High court lifts time bar on challenges to federal actions

WASHINGTON (CN) — After overruling a landmark precedent on government authority, the Supreme Court ruled Monday to expand the time frame businesses have to challenge federal government actions. 

In a 6-3 ruling, Justice Amy Coney Barrett said challenges to agency rules should not be exclusive to only those fortunate enough to be harmed within the first six years of a regulation’s enactment. 

The Donald Trump appointee said allowing businesses to sue the government within six years of their injury instead “respects our ‘deep-rooted historic tradition that everyone should have his own day in court.’” 

On Friday, the conservative majority overruled Chevron v. Natural Resources Defense Council, a 40-year-old ruling that gave federal agencies deference when interpreting statutes. Legal experts worried the ruling could leave many agency rules on the chopping block. 

With Monday's ruling, the dissenting justices argued the court has now added to the “tsunami of lawsuits” agencies could face, having “the potential to devastate the functioning of the federal government.” 

“The majority refuses to accept the straightforward, commonsense, and singularly plausible reading of the limitations statute that Congress wrote,” Justice Ketanji Brown Jackson wrote in an opinion joined by Justices Elena Kagan and Sonia Sotomayor. “In doing so, the court wreaks havoc on government agencies, businesses, and society at large.” 

Monday's opinion stems from a case in which a North Dakota truck stop wanted to sue the Federal Reserve for rules it placed on debit card transactions.

In 2010, Congress included a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act that forced merchants accepting debit card payments to pay a percentage of each purchase to the networks. Charged with implementing that law, the Federal Reserve issued a rule that capped interchange fees at 21 cents for each transaction plus 0.05% of the transaction’s value.  

The board’s rule was challenged by merchant groups who argued the fees were too high. The D.C. Circuit rejected their claims. 

In 2021, the North Dakota Retail Association and the North Dakota Petroleum Marketers Association tried again to block the fees. Unlike the merchant groups, this challenge failed because it came after the six-year statute of limitations. 

Corner Post, the truck stop before the court, thought it had solved the groups’ problem. The store was not incorporated until 2017 — within the six-year deadline. Corner Post joined the associations’ lawsuit, claiming that the store should have the same six years to challenge the board’s rule just like any other business. 

Two lower courts rejected Corner Post’s arguments, finding the statute of limitations started when the rule was finalized not when Corner Post came into business. 

During oral arguments in February, Corner Post presented the justices with a textualist argument for why the countdown should begin when a business opens its doors. 

The government said a ruling in favor of Corner Post would threaten every regulation government agencies make, allowing challengers to simply create a new business when the statute of limitations runs out.  

Barrett said the Administrative Procedure Act lets people injured by government actions sue agencies but limits those challenges to when a party suffers an injury. The statute also, Barrett said, restricts when government rules can be subject to judicial review. 

Unless Congress specified elsewhere, Barrett said a cause of action is not complete until a plaintiff can sue and obtain relief. With that reasoning, the court concluded the statute of limitations for Corner Post’s suit could not begin until the store came into business. 

Barrett said the rule “vindicates the APA’s ‘basic presumption’ that anyone injured by agency action should have access to judicial review.” 

Characterizing the ruling as baseless, Jackson said the text and context of the statute refute the majority’s decision. The Joe Biden appointee said the six-year clock should start when the rule is published. 

Jackson said the result of the court’s incorrect reading means that there is effectively no limitations period for challenges to agency rules. 

“Allowing every new commercial entity to bring fresh facial challenges to long-existing regulations is profoundly destabilizing for both government and businesses,” Jackson wrote. 

Citing specifics, Jackson said the ruling would have changed the outcome of the challenge to the Food and Drug Administration’s approval of an abortion pill. A challenge to mifepristone’s 2000 approval was rejected because it was brought over two decades after the agency’s action. Jackson said that would no longer be the case. 

“After today, even the most well-settled agency regulations can be placed on the chopping block,” Jackson wrote. 

The consequences of the ruling will not be contained to new challenges to old regulations, Jackson added. 

“Any established government regulation about any issue — say, workplace safety, toxic waste, or consumer protection — can now be attacked by any new regulated entity within six years of the entity’s formation,” Jackson wrote. 

Earthjustice vice president of program Sambhav Sankar said the ruling will sow chaos, undermining predictability and legal certainty. 

“The one-two punch of this decision and the Loper/Relentless decision is obvious,” Sankar said in a statement, referring to Friday's ruling to gut agency deference. “As Justice Kagan presciently warned us last week: Agency decisions that weren’t even challenged before under Chevron will be now. That’s because corporations will look out at a sea of judges eager to strike down protective regulations and be emboldened to take a shot at challenging them.” 

Follow @KelseyReichmann

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