We previously posted on July 2, 2024 The Demise of Chevron Will Result In Increased Treasury Regulation Challenges, which discussed the demise of Chevron deference as "misguided because agencies have no special competence in resolving statutory ambiguities. Courts do," the Supreme Court's majority opinion said in Loper Bright case and a similar one called Relentless v. Department of Commer.
Now the US Supreme Court decided Corner Post, Inc. v. Board of Governors of the Federal Reserve System which further exposes regulations to challenge.
This case involved a challenge by Corner Post, Inc., a North Dakota truck stop, to a 2011 regulation issued by the Federal Reserve. This regulation set a cap on the fees that large banks could charge merchants for debit-card transactions. The key issue before the Supreme Court was whether the six-year statute of limitations under 28 U.S.C. § 2401(a) began at the time the regulation was enacted or when the plaintiff was first injured by it.
Background
- In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, specifically through the Durbin Amendment, required the Federal Reserve to set limits on debit-card interchange fees. The final rule was published in 2011.
- Corner Post, Inc. was founded in 2018 and challenged the regulation in 2021, arguing that their claim was timely since they were first affected by the regulation upon their establishment.
- The Federal Reserve contended that the statute of limitations began when the rule was enacted in 2011, not when Corner Post was injured in 2018. Both the district court and the Eighth Circuit sided with the Federal Reserve, leading to an appeal to the Supreme Court.
Supreme Court Decision
- The Supreme Court ruled in a 6-3 decision, holding that a claim under the Administrative Procedure Act accrues when the plaintiff is first injured by the final agency action, not when the rule was first promulgated. Justice Barrett authored the majority opinion, reversing the lower court's dismissal and remanding the case for further proceedings.
- The ruling clarifies that for the purposes of the statute of limitations, the clock starts ticking when a plaintiff suffers a legal wrong due to the agency's action, thus allowing challenges to older regulations if the plaintiff is newly affected.
Implications
- This decision potentially opens the door for other businesses and individuals to challenge older federal regulations, provided they can show they were first injured within the six-year window prior to filing suit, as part of their legal strategy during deficiency or refund proceedings.
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