Perez v Mortgage Bankers Association on interpretive rules
📘 What Are Interpretive Rules?
Definition:
Interpretive rules are agency statements that clarify or explain existing laws or regulations, without creating new obligations or altering legal rights.
Key Characteristics:
Do not require notice-and-comment rulemaking under APA §553.
Meant to interpret existing law, not impose new duties.
Generally not judicially binding, but may be given deference (e.g., Skidmore deference or Auer deference depending on context).
🧑⚖️ Core Case: Perez v. Mortgage Bankers Association, 575 U.S. 92 (2015)
📌 Facts:
The Department of Labor (DOL) issued an interpretive rule reversing its prior stance on whether mortgage loan officers were exempt from overtime pay under the Fair Labor Standards Act (FLSA).
The Mortgage Bankers Association (MBA) challenged this shift, arguing that the DOL violated the Paralyzed Veterans doctrine, which required agencies to go through notice-and-comment when significantly changing an interpretive rule.
📌 Issue:
Does an agency need to go through notice-and-comment rulemaking when it reverses an existing interpretive rule?
📌 Holding:
The Supreme Court unanimously rejected the Paralyzed Veterans doctrine, holding that:
“The APA does not require notice-and-comment rulemaking for interpretive rules, even when they significantly alter an agency’s previous interpretation of a regulation.”
📌 Key Takeaways:
Agencies can change interpretive rules without notice-and-comment, even if the change is significant.
Interpretive rules are exempt from APA’s procedural requirements under §553(b).
However, they are still subject to judicial review, and agencies must provide reasoned explanations under arbitrary and capricious review (APA §706).
⚖️ Other Key Cases on Interpretive Rules
1. Paralyzed Veterans of America v. D.C. Arena L.P., 117 F.3d 579 (D.C. Cir. 1997)
Role in Perez:
This was the now-overruled precedent at the heart of Perez.
Holding:
The D.C. Circuit held that if an agency modifies an existing interpretive rule, it must use notice-and-comment procedures, even if the original rule didn’t require them.
Importance:
Created the Paralyzed Veterans doctrine.
Sought to prevent agencies from bypassing APA protections by issuing interpretive rules and then significantly revising them later without public input.
Overruled by:
Perez v. Mortgage Bankers Association.
2. Christensen v. Harris County, 529 U.S. 576 (2000)
Facts:
An interpretive letter from the DOL stated that certain comp-time policies violated the FLSA.
Issue:
Should courts defer to agency interpretive rules?
Holding:
The Court held that interpretive rules, including opinion letters, do not carry the force of law, and thus do not receive Chevron deference.
Instead, they may be given Skidmore deference—only to the extent they have the “power to persuade.”
Importance:
Clarified that interpretive rules are not binding law.
Courts will evaluate them based on persuasiveness, not authority.
3. Auer v. Robbins, 519 U.S. 452 (1997)
Facts:
A challenge was made against an agency’s interpretation of its own ambiguous regulation related to FLSA exemptions.
Holding:
The Supreme Court held that courts should defer to an agency’s interpretation of its own regulation unless it is plainly erroneous or inconsistent.
Deference Granted:
This became known as Auer deference.
Relevance to Interpretive Rules:
Even interpretive rules explaining an agency’s own regulations may receive binding deference, though this has been limited in later cases (see Kisor).
4. Kisor v. Wilkie, 588 U.S. ___ (2019)
Facts:
Kisor challenged the VA's denial of retroactive benefits based on an interpretation of its own regulation.
Issue:
Should Auer deference still apply?
Holding:
The Court upheld Auer deference but significantly narrowed its application, stating that:
Deference applies only if the regulation is genuinely ambiguous, the agency’s interpretation is reasonable, and the agency’s position reflects authoritative, expertise-based, and fair judgment.
Importance:
Not all interpretive rules interpreting agency regulations are entitled to deference.
Reinforces that courts, not agencies, are the final interpreters of the law unless conditions for deference are met.
5. Appalachian Power Co. v. EPA, 208 F.3d 1015 (D.C. Cir. 2000)
Facts:
EPA issued a "guidance document" interpreted to have binding effects on states and power plants.
Issue:
Was the “guidance” actually a legislative rule in disguise, requiring notice-and-comment?
Holding:
The D.C. Circuit held that the guidance had binding legal effect and thus should have been promulgated through formal rulemaking.
Importance:
Distinguished between interpretive rules (non-binding) and legislative rules (binding).
A document labeled “guidance” can be a legislative rule if it binds the agency or regulated parties.
📊 Summary Table
| Case | Key Legal Issue | Outcome | Importance |
|---|---|---|---|
| Perez v. MBA (2015) | Must agency use notice-and-comment to change interpretive rule? | No | Agencies can change interpretations without formal rulemaking |
| Paralyzed Veterans (1997) | Change in interpretive rule needs notice-and-comment? | Yes (overruled) | Overruled by Perez |
| Christensen v. Harris (2000) | What deference for interpretive rules? | Skidmore | No Chevron deference for interpretive rules |
| Auer v. Robbins (1997) | Deference for agency’s interpretation of its own regulation? | Yes | Created Auer deference |
| Kisor v. Wilkie (2019) | Should Auer deference still apply? | Narrowed | Requires genuine ambiguity, expertise, fairness |
| Appalachian Power (2000) | Is guidance really a binding rule? | Yes | Courts will scrutinize agency “guidance” if it binds |
📝 Conclusion
Perez v. Mortgage Bankers Association solidified the principle that interpretive rules may be changed without notice-and-comment rulemaking, so long as they don’t carry the force of law. However, courts maintain vigilant oversight to prevent agencies from using interpretive rules to sidestep legal obligations or public accountability.
Together, these cases demonstrate that while agencies enjoy flexibility in interpretation, they are still subject to APA standards, judicial review, and limits on deference.
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