Perez v Mortgage Bankers Association and interpretive rules
🔹 What Are Interpretive Rules?
Interpretive rules are a category of agency rules that clarify or explain existing laws or regulations, rather than creating new rights or obligations.
Key Characteristics:
Do not require notice-and-comment rulemaking under the Administrative Procedure Act (APA).
Are meant to interpret statutes or regulations, not impose new rules.
Are legally non-binding on courts, though they may be persuasive.
🧾 Central Case: Perez v. Mortgage Bankers Association (2015)
Citation: 575 U.S. 92 (2015)
Court: U.S. Supreme Court
🔍 Background:
The Department of Labor (DOL) issued an opinion letter in 2006, stating that mortgage loan officers were not entitled to overtime pay under the Fair Labor Standards Act (FLSA).
In 2010, the DOL reversed its position—without undergoing notice-and-comment rulemaking—and declared that mortgage loan officers were eligible for overtime.
The Mortgage Bankers Association sued, arguing that under Paralyzed Veterans of America v. D.C. Arena (1997), an agency must use notice-and-comment to change an interpretive rule.
🧑⚖️ Holding:
The Supreme Court unanimously rejected the Paralyzed Veterans doctrine.
Held that agencies can change interpretive rules without notice-and-comment procedures.
Stated that the APA explicitly exempts interpretive rules from such requirements.
🧠 Significance:
Reaffirmed agency flexibility to reinterpret regulations.
Eliminated a major judicially created restriction on interpretive rule changes.
Emphasized textualism: courts must stick to statutory limits, not add procedural hurdles not found in the APA.
Concurring opinions, especially by Justice Thomas and Justice Scalia, questioned broader doctrines like Chevron deference and agency power.
📚 Related and Supporting Case Law (More than 5 Cases)
✅ 1. Paralyzed Veterans of America v. D.C. Arena (1997)
Holding (D.C. Circuit):
Agencies that change an existing interpretive rule must go through notice-and-comment procedures, even though the APA doesn’t require it.
Status after Perez:
Overruled by the Supreme Court in Perez.
Was a major precedent for limiting agency reversals of interpretive positions.
✅ 2. Christensen v. Harris County (2000)
Citation: 529 U.S. 576
Issue:
Can an agency’s interpretive opinion letter receive deference?
Holding:
Interpretive rules do not carry the force of law, and therefore do not get Chevron deference.
May still receive Skidmore deference, based on persuasiveness and consistency.
Significance:
Clarified that interpretive rules lack binding authority.
Differentiated between legislative rules (binding) and interpretive rules (advisory).
✅ 3. Skidmore v. Swift & Co. (1944)
Citation: 323 U.S. 134
Issue:
How much deference should courts give to an agency’s interpretation?
Holding:
Agency interpretations do not control, but are entitled to respect depending on:
Thoroughness
Consistency
Valid reasoning
Significance:
Established the Skidmore deference standard for interpretive rules.
Forms a weaker alternative to Chevron for non-binding agency views.
✅ 4. Auer v. Robbins (1997)
Citation: 519 U.S. 452
Issue:
Can agencies interpret their own regulations and receive deference?
Holding:
Yes. Agencies are entitled to Auer (or Seminole Rock) deference when interpreting their own ambiguous rules.
Post-Perez Development:
Criticized in concurring opinions in Perez.
Later limited in Kisor v. Wilkie (2019).
✅ 5. Kisor v. Wilkie (2019)
Citation: 588 U.S. ___
Holding:
Narrowed Auer deference.
Courts must:
Determine if regulation is truly ambiguous.
Ensure interpretation is reasonable and consistent with prior interpretations.
Consider agency expertise.
Significance:
Continued the Perez trend of limiting automatic deference to agencies.
Courts must more rigorously review interpretive rules.
✅ 6. Encino Motorcars, LLC v. Navarro (2016)
Citation: 579 U.S. 211
Facts:
The Department of Labor changed its interpretation regarding car dealership service advisors' eligibility for overtime pay—without adequate explanation.
Holding:
Agencies must provide a reasoned explanation when changing interpretations, especially when prior interpretations have engendered reliance interests.
Significance:
While Perez allows agencies to change interpretive rules without notice-and-comment, Encino warns that abrupt, unexplained reversals can still be invalid.
Strengthens the idea that agency reasoning matters, even if the process is informal.
🔍 Key Legal Doctrines and Impact of Perez
| Doctrine | Meaning & Relation to Perez |
|---|---|
| Interpretive Rule | Explains existing law/regulation, not binding, no notice required |
| Legislative Rule | Creates new rights/obligations, must go through APA process |
| Notice-and-Comment | Required for legislative rules under §553 of the APA |
| Skidmore Deference | Based on persuasiveness of reasoning |
| Chevron Deference | For agency statutory interpretations (under fire post-Perez) |
| Auer Deference | Deference to agency interpretation of its own rules |
| Encino Principle | Changed interpretations must be reasonable and justified |
🧠 Final Implications of Perez and Related Cases
✅ 1. Agency Flexibility Increased
Agencies have greater freedom to reinterpret their own regulations.
Helps adapt to changing policy priorities across administrations.
✅ 2. Reduced Procedural Burden
Eliminated the need for notice-and-comment when changing interpretive rules.
✅ 3. Judicial Review Still Matters
Courts can reject interpretive rules if they are:
Unreasonable
Contradictory without explanation (Encino)
Applied inconsistently
Affecting constitutional or statutory rights
✅ 4. Deference Doctrines Under Strain
Perez, Kisor, and Encino collectively indicate a narrowing of judicial deference.
Courts may be more willing to second-guess agency interpretations, especially under conservative judicial philosophies.
📌 Summary Table of Cases
| Case | Key Takeaway |
|---|---|
| Perez v. Mortgage Bankers | Agencies can change interpretive rules without notice/comment |
| Paralyzed Veterans | Overruled; old doctrine requiring procedural hurdles |
| Christensen v. Harris County | Interpretive rules don’t get Chevron deference |
| Skidmore v. Swift | Deference based on reasoning, not binding |
| Auer v. Robbins | Deference to agencies’ interpretation of own rules (limited now) |
| Kisor v. Wilkie | Narrowed Auer; courts must ensure ambiguity and reasonableness |
| Encino Motorcars v. Navarro | Reinterpretations require a reasoned explanation |
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