Federal agencies should be barred from issuing interpretive guidance on their regulations unless they follow the notice- and-comment procedures in the Administrative Procedure Act (APA), business groups are urging the Supreme Court. Left unchecked, they argue, agencies have an incentive to enact intentionally vague rules, then release more specific guidance on how the rules are to be implemented, so as to achieve their “potentially controversial” goals, the groups said in an amicus brief October 16.

The U.S. Chamber of Commerce, National Association of Manufacturers, Business Roundtable and others filed the brief in Perez v. Mortg. Bankers Ass'n, No. 13-1041, in which the Court may decide if agencies must follow APA procedures when changing an interpretation of their own rules. The case involves a 2010 decision that mortgage loan officers would have to be paid overtime under the Fair  Labor Standards Act. Other groups represented on the brief were the American Fuel and Petrochemical Manufacturers, American Health Care Association and Securities Industry and Financial Markets Association.

“[A]n agency could promulgate an ambiguous regulation in the first place and then, without having to respond to the concerns of the regulated community, merely interpret that rule to reach any of the results it desires,” the brief states. “But even then, no matter how much anyone had relied on the agency's definitive interpretation, it could later change its mind, again without any feedback from the public.”

OSHA, in particular, could be affected by the High Court’s decision, since it frequently issues interpretive guidance.   The agency has been accused of using interpretations as a back-door rulemaking, such as a 1994 memo decreeing that employers must pay for personal protective equipment.  That guidance was struck down two years later by the Occupational Safety and Health Review Commission, which said it was improper to reverse 20 years of uninterrupted policy through an interpretive memo.

According to the brief, the APA’s notice-and-comment provisions was Congress' way of balancing the agencies’ need for flexibility in addressing new problems against the regulated community’s right to have a say in regulatory decision-making. But, the brief said, federal agencies have tried to block public participation by advancing purposely vague regulations, then issuing interpretations under those rules that fulfill the controversial outcomes the agencies had in mind from the beginning. A decision by the High Court that lets agencies reverse their interpretations without  notice and comment “would make the situation even worse,” the brief contended.

One reason agencies are so strongly encouraged to pass vague rules is because of an earlier Supreme Court holding, known as the Auer doctrine, giving agencies the right to have the final say on what a regulation means, according to the brief. Because of Auer, agencies may act with full confidence that courts must accept their interpretations unless they are patently unreasonable.

At the very least, courts should interpret the APA to require notice and comment when an agency substantially deviates from a relied-upon interpretation, the brief stated. Regulated entities rely on guidance to help them understand how the regulation will be enforced, but some academicians have predicted a ruling favoring the business groups will discourage agencies from issuing any guidance.

In its brief, the Labor Department asserted that Congress had unambiguously exempted guidance from notice and comment, and that the interpretation triggering the litigation was neither arbitrary nor capricious.