Department of Labor did not Violate APA: Supreme Court’s Unanimous Opinion

Early in 2010, the Department of Labor (DOL) made an announcement denouncing its practice of opinion letter, and replacing it with the “Administrator’s Interpretation”, wherein the Department would simply issue an advisory opinion on its own volition. In the same year, the Department issued an Interpretation stating that mortgage loan officers generally do not qualify for exemption from overtime under the administrative exemption without first affording the public the opportunity for notice and comment. Perez v. Mortgage Bankers Ass’n, 135 S. Ct. 1199 (U.S. 2015).

This depart from the opinion letter was further considered by the Supreme Court in Perez. In doing so, the Court cited the United States Court of Appeals for the District of Columbia Circuit’s opinion that an agency must use the Administrative Procedure Act (APA)’s notice-and-comment procedures when it wished to issue a new interpretation of a regulation that deviated significantly from one the agency had previously adopted. Paralyzed Veterans of Am. v. D.C. Arena L.P., 117 F.3d 579 (D.C. Cir. 1997).

The Supreme Court in Perez found this to be inconsistent with the APA, and on a unanimous decision held that DOL did not violate the APA as per Section 4 (5 U.S.C.S. § 553), which prescribed a three-step procedure for the “notice-and-comment rulemaking”, specifically: (1) the agency to issue a general notice of proposed rulemaking, ordinarily by publication in the Federal Register [5 U.S.C.S. § 553(b)]; (2) if notice required, the agency to give interested persons an opportunity to participate in the rulemaking through submission of written data, views, or arguments [5 U.S.C.S. § 553(c)]; and (3) while promulgating the final rule, the agency must include a concise general statement of its basis and purpose in the rule’s text [5 U.S.C.S. § 553(c)].

To sum up, an agency is not required to use notice-and-comment procedures when issuing interpretive rules. Since the APA provisions required public notice and comment only as per statute, the analysis in Paralyzed Veterans imposed just procedural obligations on the DOL beyond those required by law. This validated the Administrator’s Interpretation to interpret the Fair Labor Standards Act.