575 U.S. 92 (2015) (U.S. Supreme Court)
Perez v. Mortgage Bankers Association is a foundational Administrative Procedure Act (APA) decision that clarifies the scope of the notice-and-comment exceptions.
Does the APA require an agency to use notice-and-comment rulemaking before it can significantly alter a definitive interpretation of its own regulations, or may the agency amend or repeal interpretive rules without notice-and-comment?
Under the APA, 5 U.S.C. § 553(b)(A), notice-and-comment procedures do not apply to interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice. Courts may not impose additional procedural requirements on agencies beyond those specified in the APA or the agency's own regulations (Vermont Yankee Nuclear Power Corp. v. NRDC). An agency may issue, amend, or repeal interpretive rules without notice-and-comment. However, interpretive rules do not have the force and effect of law and cannot create new rights or obligations; if a rule is legislative (i.e., it binds with the force of law), notice-and-comment is required. When changing policy, an agency must provide a reasoned explanation and consider reliance interests (FCC v. Fox Television Stations), and changes remain subject to arbitrary-and-capricious review under 5 U.S.C. § 706.
No. The APA does not require notice-and-comment to issue or significantly revise interpretive rules. The D.C. Circuit's Paralyzed Veterans doctrine is inconsistent with the APA and is invalid. The judgment of the D.C. Circuit was reversed.
Perez clarifies the scope of the APA's notice-and-comment exceptions by confirming that interpretive rules can be issued, amended, or repealed without notice-and-comment. It eliminates the Paralyzed Veterans doctrine, restoring the primacy of the APA's text and Vermont Yankee's limit on judicial augmentation of agency procedures. For students and practitioners, the case reorients challenges to changed interpretations away from procedural attacks (i.e., lack of notice-and-comment) and toward substantive review (arbitrary-and-capricious, inconsistency with the statute or regulation, impermissible retroactivity, or misclassification of an ostensibly interpretive rule that actually functions as a legislative rule). It also foreshadows later developments in deference doctrine, culminating in Kisor's refinement of Auer deference.