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Supreme Court eases time limits on challenges to federal rules

Another decision this term that gives judges greater involvement over government actions

The Supreme Court building at sunset.
The Supreme Court building at sunset. (Bill Clark/CQ Roll Call file photo)

The Supreme Court made it easier Monday to challenge long-standing federal rules, the latest in a series of decisions that give the federal judiciary a greater say in federal government policies.

A 6-3 decision in Corner Post Inc. v. Board of Governors of the Federal Reserve System revived a challenge to a debit card fee rule first issued in 2011 and laid out a new standard for when agency rules could be challenged in court.

Previously, a rule issued under the Administrative Procedure Act, or APA, could be challenged within six years of it being finalized. In the majority opinion, Justice Amy Coney Barrett wrote that any entity instead has six years from when they are affected by a rule.

Expanding that time frame to file a lawsuit, what is called the statute of limitations, will allow judges to decide more disputes and potentially allow new challenges to rules that have long been in place.

In the case, Corner Post, a convenience store and truck stop in North Dakota founded in 2017, argued that the Federal Reserve allowed banks to charge debit card “interchange” fees that were higher than those allowed by the 2010 financial overhaul law known as Dodd-Frank.

The Supreme Court decision Monday found that Corner Post could still challenge the 2011 rule. “An APA plaintiff does not have a complete and present cause of action until she suffers an injury from final agency action, so the statute of limitations does not begin to run until she is injured,” Barrett wrote.

The APA governs the federal rulemaking process and thousands of rules issued by hundreds of federal agencies across the executive branch. Barrett wrote that, although several laws say explicitly that a challenger can only sue within a certain time period after the rule is issued, the APA only refers to when someone is injured by the rule.

Barrett wrote that the court was simply applying the standard it uses for most lawsuits, and Congress could change the statute of limitations for agency challenges.

“If it is a poor fit for modern APA litigation, the solution is for Congress to enact a distinct statute of limitations for the APA,” Barrett wrote.

Justice Ketanji Brown Jackson, in a dissent joined by Justices Elena Kagan and Sonia Sotomayor, said the majority wiped out any sense of finality in federal rulemaking. Jackson said the decision ignored how Congress has structured administrative law and puts every federal rule passed since 1948 up for grabs.

“From this day forward, administrative agencies can be sued in perpetuity over every final decision they make,” Jackson wrote.

Reading from a portion of her dissent on the bench, Jackson said the majority decision incentivizes the challenging of every rule in the books for competitive advantage.

“No matter how entrenched, heavily relied upon, or central to the functioning of our society a rule is, the majority has announced open season,” Jackson said.

Barrett downplayed the seriousness of the decision and its potential consequences. She pointed out that most major regulation is challenged almost immediately and that future courts can rely on the decisions the courts made in the original cases to decide new ones.

Not all rules

Kevin Minoli, a partner at Alston & Bird and former acting general counsel and principal deputy general counsel at the EPA, said the Corner Post decision would not apply to all federal rules and its reach would depend on which law a rule was issued under.

For instance, he said the Clean Air Act specifies when a rule can be challenged in many instances, apart from the general rule under the APA.

The back and forth between Barrett and Jackson was a “continuation of the string of decisions that reviewed administrative law and really changed administrative law this term,” Minoli said.

“One side views it as an important step to rein in administrative authorities appropriately and another views it as putting a lot of rules on the chopping block,” Minoli said.

Devon Ombres, a senior director at the Center for American Progress, in a statement issued Monday, criticized the decision for allowing businesses to challenge long-standing federal rules ensuring safety.

“These rulings put in jeopardy thousands of regulations adopted over decades, opening the door to nonstop legal challenges for rules that have protected Americans from bad actors and corporate malfeasance for decades,” Ombres said.

The decision was the latest in three cases this term where the Supreme Court gave federal judges more say in the functions of the federal government.

That includes a decision that agencies must bring cases that seek fines in federal court, and another that overturned the 40-year-old doctrine known as Chevron deference, which had required judges to defer to administrative agencies’ interpretations of ambiguous laws when deciding a particular rule.

“Doctrines that were once settled are now unsettled and claims that lacked merit a year ago are suddenly up for grabs,” Jackson said.

Minoli said the combination of the Corner Post decision with the one invalidating Chevron could add uncertainty to regulations that have been in place for years.

“When you put the two together, any previous old interpretation is going to be up for review if you have a plaintiff who can prove a new injury,” Minoli said.

Minoli said that particularly for environmental rules, regulated entities may face costly decisions, like buying new equipment and “it makes those decisions much easier if they are confident the rule is going to be in place for some time.”

Jackson in her dissent said that there was a small chance for Congress to “address this absurdity and forestall the coming chaos” of additional litigation over federal rules.

Citing a 2007 decision on pay discrimination, Jackson said “the ball is in Congress’ court” to fix the problem.

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