Hard on the heels of its holding in Loper Bright, the Supreme Court has issued another decision that may have just as great an impact on curbing federal agencies' power.
In Loper Bright, the court overruled the Chevron doctrine, which mandated that where a statute is ambiguous, courts defer to a federal agency's reasonable interpretation of the statute. This gave federal agencies power to create their own law, as long as it was a "reasonable interpretation" of the statute.
"In Loper, the court concluded that Chevron deference conflicts with separation of powers principles and the command of the Administrative Procedure Act that courts, not agencies, are to decide all relevant questions of law and interpret statutory provisions" said Joshua Odintz, tax partner at law firm Holland & Knight and former chief tax counsel in President Barack Obama's National Commission on Fiscal Responsibility and Reform. "Stated another way, the court made clear that it remains the responsibility of the court to decide whether the law means what the agency says."
The justices reinforced that "Courts, not agencies, will decide all relevant questions of law," he concluded.
In the Corner Post case, the Supreme Court revived a lawsuit by a North Dakota truck stop, ruling that the six-year limit to sue under the Administrative Procedure Act starts only when someone is harmed by the regulation, not when the regulation is issued.
The Corner Post decision is "much more impactful" than the Loper Bright ruling, according to Odintz.
"Everyone thought the six years runs from the time the regulation becomes final," Odintz said. The regulation at issue was finalized in 2016, and presumably any challenge to it had to be made by 2022. But Corner Post didn't exist at the time the regulation was finalized.
"Everyone now has their own personal statute of limitations," Odintz explained. "In this case, Corner Post's limitations period runs out in 2027." This makes it easier to challenge the validity of a regulation — and it also opens up many older regulations to challenge.
When it opened for business in 2018, Corner Post accepted debit cards as a form of payment. The interchange fee of such cards requires the merchant to pay an interchange fee to the bank that issued the card. The fee is set by the networks, such as Visa and Mastercard, that process the transactions. In 2019, Congress placed on the Federal Reserve the task of making sure that fees charged were reasonable and proportional to the cost incurred by the issuer with respect to the transaction. Corner Post challenged the fee on the ground that it allowed higher interchange fees than the statute permits. The District Court dismissed the suit as time-barred, and the Eighth Circuit affirmed. The Supreme Court reversed, finding that the six-year limitation period does not begin to run until a party is injured.
Odintz cited Justice Ketanji Brown Jackson's dissent, which said that a taxpayer can create an entity for the sole purpose of challenging the regulation.
"Taxpayers need certainty," said Odintz. "This creates chaos. It also creates additional work for the IRS. They're hiring additional staff, but the potential for additional work as a result of this decision is great."
