In a March 9, 2015, decision in Perez v. Mortgage Bankers Ass'n., the U.S. Supreme Court unanimously held that an interpretative rule issued by an administrative agency does not require notice and opportunity for comment, even if the interpretative rule construes a substantive (or "legislative") rule previously issued by the agency and even if the interpretative rule alters a prior interpretation of the same rule. In the Perez decision, the Court explicitly overruled Paralyzed Veterans of America v. D.C. Arena, L.P., a 1997 decision by the U.S. Court of Appeals for the D.C. Circuit that held that notice and comment is required whenever an agency issues an interpretative rule altering a prior interpretation of a legislative rule, based on the premise that adopting a new interpretation of a rule is tantamount to an amendment of the underlying rule.
Pursuant to Administrative Procedure Act (APA) Section 553(b)(A), notice and comment rulemaking procedures do not apply to "interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice." In Perez, the Supreme Court concluded that "[t]he text of the APA answers the question presented." Finding the APA exemption for interpretative rules to be "categorical," the Court held that "it is fatal to the rule announced in Paralyzed Veterans." Since an agency can adopt an initial interpretative rule without notice and comment, it is "also not required to use those procedures when it amends or repeals that interpretive rule." The actual legal effect of this new ruling is likely to be limited in scope, because the Paralyzed Veterans decision only required an agency to use notice and comment procedures in those instances where the agency was both interpreting an underlying substantive regulation and revising or contradicting a prior interpretation of that regulation.
Although the APA does not define "interpretative rules," the general consensus is that such rules only are intended to announce how the agency intends to construe a particular statute or regulation. Interpretative rules are not supposed to have any independent force of law. While an agency must generally follow its own interpretation of a statute or regulation unless and until it has been revised, no party outside of the agency is required to conform to that same interpretation. This contrasts to a legislative rule, which binds parties other than the agency as well, and which can only be lawfully adopted after providing notice and opportunity for comment. A "statement of policy" has even less formality than an interpretative rule, because even the agency that issued a policy statement is free to deviate from that policy without formally withdrawing or revising it.
While the Supreme Court was unanimous in setting aside the Paralyzed Veterans precedent, the Court did not clearly resolve the question of how much judicial deference should be afforded to such agency interpretations. It can be argued that an interpretation adopted by an agency without notice and comment should be afforded a lesser degree of judicial deference, but there has been a general trend in recent years toward affording judicial deference to agency interpretations in situations where an underlying statute or regulation is ambiguous. In three concurring opinions, several conservative members of the Court (Scalia, Thomas, and Alito) signaled that they are willing to revisit the 1945 Supreme Court decision in Bowles v. Seminole Rock & Sand Co., a case holding that reviewing courts should generally defer to the agency's interpretation when construing an ambiguous regulation. Scalia's concurring opinion goes even further, indicating that he would like to revisit the general rule announced in the seminal 1984 precedent Chevron v. NRDC, which affords substantial judicial deference to an administrative agency in construing ambiguous statutory provisions. Unlike an administrative agency's interpretation of an ambiguous regulation, however, ambiguous statutory provisions will typically be construed in the context of promulgation of a substantive or legislative rule, and this type of exercise means that the agency's statutory construction can only be adopted after notice and comment.
On balance, it is possible that the Perez decision could encourage administrative agencies to issue new interpretative rules or even policy statements in lieu of using more elaborate notice and comment rulemaking procedures. Such an approach could be particularly tempting where an agency anticipates that a reviewing court is likely to give deference to its interpretation. After all, the principle that the public is not bound by an interpretative rule or policy statement will provide little solace if regulated parties must effectively presume that the agency's announced construction is correct.
This risk is mitigated somewhat by language in the majority opinion that makes it clear that a newly adopted agency interpretation may require greater substantive justification and be entitled to less judicial deference when it conflicts with a prior interpretation. Moreover, it is possible that the Perez decision could ultimately undermine Seminole Rock, a case that has encouraged reviewing courts to give administrative agencies a high degree of discretion when interpreting ambiguous provisions in their own rules. After all, when the agency is free to resolve clearly such ambiguities through amendments adopted through notice and comment rulemaking, there may be less justification for resolving the same ambiguities through non-binding interpretations.