Administrative Procedure -- 2015

Perez v. Mortgage Bankers Association   (U.S. Supreme Court)

Administrative law

The NAM and coalition associations filed a Supreme Court brief in Perez v. Mortgage Bankers Association. On March 9, 2015 the Court issued a decision in this case with a wide ranging impact on administrative law by significantly expanding the authority of regulatory agencies. The case concerned whether a federal government agency must get the public’s reaction before it changes a rule that interprets one of its own existing regulations. As a general rule a federal agency must engage in notice-and-comment rulemaking pursuant to the Administrative Procedure Act (APA) before it can significantly alter an interpretive rule that articulates an interpretation of an agency regulation.

Unfortunately, agencies are able to take advantage of a variety of exceptions to this rule and avoid meaningful public participation by promulgating vague legislative rules and then interpreting those rules to reach the potentially controversial regulatory outcomes that the agencies seek. This strategy is purposefully designed to avoid public input. Further, agencies know they are shielded from legal challenges because the court must accept an agency interpretation as long as they are not patently incompatible with the statutory or regulatory text. The result of this process is ambiguity and uncertainty on how to comply with the law by public. This opinion from the Court allows agencies to reverse their definitive, relied-upon interpretations without notice and comment making the situation even worse.

The NAM brief argued that agencies should be required to follow the requirements of notice and comment before reversing their definitive, relied-upon interpretations because in such situations the agency has effectively amended a legislative rule. Business should be allowed to rely upon the interpretive rules that increasingly affect its day-to-day operations but this decision adds further ambiguity.

Related Documents:
NAM brief  (October 16, 2014)


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