SCOTUS Rules That Interpretive Rules Issued by Administrative Agencies are not Subject to Public Notice and Comment
On March 9, 2015, the United States Supreme Court determined that interpretive rules issued by federal agencies are not subject to notice-and-comment procedures under the APA. Perez v. Mortgage Bankers Ass’n, 135 S. Ct. 1199 (2015). The court held that the Paralyzed Veterans doctrine requiring agencies to undergo notice-and-comment rulemaking procedures for interpretations that “deviate significantly” from previous interpretations was “contrary to the clear text of the APA’s rulemaking provisions, and it improperly imposes on agencies an obligation beyond the ‘maximum procedural requirements’ specified in the APA. . . .” Id. at 1206 (internal citations omitted). As a result, as was the case in Perez, an agency can issue an interpretation of its regulations and then later change its mind and issue a contrary interpretation even if parties have detrimentally relied on the previous interpretation. See id. at 1204. The majority opinion tries to console regulated entities by offering the following recourse where it appears that “an agency’s decision to issue an interpretive rule, rather than a legislative rule, is driven primarily by a desire to skirt notice-and-comment provisions”:
- The various constraints on the decision-making process of agencies, especially the arbitrary and capricious standard, set forth in the APA. The court specifically identified the necessity for a more substantial justification from an agency when the agency’s new interpretation relies upon “factual findings that contradict those” that supported the previous interpretation, or when the prior policy “has engendered serious reliance interests that must be taken into account.”
- Safe harbor provisions enacted by Congress to shield regulated entities from liability when acting in accordance with prior agency interpretations.
Id. at 1209. Furthermore, regulated entities can challenge the rule as actually being a legislative rule and not a mere interpretive rule, although the court declined to address that argument in Perez. Id. at 1210.
Perhaps the most interesting aspect of the decision, however, comes from the concurring opinions of Justices Thomas, Scalia and Alito and not from the majority opinion itself. Justices Thomas and Scalia called into question the validity of the Seminole Rock doctrine — which required deference to agencies’ administrative interpretations of regulations — and signaled their willingness to reconsider the doctrine in an appropriate case. Justice Alito, referencing the reasons offered by Justices Thomas and Scalia, echoed their desire for the case that will allow for reconsideration of the doctrine. Taft will monitor upcoming cases for such developments.
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