The Supreme Court followed its shredding of the Chevron doctrine on Friday by issuing another opinion Monday that could make it easier to challenge federal agency regulations.
In a 6-3 decision that mirrored the vote breakdown in Friday’s Chevron opinion, the court said a plaintiff can sue over a rule when it is first injured by it, not when the rule is issued. For federal laws that do not specify when rules must be challenged, “the default statute of limitations is six years,” Justice Amy Coney Barrett wrote for the majority.
The business involved in the case, Corner Post, did not exist when the regulation setting the amount that payment networks could charge for debit card transactions was issued, in 2011. It began operating in 2018 and joined a lawsuit challenging the Federal Reserve Board rule in 2021, but both a district court and the 8th U.S. Circuit Court of Appeals in St. Louis dismissed the action.
However, “Because injury, not just finality, is required to sue under the [Administrative Procedure Act], Corner Post’s cause of action was not complete and present until it was injured,” Barrett wrote.
In dissent, Justice Ketanji Brown Jackson said that the combination of the opinions issued in Corner Post today and Loper Bright Friday will make more rules vulnerable to lawsuits:
A "fixed statute of limitations, running from the agency’s action, was one barrier to the chaotic upending of settled agency rules; the requirement that deference be given to an agency’s reasonable interpretations concerning its statutory authority to issue rules was another. The court has now eliminated both. Any new objection to any old rule must be entertained and determined de novo by judges who can now apply their own unfettered judgment as to whether the rule should be voided.”
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“At the end of a momentous term, this much is clear:" she wrote. "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."
In the Loper Bright opinion, the court overruled its own 1984 decision in Chevron v. Natural Resources Defense Council, which had said courts should defer to federal agencies' "reasonable" interpretations of unclear federal laws.
Earthjustice, which represents environmental groups challenging agency actions under the Endangered Species Act, Clean Water Act and numerous other laws, criticized the decision.
“Before today, under the APA, when agency issued a regulation, parties had six years to challenge it,” the group said. “After that, we could all rely on the regulation as settled, and depend on its protections. Now, the time to sue starts from when a challenger is first harmed by a rule, so all industry has to do is create a new corporation if it wants to challenge old rules.”
Earthjustice Vice President of Programs Sambhav Sankar called the decisions a “one-two punch.”
“Agency decisions that weren’t even challenged before under Chevron will be now,” he said.
The U.S. Chamber of Commerce, National Federation of Independent Business and 18 states were among those backing Corner Post. Public Citizen and a group of small business associations filed amicus briefs supporting the federal government.
In their brief supporting the business, West Virginia and 17 other states said "parties like Corner Post cannot reasonably be accused of 'sleeping on their rights' when those parties did not even exist at the time that the [Federal Reserve] Board insists that clock began to run. More to the point, the word 'right' must be given real meaning — and parties have no 'rights' to sleep on until they suffer injury."
Beth Milito, executive director of NFIB’s Small Business Legal Center, said, "Small business owners shouldn’t be denied the right to challenge government regulations and we’re glad to see the Supreme Court agrees. Unreasonable government regulations are consistently a top issue for small business owners and today’s decision will allow owners to challenge them as they see fit."
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