06.16.2014 2

Another Obama overreach goes to Supreme Court

supreme_courtBy Nathan Mehrens

Throughout the course of the Obama Administration we’ve seen the President and his appointees make a regular practice of dodging laws that make implementing their agenda difficult.

One such example of this practice will be receiving greater scrutiny now that the U.S. Supreme Court has decided to review the Administration’s actions in regulating the workplace. The Court announced this week that it would review Perez v. Mortgage Bankers Association, a Labor Department case involving its Wage and Hour Division’s interpretation of the Fair Labor Standards Act.

At issue is the method that the Administration used to make the interpretation.

When Congress passes laws, such as the Fair Labor Standards Act, it typically delegates part of its authority to the Executive Branch to promulgate regulations implementing the act. Normally these regulations are promulgated after the agency engages in what is known as “notice and comment” rulemaking where the agency first publishes a notice of proposed rulemaking and uses comments it receives to craft the final regulation. In some areas, an agency is allowed to give the public its interpretation of particular parts of the act without the full-blown procedure, but once that agency has given “a definitive interpretation” then the agency must use the “notice and comment” process in order to “significantly revise” the interpretation. If the agency fails to engage in the “notice and comment” process, it violates the requirements of the Administrative Procedures Act.

As the D.C. Circuit noted in its opinion on the case, the Obama Administration is free to change interpretations, provided they do it the right way and allow the regulated community an opportunity to comment on proposed regulations as the law requires.  The court stated, “if the Department of Labor (‘DOL’) wishes to readopt the later-in-time interpretation, it is free to. We take no position on the merits of their interpretation. DOL must, however, conduct the required notice and comment rulemaking.”

In the Mortgage Bankers Association situation, the Administration short-circuited the process, failed to engage in the “notice and comment” procedure, and instead chose to issue an interpretation letter. The interpretation letter dealt with the application of the Fair Labor Standards Act to mortgage-loan officers and made significant changes that affect the legal obligations of the regulated community.

Since the application of the Act to mortgage-loan officers had already received a “definitive interpretation” in the past, the Administration violated the Administrative Procedures Act by significantly changing its interpretation without using the “notice and comment” procedure.

The person responsible wasn’t even the head of the Wage and Hour Division because the President failed to pick someone who could be confirmed by the Senate to run the Division. Instead, the Deputy Administrator issued the interpretation. As such, you have a non-confirmed appointee running an agency that Congress mandated be run with a Senate-confirmed head, who chose to skip the hard work involved in properly promulgating regulations.

After getting caught, one would think that the Administration would recognize its error and if it decided to regulate on this particular subject it would use the lawful procedure. Instead, the Administration opted to elevate the issue in an attempt to convince the Court to add additional elements to the analytical framework used to determine when “notice and comment” rulemaking is required.  If the Court adopts the Administration’s arguments, the effect will be increased difficulty in bringing lawsuits to challenge Administration actions. Should this occur, one less check on the power of the Executive Branch would exist, giving President Obama more power to “use his pen” in a unilateral fashion on regulatory matters.

Unfortunately, as this case illustrates, the Administration is all too willing to simply ignore the law and to instead unilaterally impose its will by fiat.  This is the quick and easy way of doing things, one that doesn’t require a lot of hard thought and review normally accompanying significant regulatory changes. The President would be well advised to abandon this practice, not only because it makes regulations weaker, but also because one day a successor with different views may use that power to undue his regulations. It’s now up to the Supreme Court to get this right and affirm the check on the Executive’s power.

Nathan Mehrens is president of Americans for Limited Government and previously served in the U.S. Department of Labor.

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