The U.S. Supreme Court dealt a fresh blow to the authority of federal agencies, ruling in a case over debit-card swipe fees that some regulations can be challenged a decade or more after they were enacted.
Voting 6-3 along ideological lines, the justices said a North Dakota convenience store and truck stop can sue over a 2011 rule governing the charges that banks impose on merchants. The majority said a six-year statute of limitations doesn’t bar the suit because the business didn’t open until 2018.
The ruling could have ramifications across the U.S. government, making a raft of longstanding rules newly vulnerable to challenge in court under the federal Administrative Procedure Act. The swipe-fee lawsuit will go forward even though merchant trade groups lost a similar case they filed soon after the Federal Reserve adopted the rule.
Writing for the majority, Justice Amy Coney Barrett said the nation’s highest court had to decide when a claim brought under the APA “accrues,” beginning the statute-of-limitations countdown.
It’s ‘straightforward’
“The answer is straightforward,” Barrett wrote. “A claim accrues when the plaintiff has the right to assert it in court – and in the case of the APA, that is when the plaintiff is injured by final agency action.”
The decision is likely to amplify the effect of a blockbuster ruling issued last week, when the justices overturned a 1984 precedent that had required judges to defer to an agency’s reasonable interpretation of an unclear statute. Last week’s ruling gave judges more of a mandate to toss out regulations as being inconsistent with Congress’ instructions.
In a blistering dissent, Justice Ketanji Brown Jackson wrote that the two decisions, taken together, meant that “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.”
“At the end of a momentous term, this much is clear,” she wrote, joined by Justices Sonia Sotomayor and Elena Kagan. “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.”
Up to Congress
She added that “Congress still has a chance to address this absurdity and forestall the coming chaos. It can opt to correct this court’s mistake by clarifying that the statutes it enacts are designed to facilitate the functioning of agencies, not to hobble them.”
The Fed rule was a product of the 2010 Dodd-Frank Act, which included a provision responding to increases in swipe fee rates, also known as interchange fees. The law said fees must be “reasonable and proportional” and instructed the Fed to craft an implementing regulation.
The following year the Fed capped fees at 21 cents per transaction plus 0.05% of the transaction’s value. Merchant trade groups quickly sued, contending that the fee cap was too high, and a federal appeals court in Washington largely upheld the rule.
Merchant trade groups in North Dakota filed another suit in 2021, eventually adding the convenience store, Corner Post Inc., as a plaintiff. Corner Post has operated its store and truck stop in Watford City, North Dakota, since March 2018.
Business groups
A federal district court and then a federal appeals court tossed out the suit, saying the six-year statute of limitations began to run when the rule was issued in 2011.
Corner Post was backed at the Supreme Court by business groups, anti-government-regulation advocates and Republican-led states. They contended the six-year clock doesn’t start until a particular plaintiff is able to sue – in 2018, in Corner Post’s case.
The Biden administration urged the Supreme Court to reject the lawsuit, saying it would undermine the clarity the six-year statute of limitations is designed to provide.
The case is Corner Post v. Board of Governors, 22-1008.
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