Supreme Court Extends Time Frame for Challenges to Regulations

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The Supreme Court on Monday gave companies more time to challenge many regulations, ruling that a six-year statute of limitations for filing lawsuits begins when a regulation first affects a company rather than when it is first issued.

The ruling in the case — the latest in a series of challenges to administrative power this term — could amplify the effect of the blockbuster decision last week overturning a foundational legal precedent known as Chevron deference, which required federal courts to defer to agencies’ reasonable interpretations of ambiguous statutes. That decision imperils countless regulations, particularly on the environment, and advances a longstanding goal of the conservative legal movement.

The vote was 6 to 3, split along ideological lines. Justice Amy Coney Barrett, writing for the conservative majority, rejected the government’s argument that the time limit to sue begins when an agency issues a rule.

Under the government’s view, she wrote, “only those fortunate enough to suffer an injury within six years of a rule’s promulgation” could sue. She added, “Everyone else — no matter how serious the injury or how illegal the rule — has no recourse.”

In dissent, Justice Ketanji Brown Jackson wrote that the decision, along with the case overturning Chevron, Loper Bright Enterprises v. Raimondo, was an assault on the power of administrative agencies. She was joined by the court’s other liberals, Justices Elena Kagan and Sonia Sotomayor.

“At the end of a momentous term,” Justice Jackson wrote, “this much is clear: The tsunami of lawsuits against agencies that the court’s holdings in this case and Loper Bright have authorized has the potential to devastate the functioning of the federal government.”

Environmental advocates warned that the combined effect of the decisions on administrative agencies could be especially profound for the thousands of regulations enacted by the Environmental Protection Agency.

“These are a series of decisions collectively designed to undermine the government’s ability to protect the public from polluters and other corporate bad actors,” said Ian Fein, a senior lawyer with the Natural Resources Defense Council, an advocacy group.

Republican attorneys general, who have worked with conservative activists and major industries and corporations in leading a multiyear strategy to sharply reduce the authority of the federal government, cheered the decision.

“Federal agencies should be held to account for their actions, even when a few years have passed from the time the rule was first issued,” said Patrick Morrisey, the West Virginia attorney general, who has taken a lead role in that campaign and filed a friend-of-the-court brief in support of the plaintiffs.

At first glance, the case, Corner Post v. Board of Governors of the Federal Reserve System, No. 22-1008, appeared to be a technical challenge to debit card fees incurred by a North Dakota truck stop.

It was brought in 2021 by two trade associations who opposed the rule, which was enacted in 2011.

Such fees “have long been a sore point for merchants,” Justice Barrett wrote. Payment networks set the fee amount, she wrote, leaving merchants, who would lose business if they refused to accept debit cards, with few options. Without regulation, she said, swipe fees “ballooned.”

In response, Congress stepped in and asked the Federal Reserve Board to set standards for these fees, called interchange fees. In July 2011, the board published a rule that set a maximum fee of 21 cents per transaction, with an additional amount based on the transaction’s value.

Four months later, a group of retail industry trade associations and individual retailers sued the board, arguing that the rule allowed costs that Congress did not approve.

After the government moved to dismiss the case on statute-of-limitations grounds, the associations added a third plaintiff: Corner Post, a truck stop and convenience store in Watford City, N.D.

Watford City, a town of about 6,200 in the western part of the state, opened for business in 2018, years after the federal rule was in place. Corner Post argued that it had racked up hundreds of thousands of dollars in these transaction fees since it opened, which meant higher prices for its customers.

In the amended suit, the truck stop argued that it could not have sued within the six-year period after the issuance of the regulation because it did not yet exist. It said the clock should have started running when the regulation first affected the company.

Lower courts disagreed, dismissing the case.

As Justice Barrett wrote in the majority opinion, the lower courts’ view was that the six-year limitation period began in 2011 and expired in 2017, “before Corner Post swiped its first debit card.”

The government’s concerns that agencies and regulated groups need the finality of a six-year cutoff because later challenges “impose significant burdens on agencies and courts” were “overstated,” she added.

Under the board’s rule, “only those fortunate enough to suffer an injury within six years of a rule’s promulgation” could sue, she wrote, leaving “everyone else — no matter how serious the injury or how illegal the rule” with no recourse.

She discounted Justice Jackson’s dire warning that the court’s decision could bring havoc to the functioning of the federal government.

“This claim is baffling — indeed, bizarre — in a case about a statute of limitation,” Justice Barrett wrote..

Justice Jackson and the other liberal justices appeared to see the case much more broadly.

“The flawed reasoning and far-reaching results of the court’s ruling in this case are staggering,” she wrote. She argued that the majority had disregarded the text and context of the statute and ignored “the straightforward, common-sense and singularly plausible reading” of the statute.

Justice Jackson cautioned that the outcome could lead to abuse of the courts by wealthy groups trying to skirt the rules.

“It also allows well-heeled litigants to game the system by creating new entities or finding new plaintiffs whenever they blow past the statutory deadline,” Justice Jackson wrote. “In doing so, the court wreaks havoc on government agencies, businesses and society at large.”

Coral Davenport contributed reporting.



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