WASHINGTON (10/15/14)--The U.S. Supreme Court is expected to consider a case in December that could have widespread implications for government regulations and organizations that follow them.
The case is known as Perez v. Mortgage Bankers Association and pits the MBA against the Department of Labor about whether loan officers should be paid overtime. Thomas Perez is the Secretary of Labor.
According to the Supreme Court, in a statement on its website, the question presented for the high court's review is "whether a federal agency must engage in notice-and-comment rulemaking before it can significantly alter an interpretive rule that articulates an interpretation of an agency regulation."
In 2006, the Department of Labor issued an opinion letter that said mortgage loan officers' duty qualifies for an exception to the overtime rule in the Fair Labor Standards Act. In 2010, the department's deputy administrator reversed course, saying the officers did not qualify for the exception.
MBA sued the Department of Labor, saying its interpretation could not be changed without a notice and comment period required in the Administrative Procedures Act. The U.S. District Court of Appeals for the D.C. Circuit ruled that the 2010 decision must be reversed.
Eric Richard, general counsel for the Credit Union National Association, said the case has implications on several matters important to organizations that follow federal regulations.
"This case has the potential to make the regulatory process more transparent for regulated industries like credit unions, but we can expect the Justice Department to fight all the way," he said.
"Guidance is used extensively by credit union regulators, including both the National Credit Union Administration and the Consumer Financial Protection Bureau, including sometimes when regulators could do a better job after public comment. This is an important issue CUNA will be watching during the current Supreme Court term."
The case could also articulate a standard as to when regulated entities are expected to follow guidance, as well as important implications for examination and supervision processes, Richard said.
If the Supreme Court upholds the D.C. Circuit Court's decision, agencies may decide not to use guidance as often for fear of locking themselves into a position, Richard said. If the Supreme Court rejects that decision, agencies are more likely to issue more interpretations.
The case is scheduled to be heard Dec. 1.
Next week, CUNA's Richard will be discussing this issue in his annual review of developments in credit union law at the annual CUNA Attorneys' Conference. Watch News Now for conference coverage.