Should agencies be allowed to issue interpretive rules without public input?

The Administrative Procedure Act (“APA”) states that agencies must engage in notice-and-comment rulemaking, a three-step process that requires agencies to notify and solicit public feedback, before promulgating a legally binding regulation.[i]  The APA does not, however, require notice-and-comment for “interpretative rules, general statements of policy, or rules of agency organization . . . or practice.”[ii]  Whether agencies should be allowed to issue interpretive rules without soliciting public input is an important and evolving issue in administrative law.

The APA does not define interpretive rules,[iii] but the Attorney General’s Manual on the APA describes them as “rules or statements issued by an agency to advise the public of the agency’s construction of the statutes and rules which it administers.”[iv]  Agencies use interpretive rules to establish how their regulations will apply in situations that were unforeseen when a regulation was promulgated, to resolve ambiguities, and to provide information to regulated parties on the way the agency plans to administer a certain program.[v]

Exempting interpretive rules from the notice-and-comment requirement affords agencies a degree of flexibility and enables them to issue timely communications to the public without having to engage in the cumbersome, time-consuming, and expensive notice-and-comment procedure.[vi]  On the other hand, this flexibility can be a cause for concern.  Some scholars have argued that interpretive rules, while not legally-binding, are often “practically binding,” and that enabling agencies to issue binding rules without soliciting public input is problematic.[vii]  As one scholar noted: “The agency treats the interpretation as dispositive of the question involved, and private parties can ignore it only at their peril.”[viii]  Because the APA does not explicitly define interpretive rules, moreover, it can be difficult to distinguish between legislative rules that require notice-and-comment and interpretive rules that do not.[ix]

Allowing agencies to issue interpretive rules without engaging in notice-and-comment rulemaking may also permit agencies to change the way they interpret and enforce regulations from one administration to the next.  The D.C. Circuit recently addressed this very issue in Mortgage Bankers Ass’n v. Harris, invalidating an interpretive rule the Department of Labor (“DOL”) set forth in 2010 to rescind an interpretation it previously issued in 2006.  The court reaffirmed a line of D.C. Circuit cases holding that once an agency has given a regulation a definitive interpretation, it may not significantly revise that interpretation without first engaging in notice-and-comment proceedings.[x]  The court reasoned that because “a definitive interpretation is so closely intertwined with the regulation, . . . a significant change to the former constitutes a repeal or amendment of the latter,” which should trigger the notice-and-comment requirement.[xi]

DOL has petitioned the Supreme Court to review the D.C. Circuit’s opinion.[xii]  DOL argues that because interpretive rules reflect only the agency’s “own views” and do not have the force of law, it does not makes sense to “force agency decisionmakers to dedicate limited agency time and resources” engaging in notice-and-comment rulemaking “simply to inform the public about the agency’s views on the meaning of relevant statutory and regulatory provisions.”[xiii]  DOL also observes that the Courts of Appeals do not agree on this issue and requests that the Court grant certiorari to resolve the split.[xiv]  Lastly, DOL argues that requiring an agency to complete notice-and-comment rulemaking would be inconsistent with the APA and would violate the Vermont Yankee rule that the APA’s rulemaking provision “specifies the ‘maximum requirements which Congress was willing to have the courts impose on agencies’ for rulemaking.”[xv]

A group of 72 administrative law professors have filed an amicus brief in support of the government’s petition.[xvi]  The professors contend that requiring agencies to engage in notice-and-comment rulemaking before issuing interpretive rules would make agencies less likely to respond to requests from regulated entities for clarification as to whether and how agency regulations would apply in a particular situation.  This, the professors argue, would “create unnecessary uncertainty for regulated firms and for the general public.”[xvii]

Mortgage Bankers’ response to DOL’s petition is currently due on May 2.[xviii]  If the Supreme Court decides to hear the case, its decision will likely have important implications for administrative agencies seeking to revise and refine the way they interpret and apply pre-existing regulations.  Perhaps the Court will provide a clearer way to differentiate between legislative and interpretive rules.  Or maybe the Court will determine that, despite the language of the APA, certain types of interpretive rules are sufficiently significant to require notice-and-comment rulemaking.  We will have to wait and see.[xix]

 

-Sommer Engels is a general member on MJEAL.  She can be reached at shengels@umich.edu.

 


The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.

[i] 5 U.S.C. § 553.

[ii] 5 U.S.C. § 553(b)(A).

[iii] Although the APA calls these informal statements “interpretative rules,” they are more commonly referred to as “interpretive rules.” William Funk, A Primer on Nonlegislative Rules, 53 Admin. L. Rev. 1321, 1352 n.2 (2001).

[iv] Attorney General’s Manual on the Administrative Procedure Act at 30 n.3, available at, https://archive.org/details/AttorneyGeneralsManualOnTheAdministrativeProcedureActOf; see also Funk, supra note 3, at 1324-25.

[v]  Robert A. Anthony, Interpretive Rules, Policy Statements, Guidances, Manuals, and the Like-Should Federal Agencies Use Them to Bind the Public?, 41 Duke L.J. 1311, 1313 & n.5 (1992); Nina A. Mendelson, Regulatory Beneficiaries and Informal Agency Policymaking, 92 Cornell L. Rev. 397, 399-400 (2007).

[vi] Funk, supra note 3, at 1323; Richard J. Pierce, Jr., Distinguishing Legislative Rules from Interpretative Rules, 52 Admin. L. Rev. 547, 550-51 (2000).

[vii] Anthony, supra note 5, at 1314 n.6, 1327-32 (practically binding in effect); see also Funk, supra note 3, at 1323.

[viii] Anthony, supra note 5, at 1314 n.6.

[ix] Pierce, supra note 6, at 547-48 (“Courts often refer to the distinction between [legislative rules and interpretive rules] as ‘fuzzy,’ ‘tenuous,’‘blurred,’ ‘baffling,’and ‘enshrouded in considerable smog.’”).

[x] Mortgage Bankers Ass’n v. Harris, 720 F.3d 966, 967 (D.C. Cir. 2013)(citing Paralyzed Veterans of Am. v. D.C. Arena L.P., 117 F.3d 579 (D.C. Cir. 1997); Alaska Prof’l Hunters Ass’n v. FAA, 177 F.3d 1030 (D.C. Cir. 1999)).

[xi] Id. at 969 n.3 (internal emphasis omitted)(citing Envtl. Integrity Proj. v. EPA, 425 F.3d 992, 997 (D.C. Cir. 2005)).

[xii] Petition for a Writ of Certiorari, Perez v. Mortgage Bankers Ass’n, 2014 WL 825178 (Filed Feb. 28, 2014).

[xiii] Id. at *13.

[xiv] Id. at *16-18.

[xv] Id. at *19.

[xvi] Amicus Curiae Brief of Administrative Law Scholars in Support of the Petitioners, 2014 WL 1275189 (Filed Mar. 26, 2014).

[xvii] Id. at *7.

[xviii] Docket, http://www.supremecourt.gov/Search.aspx?FileName=/docketfiles/13-1041.htm.

[xix] The case has been docketed as Perez v. Mortgage Bankers Ass’n, Case No. 13-1041.

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