Perez v. Mortgage Bankers Association

PETITIONER: Thomas E. Perez, Secretary of Labor, et al.
RESPONDENT: Mortgage Bankers Association, et al.
LOCATION: Mortgage Bankers Association Headquarters

DOCKET NO.: 13-1041
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 575 US (2015)
GRANTED: Jun 16, 2014
ARGUED: Dec 01, 2014
DECIDED: Mar 09, 2015

ADVOCATES:
Edwin S. Kneedler - Deputy Solicitor General, Department of Justice, for the petitioner
Allyson N. Ho - for the respondent

Facts of the case

The Fair Labor Standards Act (FLSA) requires employers to pay overtime wages to employees who work more than 40 hours per week. However, the FLSA also provides exemptions to this overtime rule for employees, including those "employed in a bona fide executive, administrative, or professional capacity…or in the capacity of outside salesman."

Mortgage Bankers Association (MBA) is a national trade organization that represents real estate financial companies and their employees across the country. Among these employees are mortgage loan officers, who assist prospective buyers in finding and applying for mortgage offers. In 2006, the Department of Labor issued an opinion letter that stated that mortgage loan officers' duties fell within the definition of "administrative" and that they qualify for the exception to the overtime rule in the FLSA. In 2010, however, the Deputy Administrator issued a second pronouncement that declared that a mortgage loan officer did not qualify for the administrative employee exception. MBA sued the Department of Labor in district court and argued that the agency could not change its interpretation without first going through a notice-and-comment period required by the Administrative Procedure Act. The district court denied MBA's motion for summary judgment. The U.S. Court of Appeals for the District of Columbia Circuit reversed and remanded the case with instructions to vacate the Department of Labor's 2010 interpretation.

Question

Must a federal agency engage in a notice-and-comment procedure before it can significantly alter an interpretation of a rule of agency regulation?

Media for Perez v. Mortgage Bankers Association

Audio Transcription for Oral Argument - December 01, 2014 in Perez v. Mortgage Bankers Association

Audio Transcription for Opinion Announcement - March 09, 2015 in Perez v. Mortgage Bankers Association

John G. Roberts, Jr.:

Justice Sotomayor has our opinion this morning in Case 13-1041, Perez v. Mortgage Bankers Association and the consolidated case.

Sonia Sotomayor:

These cases come to us on writs of certiorari to the Court of Appeals for the District of Columbia Circuit and concern a rule developed by that Court known as the Paralyzed Veterans doctrine.

Under that doctrine a federal agency must use the Administrative Procedure Act's Notice and Comment Procedures when it issues a ruling interpreting one of its regulations, if that new interpretation deviates significantly from one the agency has previously adopted.

We granted certiorari to determine whether the Paralyzed Veterans doctrine is consistent with the APA.

Section 4 of the APA exempts agency interpretive rules from the Notice and Comment process.

This exemption is categorical and it is fatal to the rule announced in Paralyzed Veterans.

Because an agency is not required to use Notice and Comment Procedures when it first issues an interpretive rule, it also is not required to use those procedures when it amends or repeals that rule.

This straightforward reading of the APA follows from longstanding principles of this Court's administrative law jurisprudence.

Time and again we have explained that the APA establishes the maximum procedural requirements that courts may impose upon agencies.

By mandating Notice and Comment Procedure when an agency changes its interpretation of one of the regulations it enforces, the Paralyzed Veterans doctrine creates a judge-made procedural right that is inconsistent with Congress' standards.

Our task in this case is not to decide whether requiring Notice and Comment before an agency revises an interpretive rule is the best policy choice.

That decision belongs to Congress and it has chosen to adopt standards that permit agencies to issue freely such rules, whether or not they are consistent with earlier interpretations.

The judgment of the DC Circuit is reversed.

Justice Alito has filed an opinion concurring in part and concurring in the judgment.

Justices Scalia and Thomas have filed opinions concurring in the judgment.