NSBA speaks out on federal rule making in Perez v. Mortgage Bankers Association

The National School Boards Association (NSBA) joined a “friend of the court” (amicus) brief filed by the State and Local Legal Center (SLLC) and multiple signatories that asks the High Court to affirm the District of Columbia Circuit’s holding in the case of Perez v. Mortgage Bankers Association. At issue is whether state and local governments should be notified and allowed to comment before federal agencies change interpretations of their own regulations.  The 1946 Administrative Procedures Act (APA) permits agencies to issue “interpretive rules” without notice and comment procedures, because traditionally such rules do not have the “force and effect” of law.

The brief argues that courts have begun to give these informal rules more binding authority and presents an array of real-life examples of the substantial operational and financial impact such unvetted changes have imposed on state and local governments. At a practical level, failing to incorporate private or public input bypasses an important opportunity for the federal government to address or understand the particular challenges or concerns facing states and localities prior to a formal change in policy.

“Rule-making should be orderly and fair,” said NSBA Executive Director Thomas J. Gentzel. “Invoking new legal requirements not expected at the time federal funds were accepted is capricious, imposing undue burdens on school boards and other local governmental entities.” The brief is consistent with NSBA’s longstanding view that in the absence of specific authorizing legislation, federal agencies should not be able to issue new requirements enforceable against school districts.

In the joint brief, the notice-and-comment period NSBA and key state and government leaders request improves federal policymaking by alerting federal authorities of “facts on the ground,” reducing the need to pursue expensive and adversarial litigation. Gathering private or public feedback would also avoid “undue disruption” imposed by changes to federal regulations and standards that fail to take into account state regulatory considerations and local policymaking needs.

“Unchecked rulemaking is a serious threat to local authority,” said NSBA Associate Executive Director and General Counsel Francisco M. Negrón, Jr. “Requiring a notice-and-comment period for significant changes to interpretive rules is essential to preventing federal agencies from exerting their power over matters that should be determined by local school boards.”

The case in question arose when the U.S. Department of Labor (DOL) between 2001 and 2010 twice changed its interpretation of a regulation under the Fair Labor Standards Act (FLSA) that exempts administrative employees from coverage under the law’s minimum-wage and overtime protections.  DOL took these actions without providing a notice and comment period.  The U.S. Court of Appeals for the District of Columbia held that the DOL had acted improperly under the APA.  The High Court has agreed to review that decision.

Eight state and government leaders in addition to NSBA and SLLC filed the joint brief. Co-signatories include the International Municipal Lawyers Association, the National League of Cities, the National Public Employer Labor Relations Association, the U.S. Conference of Mayors, the National Association of Counties, the International City/County Management Association, the Government Finance Officers Association, and The International Public Management Association for Human Resources.

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