Nickols v. Mortgage Bankers Ass'N

Questions presented

SCOTUS records, cert granted 16 Jun 2014

The Administrative Procedure Act, 5 U.S.C. §§ 551-59, "established the maximum procedural requirements which Congress was willing to have the courts impose upon agencies in conducting rulemaking procedures." Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519, 524 (1978). Section 553 of the Act sets forth notice-and- comment rulemaking procedures, but exempts "interpretative rules," among others, from the notice-and-comment requirement. 5 U.S.C. § 553(b). The D.C. Circuit, in a line of cases descending from Paralyzed Veterans of America v. D.C. Arena L.P., 117 F.3d 579 (D.C. Cir. 1997), has created a per se rule holding that although an agency may issue an initial interpretative rule without going through notice and comment, "[o]nce an agency gives its regulation an interpretation, it can only change that interpretation as it would formally modify the regulation itself: through the process of notice and comment rulemaking." Id. at 586. In this case, the D.C. Circuit invoked the Paralyzed Veterans doctrine-which is contrary to the plain text of the Act, numerous decisions of this Court, and the opinions of the majority of circuit courts-to invalidate a Department of Labor interpretation concluding that mortgage loan officers do not qualify for the administrative exemption under the Fair Labor Standards Act. The question presented is: Whether agencies subject to the Administrative Procedure Act are categorically prohibited from revising their interpretative rules unless such revisions are made through notice-and--comment rulemaking.

Opinion summary

Etalia.ai summary of the majority opinion

The case involved the U.S. Department of Labor's decision to change its interpretation of a regulation under the Fair Labor Standards Act without undergoing formal rulemaking procedures. The Mortgage Bankers Association challenged this action, arguing that such changes required notice-and-comment rulemaking as outlined in the Administrative Procedure Act (APA). The Supreme Court held that federal agencies are not obligated to use notice-and-comment procedures when altering interpretive rules, even if those changes significantly impact regulated parties. This ruling reinforced an agency’s ability to adapt and clarify regulations through interpretive rules without being constrained by procedural requirements intended for legislative rules.