency need not use notice and comment to issue an initial interpretive rule, it likewise need not use those procedures to amend or repeal an interpretive rule, even if the new interpretation significantly departs from a prior one.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In 2021, the Federal Housing Safety Office issued a guidance memorandum stating that a regulation on tenant-income verification did not cover co-signed student loans. In 2026, without notice and comment, the same office issued a new memorandum stating that the regulation does cover co-signed student loans and withdrew the 2021 memorandum. A landlord association in Phoenix sues, arguing the agency had to use notice-and-comment procedures because the new memorandum sharply reversed a definitive prior interpretation.

Assuming both memoranda are interpretive rules, which is the strongest argument for the agency?

Explanation. Under the APA, interpretive rules are categorically exempt from notice-and-comment unless another statute requires notice or hearing. The same exemption applies when an agency amends or repeals an interpretive rule, even if the new interpretation significantly departs from a prior definitive interpretation. The Court rejected the idea that a changed interpretation procedurally counts as an amendment requiring notice and comment.